The Big Picture

by Ben Fritz

  Then, in May 2014, Hope met Roy Price at a conference sponsored by Wired magazine, and the two stayed in touch through the release of the producer’s book, Hope for Film, on Labor Day weekend. In some ways, the book, in which Hope talks about his love for obscure independent filmmakers like Jim Jarmusch, Susan Seidelman, and Raúl Ruiz and how he got into the business because he “wanted to make the equivalent of European art films from an American perspective,” seemed diametrically opposed to the ethos of Amazon, which sells everything to everybody.

  But in the book, Hope also talked about the need for a “complete systems reboot” to fix an indie film business he thought was fundamentally broken, because marketing costs were too high and profit opportunities were too narrow to allow for experimentation and creative innovation. “Instead of thinking of ourselves as media makers who want to employ new technologies to distribute and market our work, maybe we should align ourselves with technologists (or at least technology collaborators) who want to use the existing media to make our work flourish,” he wrote.

  Hope had been talking and blogging about the need for big changes to his business for years, but felt like he was just yelling into the void. Then, on the Tuesday after Labor Day, Price called him. The Amazon executive had read Hope for Film over the holiday weekend and said its ethos aligned perfectly with the movie studio he wanted to launch. The two soon met for dinner in Los Angeles, and by December 14, Price called to offer him a job as head of production at Amazon’s new movie studio.

  Despite the company’s longstanding obsession with data, there would be no audience testing of ideas and no sorting through click-through rates to figure out which director to work with next. In the most old-fashioned setup possible, Hope was being hired as a tastemaker. Price and his boss, Amazon’s CEO, Jeff Bezos, wanted a veteran indie movie producer to decide who they should work with and what they should make.

  It was a once-in-a-lifetime opportunity and Hope knew it. With its $300 billion-plus market capitalization and its history of investing in businesses for the long term, Amazon had the resources and proven fortitude to stick with a new indie studio for the several years it would take to build. And with its massive database of hundreds of millions of customers’ interests and tastes, it could market movies with precision, saving money and reducing financial risk. It essentially solved, on day one, the problems Hope had faced at the San Francisco Film Society and Fandor.

  And as unbelievable as it seemed, coming from a lawyer working for a dot-com, Price said the exact words Hope needed to hear: that he wanted to make “bold and visionary” movies and that he wanted risky, unusual films on Amazon. The company’s message to filmmakers, Price told Hope, should be “unless you’re afraid your film may not work, we should not be the ones making it.”

  As he assembled his team, Hope seemed to be rebuilding an art-house studio from the days when major studios believed in them. To run marketing and distribution he hired Bob Berney, who founded Newmarket, the distributor of Memento and The Passion of the Christ, before running the art-house label Picturehouse for HBO and New Line—and then, after it was shut down, struggling like so many other indie executives to find a stable home.

  “We look for something artful. We don’t say first and foremost, ‘Would this be good business?’” Hope declared of his intentions at Amazon.

  Those were words sure to make shareholders shudder. Then again, many had in the past questioned whether it really made sense for the dot-com giant to spend millions to start selling jewelry, providing web-hosting services to businesses, or manufacturing e-readers. Each and every time, Jeff Bezos had shown a willingness to ignore the risk-averse on Wall Street, who cared about short-term returns. In most cases, his instincts had proved correct, as evidenced by the company’s dominance of so many categories. If anyone had to be taken seriously while pursuing an effort to outdo Hollywood in the riskiest and most rarely profitable category of movies, it was Bezos.

  Amazon forced Hope to make only two accommodations for his new venture. One was to accept a boss with a more traditional business background. Jason Ropell, Amazon’s head of global movies, had previously helped license the movies from other studios that the company offered to its Prime subscribers and had launched Prime Video in Europe and Japan.

  The other was that although Amazon was willing to debut movies in theaters, it wouldn’t keep them there long. With the company’s first release, Spike Lee’s political satire about gun violence, Chi-Raq, Price didn’t insist it be available simultaneously on the big screen and online, as Netflix was already doing with its films. But Lee’s movie was in theaters only thirty days, in December 2015, before it became available to buy or rent from Amazon and other digital retailers. Thirty days after that, Amazon Prime subscribers could stream it on TV, a tablet, or a phone for free.

  Only 305 theaters played Chi-Raq, since most major chains refuse to play movies that aren’t available exclusively on the big screen for ninety days, and it grossed a modest $2.7 million. Still, Amazon’s strategy of advantaging digital viewership at the expense of cinemas made obvious sense since it was, after all, a digital company. Why make movies if they weren’t going to disrupt the traditional system in favor of the Internet?

  But just a few months after Chi-Raq, Amazon executives had given up on the strategy of rushing movies from theaters to the Internet. As Hope and his team moved to buy the hottest movies, like Manchester by the Sea, and work with directors like Woody Allen, they found they had to promise a long playtime in theaters. The filmmakers they wanted to work with demanded it.

  And when the company started looking at what people watched most on Amazon Prime, it discovered that a theatrical run first made a big difference. I spoke to Bob Berney about this, in the sleek corporate offices of Amazon Studios in Santa Monica, a beach city adjacent to Los Angeles. Balding and clad in a T-shirt from the famous Alamo Drafthouse Cinema in Austin, Texas, he told me, “Our customers wanted the awareness of the theatrical release to guide them on what to watch.”

  Hope, in fact, believed that making audiences wait to see his films online was a smart way to prove the films had value. If something was good, he figured, people should have to work a little to get it. “There’s no convenience to the theatrical experience,” he observed. “So it’s a first measure of whether you’ve succeeded in reaching a passionate audience.”

  This was the exact opposite of the logic employed by Netflix, where Sarandos figured that convenience was the key to get more people to watch movies. But even Ropell, who seemed less likely than the indie veterans Hope and Berney to be swayed by the romantic notions of filmmakers, was convinced Amazon shouldn’t follow its primary competitor’s lead and try to change the way theaters do business and customers find movies. “We’re trying to deliver high-quality films to the platform and going to war [with movie theaters] may not result in what we want to do,” the bearded, buff Ropell said, choosing his words carefully. “This is a very traditional business grafted onto a new one.”

  That everyone in the corporate food chain, up to Price and even Bezos, was convinced of the need to work with theaters on their terms and not put their movies on Amazon Prime until five months after they debuted on the big screen proved the company was all-in on art-house movies. It was, in fact, the core of Amazon’s strategy. Rather than serve everyone everything they might want, as Netflix was doing with its mix of Adam Sandler comedies, Will Smith action flicks, and some indies, Amazon wanted to build a distinct identity for its Prime Video service.

  By making a particular kind of movie, everyone at Amazon figured, they would build an identity for their service, one that made it noticeably different from what almost everyone else in Hollywood was doing. Sure, many people wouldn’t be interested in the weird, depressing, or simply outré works that it was releasing, but at least those who were into it would love it. Amazon executives distinctly didn’t want a studio that was as bland as the company’s selection of USB cables.

  “We don
’t want something that 80 percent of the audiences eventually gets around to watching,” said Hope. “We want the thing that 20 percent of the audience is so passionate about, they’ll break up with you if you don’t feel the same way. We want to inspire an urgent need to see.”

  In addition, the people who go to art-house movies tend to be upscale, well-educated people who live in cities and who like to shop online. If the ultimate goal of Amazon’s movie business was to attract, retain, and engage Prime subscribers, it only made sense to draw people who would buy the most computers, books, and Kindles online.

  “They are often very good retail customers,” Price said sheepishly. “So that’s not a bad thing.”

  Flops? No Big Deal.

  Amazon’s first slate of movies was by and large a collection of the latest works by established indie veterans whom Hope or Berney had known for decades. In addition to Lee and Allen and Manchester‘s director Lonergan, there was Whit Stillman, whose costume drama Love & Friendship was a modest hit for Amazon, and Nicolas Winding Refn, whose horror drama The Neon Demon was a bomb.

  Refn’s experience on The Neon Demon was instructive as to how surprisingly simple Amazon’s approach to picking movies is. A Dane known for stylized work that bends genres, he had one prior hit in the United States: the action movie Drive, starring Ryan Gosling, from 2011. His other films were beloved by cineastes but barely seen in the United States, even in art-house theaters.

  Refn earns his living by directing commercials, including a widely viewed ad for Lincoln that starred Matthew McConaughey. But his passion is movies, ones that he writes and directs and over which he has total creative control. Cobbling together money from European distributors, and even kicking in $500,000 himself, he raised $5.5 million in 2015 to make The Neon Demon, about a young model, played by Elle Fanning, who enters the metaphorically and literally nightmarish world of Los Angeles fashion.

  Berney had worked at FilmDistrict, the company that released Drive, and soon after starting at Amazon, he called Refn and asked to see his latest work, which was still being edited. Berney and Hope flew to Denmark, saw a cut of The Neon Demon, and within two weeks signed a deal to be the movie’s U.S. distributor.

  To Refn, a new media company with a massive streaming platform that was equally committed to a theatrical release and run by veterans of the indie scene whom he knew and trusted was almost unbelievable luck. “They’re like the kings in the seventeenth century—they have become the true patrons,” Refn said over lunch at a trendy L.A. organic restaurant, wearing sunglasses and a shirt unbuttoned halfway down his chest.

  At a basic level, he went with Amazon simply because with such a poor box-office track record, he needed a patron willing to take a big risk. But he was also savvy enough to know that much of the value in his movies lay in giving fans a way to pore over them dozens of times in search of hidden meanings. So digital streaming was critical, as it is for most indie movies whose directors are realistic about the superhero-dominated state of the multiplexes. “I wanted to get into the Amazon business because they were the first company to present an answer in this new ecosystem,” Refn said. “I wanted to jump into the future before the future was created.”

  It was a good bet. Critics were divided on The Neon Demon, but had a lot to say about it, and people who saw it loved it—some even sent Refn pictures of their Neon Demon–inspired tattoos. But there weren’t nearly enough of them. The Neon Demon was one of 2016’s biggest bombs at the box office, grossing just $1.3 million in its nationwide release. For any normal Hollywood distributor, be it Fox Searchlight or the Weinstein Company, that would have been a disaster, with a loss in the tens of millions of dollars once marketing costs were included.

  Amazon certainly wasn’t pleased with the outcome, but it could easily absorb the blow. Price had explicitly stated, in fact, that he didn’t care about the losses or profits on any particular film. Amazon was building a slate of movies that would give its streaming service an identity and would engage passionate fans. On that count, at least, The Neon Demon could still be a win. “I think that it’s going to be a success on Prime,” said Berney. “But if we were a small company, we wouldn’t be able to ride it out for a year.”

  Hope, perhaps even more boldly, was willing to declare the movie a success soon after its miserable theatrical run because of what it told audiences about Amazon Studios. “We don’t measure success by an individual film,” he said. “Audiences are built by a consistent supply of quality goods in an environment they trust. That ultimately alters people’s behavior.”

  In the long run, Ropell admitted, he wanted hits just like any movie company. But because Amazon had ambitions much broader than each picture’s bottom line, failure was measured very differently. “The only thing that would be unacceptable,” he said, “would be if we were making films that weren’t high quality.”

  “Awful” is a Matter of Perspective

  January 2017 was a notable turning point for the movie business. With Manchester by the Sea, a dot-com company had earned a best picture Academy Award nomination for the first time. Two months later, it won for best actor and best screenplay.

  Amazon threw some of the most extravagant, star-studded parties around the Oscars and Golden Globes that year, and Bezos became a regular presence on the Hollywood cocktail circuit, sipping champagne in a tuxedo while hobnobbing with moguls and stars. It was all a sign that Silicon Valley was encroaching on Hollywood’s turf and gaining a more dominant place in popular culture, as it had already done in so many other areas of our lives, from communication to journalism to cars.

  But in a few years, it may be remembered best as the moment when Amazon proved it could do what Hollywood no longer could: provide a sustainable, supportive home for interesting, original indie movies.

  Hollywood studios, which made movies in order to make money from movies, simply couldn’t justify using their parent companies’ funds to let indie darling James Gray re-create a doomed voyage up the Amazon River and Gillian Robespierre portray a fractured family in 1990s New York. As Bob Iger had said about Miramax: “That’s an awful business. Awful.”

  But Amazon didn’t make movies primarily to make money from movies. It used movies to draw attention, to increase engagement, and to dominate people’s time and digital behavior so they would ultimately buy more stuff from the company.

  The solution Ted Hope had long wanted, one that would keep feeding intelligent moviegoers and the culture at large with truly artful cinema, had finally revealed itself. All he needed was a company that, at its core, couldn’t care less about movies.

  13

  Apt Pupil

  China’s Shifting Relationship with Hollywood

  As Hollywood sought new sources of money in recent years to help fund the risky, original movies it wouldn’t make itself, it didn’t just look north to Silicon Valley. It also turned east, to China.

  It was a big change, since for many years Hollywood had been using China simply as a new market in which to make more money from its biggest films. But by the mid-2010s, proposals from Chinese companies eager to put their own money into Hollywood arrived with increasing regularity on studio doorsteps. In one such proposal, in 2014, a Chinese conglomerate announced itself eager to invest in Sony Pictures’ Amazing Spider-Man 2, promising to help increase box office in the world’s second-largest movie market in exchange for a small piece of the movie’s profits and the chance to have its name listed as a producer.

  “We focus much more on the strategic value of our cooperation in Spiderman, and hope this will work out for both parties,” wrote Yuan Zhou, the head of motion pictures for China’s powerful Shanghai Media Group, in broken English. “We do believe SMG could be Sony’s close friend and strategic partner in China market, and this relationship can lead to much greater success with the fast growth and opening up of our market.”

  Sony executives were intrigued but certainly didn’t feel they needed such a deal to make their next Spi
dey blockbuster a hit in China. Deciding the financial terms weren’t in Sony’s favor, the business affairs chief, Andrew Gumpert, made a succinct recommendation to Michael Lynton and Amy Pascal concerning the proposal: “NO THANKS!”

  The Amazing Spider-Man 2 went on to gross $94 million in China, its best foreign performance by a factor of more than two. A visual-effects-heavy 3D sequel, featuring a well-known superhero, was exactly what Chinese moviegoers loved, and Sony’s bet that it didn’t need a partner to succeed there proved correct.

  Two years later, though, things had changed. After years of white-hot growth, the Chinese market was cooling. Hollywood tentpoles, while still popular, no longer owned the top of the box-office charts. A local family movie, Monster Hunt, had hit number one at the box office in 2015, and a romantic comedy fantasy, The Mermaid, was topping the charts in 2016, with more than twice as much box office as the number two film, Disney’s Zootopia.

  Sony, with its shortage of “event” films, was feeling the pain particularly intensely. It was number six among major studios at the 2015 box office in China, even worse than its fifth-place showing in the United States. Its biggest production of 2016, the female-led reboot of Ghostbusters, wasn’t even released in China, due either to censors’ concerns about its supernatural themes or bureaucrats’ belief that the franchise was too old to be recognizable to audiences there (the Chinese government almost never gave reasons for its decisions on whether and when to import Hollywood films).