How 1991 nearly broke Hollywood

In 1991, profits were down, star wattage was dimming and Hollywood was in a panic. Simon looks back at a bad year for the studio system...

A few weeks ago, reports were circling that Hollywood was facing a problem. The US box office had had its worst summer for over a decade, and were it not for the emergence of the Chinese market as an outlet for American films (which we wrote about a short while ago), then studios would be facing some very difficult decisions.

To a degree, they probably already are.

But then, we’ve been here before. And as bizarre as it may seem, given the fact that it housed some huge films, 1991 was the year that left many studio executives staring into the proverbial abyss. Box office was down, DVD was still some way away, and after a decade of recession-proof growth, 1991’s US box office collapsed.

It’s worth putting in context that this was at a point where the US was the most crucial market for Hollywood’s output, responsible for most of the studios’ takings. So it would be no exaggeration to say that there were a lot of worried rich people when 1991’s summer box office, for instance, dropped 11% on 1990’s numbers. Furthermore, admissions in August and September 1991 were the worst they’d been since 1978. Hollywood was in trouble, and many were pinning their hopes on Steven Spielberg’s Hook, arriving at the end of the year, to give the business a shot in the arm. We’ll come to that shortly.

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But it’s worth starting with the two big hits, to explore just what went wrong.

Schwarzenegger And Costner

Star power still just about ruled in 1991, and Hollywood was paying more than ever to acquire it. This was off the back of a preceding decade where a good movie star bought you a hit movie, no matter how good or bad the film itself was. There were not many exceptions to that particular rule.

Thus, Arnold Schwarzenegger found himself a then-unheard of $15m richer for making a sequel to The Terminator, with part of his salary offset by him being given a Gulfstream jet plane of his own.

He proved good value, though. Off the back of an opening weekend of over $30m (then one of the biggest of all time), Terminator 2: Judgment Day went on to become a huge box office success. Reviews were strong, fan enthusiasm was off the chart, and even the R-rating wasn’t enough to deter queues of moviegoers from lining up to see the film multiple times. Terminator 2 would comfortably be the biggest movie of the year at the box office, with a then-gigantic $519m global haul. It not only hit big in the States, it travelled too.

It marked a box office peak for Arnold Schwarzenegger, that only True Lies has really come close to matching since. The same year, Kevin Costner was also box office gold. Robin Hood: Prince Of Thieves took $165m at the US box office. That too marked a peak for him at the US box office (unless you count Man Of Steel, but that didn’t really sell off the back of Costner’s star status). Notching up a total of $390m in all worldwide, and generating a sizeable hit single too, Robin Hood: Prince Of Thieves was a massive success, even more so on video.

Yet scratch below the surface of those two huge blockbuster hits, both headlined by expensive movie stars (Schwarzenegger and Costner being the biggest film stars in the world at that point), and there were many star vehicles that didn’t perform. Expensive ones at that.

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Julia Roberts was thus hired to star in Dying Young. The result? A flop. Al Pacino and Michelle Pfeiffer in the decent Frankie And Johnny? A surprising box office disappointment. Warren Beatty’s Bugsy? Bruce Willis in The Last Boy Scout? Harrison Ford in Regarding Henry? All of them underperformed, with big above-the-line talent bills to pay.

And then there was the most notable flop of the year, the maligned but actually rather fun Hudson Hawk (that we wrote about here). When it failed to break $20m, it would be fair to say that the fit hit the shan.

Indies And The Middle Ground

There were hits, just not as many of them. Orion wouldn’t be around long to enjoy The Silence Of The Lambs’ success, although Disney built on the wonderful Beauty And The Beast, which brought home no shortage of bacon. City Slickers, meanwhile, along with Robin Hood, hinted at a future where independents would prove themselves more nimble and profitable than studios. A sign of things to come: even Terminator 2 was technically an independent film.

But even studio films that were well regarded and decent successes weren’t breaking through. Backdraft, for instance, was solid, as was Cape Fear, New Jack CityThelma And Louise and Hot Shots! But 1991 left Hollywood. for the first time in a generation, uncertain about star power. Yet if you didn’t have a star, you were still exposed. Disney gambled on a major blockbuster without a movie star with The Rocketeer, and the film flopped, only to be rescued by its deserved fanbase since.

William Goldman had famously coined the term “nobody knows anything” when talking about Hollywood, and 1991 seemed to prove it. “Right now”, said then chairman of 20th Century Fox, Joe Roth, “the movie business is a disaster”.

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The Clues

So what went wrong? 1990, after all, had been a stellar year at the US box office. Yet tellingly, the films that made the big money in that year weren’t the ones people were expecting. The big budget blockbusters were Die Hard 2: Die Harder (then the most expensive film ever made, before Terminator 2 popped up the year after), but that failed to generate as much money as Fox expected and needed (again, in pre-DVD days). It was no failure, but as with Disney’s Dick Tracy, it took a lot of money and resources to make, and didn’t offer too much return (Dick Tracy would inspire the Disney boss at the time, Jeffrey Katzenberg, to write an infamous memo, that we talked about here).

Further star vehicles, such as Presumed Innocent, Bird On A Wire, Another 48 HRS and Days Of Thunder were offering hints that the star system was changing, as the totals for all but the first of those fell short. The status quo was already under threat.

The big hits, and they were really big, were Home Alone, Dances With Wolves, Teenage Mutant Ninja Turtles, Ghost and Pretty Woman. Two of those took more than Terminator 2, at a fraction of the budget. The biggest star vehicle? Ghost probably counts, although Patrick Swayze’s name wasn’t guaranteeing box office gold at that stage. Further down the top 10, The Hunt For Red October and Total Recall were arguably buoyed by the leading names on the poster, though.

However, what really rattled Hollywood was that it couldn’t sink $50-60m into a film with a star and get a guaranteed hit the other side with reasonable reliability. The audience was wising up, but the 1991 slate was still built around the old way of doing things.

Crucially, Hollywood was also spending more to make films, with jaws dropping when Terminator 2′s production budget broke $100m. Even beyond that, though, spec scripts were routinely being bought for $1m+, and stars were getting points as well as upfront salaries. The bottom, at some point, had to fall out, and as Mike Medavoy, then head of TriStar Pictures observed, “we’re coming off 13 years of the most expansive growth I can remember. To a certain extent, what we’re going through is a natural reaction to the enormous spending cycle we’ve just emerged from”.

Enormous would be right. The cost of making a summer movie, according to Premiere magazine back in 1991, had jumped 20% in a year, doubling in five (proving he always had a knack for making friends, Bruce Willis apparently blamed the cost rises on unions in a Los Angeles Times interview. Willis pocketed around $14m for The Last Boy Scout).

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Boom And Bust

But it wasn’t just the spending. While box office receipts were slowing, so was the video boom that had helped fuel the decade of excess beforehand. Furthermore, non-US box office takings were tempered, and the American television networks were cutting costs.

Virtually all of the key, major revenue streams for a movie were being squeezed. Not only was the audience failing to show up in the same numbers at the cinema, that was being reflected elsewhere along the chain. Even the modest, mid-range movies were coming back flat. As Premiere wrote in that same 1991 issue, “you break even with the middle range, and make money with the hits”. But neither was really happening, and all the big studios were really offering at this stage was more of the same kind of product.

Interestingly, Premiere also asked the heads of the Hollywood studios what needed to change to turn things around. Most agreed that the movies needed to be better, and that 1991’s summer slate had hardly been vintage (not that quality had been a block to box office gold in the years before).

But it was Tom Pollock, then chairman of Universal Pictures, who had his crystal ball partly plugged in. Whilst his wish for lower ticket prices and cheaper films never came true, his argument that Hollywood needed fewer movies, better movies, and pay per view on demand, was pretty much on the button. As was Sony Pictures’ chief in 1991, Peter Guber. He wanted a new system of distribution, to negate the need to ship thousands of film cans around the world. Only now is he getting it.

Hook Vs The Addams Family

1991 would end with a similar lesson to the one taught during 1990, that sharply brought the issue into focus. Steven Spielberg’s expensive Hook, laden with stars, was regarded as a disappointment. It made money, but as Spielberg confessed to Mark Kermode on the Kermode & Mayo Radio Five film review show, it’s the film of his that he struggles now to find anything he likes in. TriStar, having invested heavily to make the film, was then obliged to spend humungous amounts to promote it. By the time Hook’s global take of $300m was finally accrued, most of that money was already accounted for.

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Meanwhile, around the same time, the much cheaper and virtually star-free The Addams Family would make nearly as much as Hook at the US box office, just delivering a lot more profit (and that’s factoring in that it took $100m less globally too). The Addams Family was arguably a much better film, better sold, and offered something different to the rest of the market. That was supposed to be Hook‘s job. As it would happen, Steven Spielberg would go on to be part of the solution.

What Happened Next

What’s interesting, then, is what Hollywood did next. It was too late to affect 1992’s output by the time 1991’s numbers had come on (and the 1992 box office chart demonstrated similar issues), and so 1993 is the next logical place to look. And there’s a sense that some lessons at least had been learned.

Looking at the summer output in particular, crucially the films were much better. Spielberg, for a start, led the way, dispensing with stars and focusing on story and impact for his groundbreaking (and ground-shuddering) Jurassic Park. He followed it at Christmas with Schindler’s List, arguably adding up to his best movie year ever.

Elsewhere, interestingly, star vehicles delivered, but generally off the back of good to excellent reviews. More to the point: the star movies were notably better. Robin Williams powered Mrs Doubtfire to success, Harrison Ford took on The Fugitive, Tom Cruise battled The Firm, Clint Eastwood headlined In The Line Of Fire and Tom Hanks joined Meg Ryan for Sleepless In Seattle. Each of them hit big. Each of them this time around was a studio film too.

Even the mid-range was improving and working. Sylvester Stallone blasted back with Cliffhanger, Tom Hanks gambled on Philadelphia, Bill Murray starred in Groundhog Day, and Julia Roberts found a hit with The Pelican Brief. Each turned in good business, and in two cases, acclaim. Groundhog Day, of course, remains a flat-out classic.

The notable underperformer? In an indication of how things had changed, that was the Arnold Schwarzenegger film, Last Action Hero. A pity, as it’s an interesting failure, but the film just scraped to $50m at the US box office, landing 26th on the annual chart. Just two years before, that would have been unthinkable. The Schwarzenegger phenomenon was nearing its end.

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But then others things had changed. Studios once gambled on stars for two reasons. Firstly, they increased your chances of a hit. Secondly, they gave you someone to blame if the film failed. After all, if you’ve hired a big star and the film bombed, what more could you have done? It’s not your fault that an expensive star attraction had fallen out of favour with their audience, is it? As the 90s progressed though, that wouldn’t wash, and things gradually changed. 1999, I’d argue, would ultimately prove pivotal, and we covered that here.

The Lessons Of ’91

But were the lessons really learned? Well, I’d argue not really. Hollywood got a shock and a half in 1991, but for the most part, it just carried on for some time with more of the same. If Arnie was available, people still stumped up (and to a degree, they still do). Budgets continued to rise (only the likes of Paramount and Disney really made a stand against that, both eventually falling in line with everyone else). Trends of movies evolved as they always did, with stars being replaced by special effects, and most blockbusters being usurped by sequels and comic book movies. But the mechanics weren’t radically altered.

Yet what saved Hollywood, and averted the problem, was DVD. The studios found themselves awash with the cash the format generated from the late 90s, and found themselves struggling again when that bubble burst towards the end of the 2000s. Then it moved onto worldwide box office. Now, as 2014’s numbers are pored over, the search is on for a new revenue stream, but few doubt the studios will find one. The irony’s not lost that 1991 suffered numbers that left people looking back at the similar problem 13 years earlier in 1978. Now, in 2014, we find ourselves looking back 23 years, to see what 1991’s box office had to teach. If the cycle continues, we’ll see you back here in 2047 for more of the same.

For that Premiere article we referred to earlier ended with a quote from the late, legendary film producer Don Simpson. He argued that “the rules never change. They only appear to change”.

And as Hollywood goes through the same cycle again, Simpson might just have a point there.

[This article was edited on 19th September 2014 to, er, correct my ropey maths – Simon]

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