The holy grail, as Hollywood entered the twenty-first century, was not just to have a successful movie but to have a "hit franchise." The six main studios, Warner Bros, Disney, Sony, Universal, Fox and Paramount pursued sequels and prequels because conventional wisdom maintained that they were a way to reduce risk in a very risky business.
Take the "Mission Impossible" franchise. These films already have built-in marketing as known brands. To help manage their huge financial risk, the major companies investing $100 million or more in a single production looked to star power. If you were spending megamillions to create an event movie then spending $20 million or more in salary plus a share in the profits to the star helped to ensure that investment. Ever notice that you now see big stars listed as Actor and Producer? It's to make more money at the end of the day. To make more money off of the same movie with the same cost and overhead you have to take your check from the gross profits NOT the net profits. A lot of great visionaries only get paid AFTER the movie goes into profit.
What makes the new star deals different, however, was that they tapped into gross profits instead of net profits.These deals are called "First-dollar" gross deals because the star got a percentage of the revenue from the first money that the studio took in. Which is why opening weekend numbers are so huge. The goal is to get as many people out to see their favorite star on opening weekend because the studios have a very short window to gain their money back. That's also why all movies seem to open on 3000+ screens! In the 70s and 80s, a movie like Star Wars opened on 35 screens. 35. Hell, the Westminster Promenade can screen 24 movies at any given time. Back in the day, a movie would open small then open on more screens across many months. Star Wars was in movie theatres for over a year.
Nowadays a movie like "Paranormal Activity 4" will open on 3100 screens, make decent money over two weeks and then proceed on to Dvd and Blu-Ray sales inside of 90 days. A movies cycle is now 90 days? That is directly impacting the way movies are made now because people don't want to spend $40 plus to see a movie in a theatre that they can own on DVD inside of three months.
The reason Tom Cruise makes $20 million plus profit-sharing is because the distributors rationalized they could make up almost all deficits from the home video market. Now it seems that the studios don't care if you don't go see their movie in the theatres because they know you will plop down $20 a person to own the Blu-Ray, Dvd, Digital Copy combo pack at Best Buy. Or do they? After decades of seemingly unlimited star paydays, studios are fretting over declining audiences and rising production cost. Tom Cruise made $25 million for Mission Impossible 2 but $75 million in gross profit sharing. He made $26 million for War of the Worlds but over $100 million in gross profit sharing. That was why Cruise was ultimately forced out of the studio that had been his home for 14 years.
Now joining Cruise in having the clout to negotiate gross deals were a handful of directors, such as Spielberg and Robert Zemeckis, as well as some of the most influential stars of the decade, including Tom Hanks, Julia Roberts, George Clooney and Brad Pitt. A 2007 report by Global Media Intelligence estimated that these gross participation deals produced income of $3 billion for the stars alone. By comparison, the residuals paid to all of the WRITERS totaled $125 million. This disparity was the subject of intense labor difficulties including the 100 day writers strike by the Writers Guild of America.
Which brings us full circle. Ironically, while their pay was going up, stars are becoming less valuable. In the big FRANCISE hit movies of the decade, a character such as Spider-Man or a concept such as Star Wars was more important than any one actor.
Fans flock to see the Lord of the Rings movies or Harry Potter movies than they came to see a specific actor. The perfect storm of this is the great Pirates of the Caribbean movies with Johnny Depp. Jack Sparrow is the only character that Johnny Depp has portrayed more than once. The reason? Class? Say it with me...gross profit sharing.