Brilliant innovation behind our big screens

Every time we visit the cinema we are entertained by a global industry that lives and breathes innovation and knows how to manage the creative beast. Best innovation practices elsewhere are standard practices here; part of the structure, culture, passion and continual growth of film making.

It’s a mature industry where individuals, small firms and their lawyers, regularly do deals with big studios and distributors; behemoths such as 20th Century Fox, Warner Bros, Walt Disney, Sony and Universal.

Typically, the average $140 million budget for a feature is split evenly between production and marketing, with the studios tipping in marketing funds, if not part of the production funds. Profits only appear after that $140 million comes back from the box office. Risk is always at play with the mega returns from just two out of 10 films covering the losses of the majority that don’t make it. The returns from creative commercial masterpieces such as Avatar (production and marketing cost around $450 million, ticket sales $2.8 billion and counting) keep the industry ticking over. As the brains behind Titanic, made in 1997, and the second highest grossing film ever, Avatar director James Cameron has few problems attracting this record investment. It’s messy; but portfolio management works.

Every major film is a new innovation project. The scripts that go into production have passed similar filters or stage-gates to those hurdles, questions, scrutiny and competition from other ideas; faced by employees and entrepreneurs with ideas. When corporations create internal test markets and open feedback loops for ideas from their employees, as Deloitte have done, they come close to replicating the flexibility and diversity of this script development/assessment and sponsor/investor hunting process.

Writers and agents can shop their wares to any number of successful producers, directors or actors. It helps if the story writer is well connected, but even without the connections an original story has more chance winning backing on its merits than in other industries where NIH (not invented here) prowls. If a person in any one of the roles – producer, director or actor – likes a script they talk to colleagues in the other roles; and when two or three team up the chances of securing the money go up. A promise of serious money from one progressively increases the chances of securing all the required funding, and by the time the funding is secured the mission critical pieces of the entire jigsaw are usually in place.

Once production is underway the pressure to deliver on time and on budget is a great as it is anywhere else. Financial controllers track expenditures and progress of the project against milestones daily. Typical production meeting conversations go like this: “You are $18,000 over budget today”. “I’ll make it up by the end of the week”. However, with a track record of box office success directors get away with lines like: “We’ll make it up at the box office.”

The pressure to deliver “on spec” is more of a wild card, depending on who has what creative control, what creative ideas and synergies emerge during production, what happens on the editing console and in the test marketing preview booths.

While the global film industry has grown slowly over the past decade and the PwC Entertainment and Media Outlook projects further growth from $36.8 billion last year to $45.7 billion in 2015.

Here are 10 points about this mature and innovative industry that continues to grow because it knows how to marry and mange creative talent, technological innovation and commercial realities.

• An industry structured entirely around a flow of new product projects.
• An industry where the lead players (investors, producers, directors and actors) and a cast of hundreds assemble themselves around the inherent appeal and the requirements (locations, stunts, animations, types of costumes, scores and music) of each story/script.
• What other industries call multi-disciplinary and cross-functional teams are a way of life.
• Deep and wide talent pools.
• Career progress is based on performance. Participants with proven technical expertise, respect for other experts and the flexibility and skills to work in-between constant change and tight deadlines. Conflict during production is rare; although negotiations before production can be protracted.
• Film crews and marketing squads love what they do and work with commitment and passion.
• Ample ingredients (all of the above) for creative thinking, creative action and occasional improvisation from the beginning to the end of each film project; that is from the emerging script to the posters and promos we see.
• Legal processes, agreements and contracts for protecting IP, insuring against operational risks and paying individuals are well developed and widely understood and respected. One formula for key contributors is a cash amount and a percentage of gross earnings.
• Attention to maximising profit from each film from by-products and line-extensions   including: merchandising (clothes, toys, drinks and more), product placement (James Bond uses Sony VAIO), film offcuts, bloopers and interviews done in production down time with lead players each side of the camera; and secondary-market (DVD) channels.
  Commercially savvy screen writers think about making the next sale every time they compose their ending. Eager fans (including me) of the Bourne series – Identity, Supremacy, Ultimatum and the just released Legacy – are more than willing to enjoy the careless anticipation of what might come next, arising from the “don’t end the story, sell the next chapter” approach.
• A great ability to enthusiastically celebrate excellence and success through industry awards and awarding events – the Academy Awards in Hollywood, BIFA in the UK and in Australia the Australian Academy of Cinema and Television Arts Awards, popularly known as the AFI awards.