District 9 and Return on Investment

District 9 by Neill Blomkamp is arguably one of the most exciting new films to come along in some time. A film that feels fresh, original and unique - traits that are all too often lacking in mainstream cinema. The Los Angeles Times described it as a “thoughtful sci-fi standout in a season characterized by big, dumb studio tent-pole movies”

Now certainly with a budget of $30 million District 9 can hardly be called ‘low-budget’ but in comparison to Hollywood standards for what they problematically term a  ‘High Concept’ sci-fi special-fx film, its extraordinarily efficient.

What is most significant is that whilst the film cost $30m to make, it has thus far made back $163m - more than 5 times it’s budget (and that’s before it hit’s DVD where it’s reasonable to assume it’s going to do very well). 5x return on investment is good by any standards and it’s this ‘return’ that is the only thing major Hollywood studios are really concerned with.

So let us then compare that to the hideous abomination that Michael bay inflicted on the world with Transformers 2: Revenge of the fallen. Cost $200m to make and has thus far taken in about $800m. Sounds impressive - but that’s only 4x it’s investment in return. The key factor is not that Transformers 2 made more money but that the proportional ‘return’ is comparable. Importantly however the Risk is not. Massive budget Hollywood monstrosities demand monstrous risk of failure. A $30m film demands not nearly as much risk.

Now, one might argue that an un-tested director making a ‘low’ budget alien film, in South Africa, with a cast of unknowns was a risk and that Transformers 2 was no risk at all because it was a known commodity franchise, regardless of budget.

Yet that doesnt really hold up. take for example Speed Racer; it cost $120m to make and made back just $44m. huge flop, lost heaps of money and yet investors could have been forgiven for thinking Speed Racer was risk-free.  Speed Racer is a hugely popular brand, with the right demographic, had comic-book hipness and was being made by the Matrix guys…!

Likewise Speed2, big budget sequel to hugely popular film with same star lead as original - Cost $110m and returned just $150m. Didnt loose money but  $110m is a lot to risk up front to make less than 50% return.

Batman and Robin should have been a slam-dunk with that cast and the uber Batman Brand but it cost $125m and made back just $140m.

Meet Joe Black starred 2 huge starts in Pitt and Hopkins, should have been a safe bet but it cost $90m and made back just $180m. Doubled its money but not even close to the percentage return of District 9.

What does this tell us?

Well perhaps a few things….

First is that first-rate visual effects and ‘high-concept’ filmmaking is not the sole domain of huge-budget filmmaking.  You simply dont need mega-bucks to do mega effects. The $30m District 9 is one example, the inspiring Moon by Duncan Jones - made for just $5m and before it’s even gone into main release and DVD it’s made back more than $7m – is another.

[Watch the trailer for Moon here]

The second is that low to mid-range budget films can and SHOULD be arguing their value NOT only on artistic integrity but on pure economics.  It strikes me that for too long indie filmmakers have  defined their value purely in self-indulgent artistic parameters instead of exerting their viability as products of strong economic credentials.

Low-budget filmmakers should Not be knocking on investors doors with pleas for artistic patronage and good-will but rather banging down their doors with a powerful argument for moderate risk, high return investment. Blockbuster Hollywood studio films are simply not good investment – massive outlay with massive risk. Mid and low budget films are a much better investment. They can take advantage of multi-platform delivery and should be able to compete head on financially on a dollar-for-dollar basis.

What Directors have to do to prove this and make it a reality is get Pragmatically Smart. Not self indulgent with artistic whimsy but proactively savvy in making films that are dynamic, viable, adventurous but also with a strong eye for the audience and being, heaven forbid, popular.

If there’s one director who intrinsically understands this it’s Peter Jackson. Lord Of The Rings may have been mega budget cinema (though it was proportionally far less than it would have cost had it been made in the US by and American) but all the films Jackson had made to that point where low-budget but profitable and viable films that always gave good return to investors. In this regard I was quite taken with Peter Jackson’s funny but astute comments to Niell Blomkamp in regard to District 9:

“I told him that was what he could do that Transformers and GI Joe couldn’t. We could be grungy and dirty and rude and violent. That’s how he could compete with movies like that. Once you have 100 million dollars, you naturally get more conservative and you think about the demographic and such. We were able to have total freedom.”

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Below is the original short film that was the basis for District 9