Niche Players

Hollywood has found profits in arthouse fare. But can it stand the controversy?

Charles Oliver from the January 1996 issue

Quick, name some of the most profitable films of 1995.

Did The Usual Suspects orThe Brothers McMullen come to mind? What about Belle de Jour? They should have. Granted, their combined rentals probably wouldn't pay Sylvester Stallone's salary for his next movie, but on a dollar-returned-per-dollar-spent basis, they were among the most successful films released last year. Indeed, 1995 was an incredibly good year for so-called niche movies.

And the summer was especially good. Those months are usually dominated by films aimed at teenagers and younger kids who are out of school. But companies who distribute specialized films took a chance that adults might want something different. They put their arthouse fare into a market saturated with action films and kiddie comedies and came up with winners.

This counterprogramming is emblematic of an ongoing trend in Hollywood. For years, the big studios have chased after the youth market that produces megahits such as Batman and Star Wars. Foreign markets, which reward the universal language of sex and violence, have also become quite important, going from one-quarter of Hollywood's total revenue 20 years ago to more than half today.

But the rise of these two markets meant that the films Hollywood made, as a group, became less cerebral. Independent filmmakers and distributors stepped into the breach. These distributors specialized in so-called arthouse pictures, and the dumber Hollywood got, the more successful offbeat fare became. Some of the biggest hits of recent years--Pulp Fiction, The Crying Game, Four Weddings and a Funeral- -were arthouse movies. And given the low, low budgets of these films, they were more profitable than a lot of films that had much higher grosses.

The big studios aren't run by fools, and they are nothing if not imitative. They saw the success niche films were having and have jumped on the bandwagon. In the past two years, all of the major studios except Paramount have started or purchased distributors devoted to arthouse fare. Fox has Searchlight and Sony has Sony Classics, for instance.

The trend started in earnest when Walt Disney Studios bought Miramax in 1993. Miramax was, at the time, the highest-profile of the independent film distributors, and it is almost single -handedly responsible for Hollywood's interest in niche films. You may not have heard of Miramax or the men who founded and run it, Harvey and Bob Weinstein, but you've certainly heard of the films it has distributed. To name just a few: The Crying Game, Priest, and The Cook, the Thief, His Wife and Her Lover.

If there was ever any doubt, the success of niche moviesand the studios' embrace of arthouse fareshould prove that the market can produce challenging art. That's good news for those who like intelligent, sometimes edgy films. But it isn't exactly clear that the big bureau cratic studios are the sorts of places that can nurture tiny films.

For years, Hollywood shunned art films. They didn't make much money. They didn't get a great deal of attention. Who needed them when you could make a big action film that could clean up at the box office?

But Hollywood movies, particularly action films, have become extremely expensive. Stars such as Slyvester Stallone and Jim Carrey get $20 million a film, plus a bit of the gross revenue. Computer animation and other special effects have become necessary to give films the look that audiences demand. It costs $40 million to make and market the average studio film these days. And the profit margins are declining on even those films that do make money. Take Waterworld and Last Action Hero: Both of those films grossed over $200 million worldwide, but neither probably broke even.

Enter Miramax. This company really didn't reinvent the arthouse film. Indeed, Miramax's founders rarely produced their own movies, usually buying them from independent filmmakers. But Miramax showed an uncanny feel for how the market had changed.

As Hollywood movies were becoming dumb and dumber, Americans were becoming more and more educated. More Americans today have college educations than in decades past, and thanks to cable and videotapes, a lot of people get to see most everything Hollywood puts out. That leaves many people hungry for something different. And those people have changed the arthouse market.

In the past, foreign-language movies dominated the arthouse. The English-language films that were shown tended to be edgier stuff that might turn people off: John Waters's movies and Andy Warhol's films come to mind.

Today, however, foreign-language films aren't very important. English-language films dominate. And while there is still a market for edgy films, there's a pretty sizable market for gentle pictures, too. The success of Gramercy's Four Weddings and a Funeral shows that.

In turn, the number of screens specializing in niche films has doubled in just the past five years. One can thank the multiplexing of America for this trend. Long derided as cookie-cutter theaters, multiplexes have in fact provided great opportunities for niche films. In areas where screens are numerous, it isn't enough to play the same studio blockbuster as everyone else. So why not take a chance on something different? Distributors who wanted to counterprogram couldn't have done so without exhibitors willing to take their product.