The Big Picture: The New Logic of Money and Power in Hollywood [Hardcover]

This is a very detailed and insightful book on the movie entertainment business. Epstein researched an enormous amount of proprietary financial information from the Motion Picture Association All Media Revenue Report (MPA). This is a report disclosed only to the studios that details movie earnings. It is unclear how Epstein obtained access to this proprietary data. Epstein leveraged this proprietary data into an incredibly insightful analysis of the movie-entertainment industry. Thanks to Epstein lively writing style the book is a quick read despite the volume of information provided.

The movie business is not an economically viable stand-alone business. Indeed, over 95% of the movies loose a ton of money at the Box Office even if they often generate hundreds of millions in such Box Office revenues. Movies have become extremely expensive advertising for a very risky long-term investment in an "intellectual property" right. The pioneer of such a business model was Walt Disney who fully grasped the possibilities of the ancillary businesses more than half a century ago.

Related ancillary revenues generated by videos, Pay TV, and Networks dwarf the revenues at the Box Office. While the major studios derived 100% of their revenues from Box Office in 1948, this percentage has continuously dropped to only 18% in 2003. Additionally, these ancillary businesses are almost all profits. The vast majority of the production costs have already been absorbed within the Box Office business.

However, a majority of movies still loose money when you figure the full life cycle of its "intellectual property." Epstein details throughout the book such a cycle for "Gone In 60 Seconds" with Nicolas Cage. At first, the movie seems a roaring success as it grossed $242 million in worldwide Box Office. But, when you figure the whole cycle, as of 2003 the movie including the ancillary businesses was still $150 million in the tank.

The reason movies still get made is because there are so many willing equity partners absorbing the brunt of the losses in financing movies. The studios survive because they are supported by their strong parent holding companies whose businesses are diversified in technology, news, media, and consumer products. The directors and stars make a fortune. And, the equity partners are the ones loosing their shirts.

After reading this book, one assesses that movie stars are the most overpaid human beings on the planet. In one single movie, they often make more money than sports stars make over their entire career (tennis or golf comes to mind). Even though some stars do attract the public, the underlying economics of their movies over the full cycle is not attractive. If it were not for equity partners making irrational investment decisions, the castle of cards would crumble.

The book also breaks or confirms many interesting myths. For one, Tom Cruise does not do his own stunts despite what you see in DVD bonus features. This is because insurers cover the risk that Tom Cruise will not be able to complete the shooting of the movie. The face of an actor is now digitized on to the body of a stuntman. So, when you see a close up of Tom Cruise jumping off a cliff it really looks like him. Another interesting concept is that movie theatres make more money from selling popcorn and sodas than from showing the movie. It is true! The movie represents foot traffic. The popcorn and sodas represent the high profit margin business segment they don't share with the studios.

There are a zillion more interesting facts mentioned within the book embedded in a coherent and very entertaining history of the movie business from its inception to nowadays. Thus, I strongly recommend this book.

This is a good book about the evolution and the workings of the modern Hollywood system. (For summaries, see the other reviews.) I enjoyed the first third of the book a lot, but then it became more and more repetitive. A lot of the information contained in Part 4 ("The Economic Logic of Hollywood"), Part 5 ("Social Logic"), and Part 6 ("Political Logic") had been already presented in the preceeding parts. For example, I don't know how many times Epstein mentions the 29 million USD Arnold Schwarzenegger received for "Terminator 3" - it sure seems like a million times. In the end, you get the impression that the author had access to more detailed information about a limited number of movies (T3, Gone in 60 seconds) and then used them as examples for each and every point he is trying to make. All in all, some serios editing would have turned this really good book into an excellent one.

This book is an astute analysis of the film business by someone outside the motion picture business. Many books are written about the movie business by insiders or entertainment reporters but often these writers are too close to the subject or in awe of the subject and as a result miss the mark. Mr. Epstien gives an astute analysis of the current state of the business using sources that normally are not available to the public. An example is the confidential disclosures by the six major studios to the Motion Picture Association Of America (MPAA), which are then compiled into an industry compendium disclosing studios sources of revenue. Mr. Epstein confines his analysis to the six major studios, Disney, Sony, Universal, Warners, Paramount and Fox, which dominate the motion picture and ancillary entertainment businesses world wide.

Once a movie's theatrical release was the primary source of a studios income and indeed in the beginning the only income. Now however the theatrical release is just the beginning of income to the studios that now earn more income from video/DVD sales and rentals than the initial theatrical release. Also particular types of movies that lend themselves to action figures, promotional tie-ins, theme park rides and sequels are the major earners for the studios. Examples of these are Star Wars, Jurassic Park and Batman. These movies are easy to understand, involve multiple spectacular action scenes and cater to a young demographic who go to movies, buy the action figures and memorabilia associated with a movie and after seeing it more than once in the theatres may buy the DVD or video of the movie.

While the cost of making and advertising the theatrical release may exceed box office receipts the picture will make money for the studio over the years in rentals, sales of the movie, leasing to television, pay per view, income from licensing toys and other products associated with the movie.

Mr. Epstein has described the historical development of the studios from creators of films shown in wholly owned theatrical chains to vast clearing houses greenlighting and financing producers to distributing, selling, licensing movies and related products world wide.

This book was a profound look at the business side of the entertainment business and the people who control and profit from it. Ever wonder why there is such a paucity of quality entertainment for persons older than twenty-five? Because in order to have a mega blockbuster that generates billions of dollars in income over the years it must be geared toward the 12 to 24 year old audience, with a story line that can be easily understood even it all the audience doesn't speak the language of the movie well. This means action movies with a simplistic story line of good triumphing over evil.
This was an excellent book and after reading it you will understand why the major studios no longer care about making quality-sophisticated entertainment. Edsopinion.com

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