The $200 million shelled out by Paramount Pictures and Twentieth Century Fox to make "Titanic" may have Hollywood bean counters shuddering, but industry insiders say more huge production budgets are on the way.
In 1998, there will be another spate of big-budget, special effects-driven "event" films including Walt Disney Co.'s "Armageddon," starring Bruce Willis; TriStar Pictures' "Godzilla," Paramount's "Star Trek IX" and "Species 2," and Fox's "The X-Files," starring David Duchovny and Gillian Anderson.
There also will be costly star vehicles, like Metro-Goldwyn-Mayer Inc.'s costume drama "Man in the Iron Mask" starring Leonardo DiCaprio, Universal Studios Inc.'s "Mercury Rising" with Bruce Willis and Warner Bros.' films "Lethal Weapon 4" with Mel Gibson and Danny Glover and "Eyes Wide Shut" with Nicole Kidman and Tom Cruise.
The reason for the extravagant spending is simple. When they hit, big movies make tons of money that often wipe out the losses for more modestly budgeted films.
Aided by the success of "The Lost World: Jurassic Park" and "Men in Black," Hollywood generated more than $6 billion in box office revenues domestically in 1997, eclipsing the previous year's ticket sales of $5.76 billion.
Sony was No. 1 with $1.25 billion; Disney's Buena Vista Pictures Distribution had $847 million.
One reason for Hollywood's thirst for blockbusters is the economic outlook for the movie industry it looks good and is getting better. The number of opportunities for filmmakers continues to expand with cable- and satellite-delivered movies expanding throughout the world. These ancillary markets will keep the cash flow coming back to Hollywood.
Movie distributors also are expanding the number of theaters here and abroad to meet the increasing demand for product. Indeed, many theater chains are being gobbled up by the merger-and-acquisition crowd.
They know that the profit margins in exhibiting films often exceed the profit margins on many of the films exhibited.
One uncertain area for the movie industry will be Asia, where Korea, Indonesia, Japan and Thailand have suffered severe financial blows. Such economic hits mean that local currencies will be worth a great deal less, in some cases down by 30 percent or more. That means, for example, that MGM/UA's new James Bond thriller "Tomorrow Never Dies" will have to sell up to 30 percent more tickets in Asia this year than its predecessor "GoldenEye" just to match that movie's intake two years ago.
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