Why Warner Brothers Was Right to Take a Risk on Wally Pfister and ‘Transcendence’

Usually when a studio like Warner Brothers (a subsidiary of Time Warner (NYSE: TWX  ) ) invests $100 million in a movie, executives expect a lot in return. With this weekend's Transcendence, that is certainly the assumption, but even if the movie under-delivers (which many project it will), this was still a smart risk for its studio to take as the long-term benefits may outdo the short-run returns.

Trailblazers

(Credit: Warner Brothers)

The film industry only works when directors are allowed to take risks. Many of history's most ground-breaking movies have been born out of risk and transcended current cinema as a result. Citizen Kane and Psycho are among the most famous, but then you have more recent films like The Matrix and Inception, which haven't been around as long, but still have made a unique mark.

The directors behind those films may be minted "A-listers" now, but that wasn't always the case. It took time for studios to trust their visions. Clearly after his work on Inception and The Dark Knight trilogy, nobody will ever doubt Christopher Nolan's' "vision" again. The Oscar nominee is a genius filmmaker with an eye for detail and imagination rarely seen in today's Hollywood.

Unlike his contemporaries, Nolan doesn't use what's called a "second unit," a separate group of shooters used to help support hard-to-shoot scenes. Instead it is just him and Wally Pfister, his longtime cinematographer. After winning an Academy Award for Inception, Pfister knew he had reached the level he wanted to as a director of photography and decided he wanted a new challenge.

Pfister

(Wally Pfister & Christopher Nolan-Credit: Warner Brothers)

Pfister was a news cameraman who eventually landed a job on Nolan's first film, Memento, a mind-bending thriller that still packs a punch. After the film, he teamed with Nolan on many more projects and undoubtedly began to learn a few tricks along the way. It was a wonderful partnership that produced a number of amazing movies.

So why switch things up now? In a fascinating interview with The Daily Beast, Pfister explained that in making his directorial debut with Transcendence, it was just his way of pushing himself to the next level.

Every 10 years I needed to make a radical change in what I was doing. I can't really say why. But I will say that I was never afraid to take risks.

It was also Warner Brothers' way of pushing its slate to the next level as the idea of having Pfister in the fold meant it would have a budding relationship with what could turn out to be a rising star. Given that the studio's relationship with Nolan was not as solid as before, signing his frequent collaborator could also be a way around that somewhat sticky situation. If audiences loved Nolan, theoretically they should also love Pfister as the two have the same passion for filmmaking.

Expectations

That brings us to Transcendence, which stars Johnny Depp as a scientist studying Artificial Intelligence who inadvertently becomes a part of his research when he's gravely injured and his mind is uploaded to a computer.

On paper the thriller has a lot of interesting moving pieces including an intriguing plot, an A-list cast headlined by Depp and Morgan Freeman, and a director full of promise attached. Yes it cost Warner Brothers $100 million to produce, but the payoff could potentially be huge. Now the key word is "potentially" as estimates had Transcendence earning $30 million during its domestic opening weekend, but that has since tapered off to between $20 million and $25 million.

It could be a combination of people not fully understanding the plot of the film or moviegoers not knowing about the Nolan/Pfister connection, but either way the critical pounding the movie took this week didn't helping matters. Still it pays to remember Memento (while better received) wasn't a big financial hit either, so you can't judge a box office career on one movie.

China

The twist that people keep forgetting in this case is that even if Transcendence disappoints domestically, it could be a financial boon overseas. So far the international crowd has bailed out a number of films this year alone and given Depp has a big global fan base the movie was coming with a nice safety net.

Yet that's not all -- Transcendence has another benefit many aren't aware of; it was not just being given a day and date release in China, it was being given a 3D release there as well.

Movie piracy takes a big bite into overseas profits especially if a film starts long after it bows here in the States. With bootlegging running rampant (especially in China) the studios needed a way to combat it and 3D is looking like the answer. While American audiences have grown tired of the third dimension, international audiences can't get enough of it. By releasing Transcendence in 3D (and IMAX) more people will come to the theaters.

(Credit: Warner Brothers)

Sony already tried this approach earlier this year with its RoboCop reboot and saw good results, which is encouraging to the industry as a whole. The trend is also beneficial to Warner Brothers as Beijing-based DMG Entertainment was the one footing the bill for the costly post-conversion process. DMG's no stranger to capitalizing on the 3D appeal in China -- it helped bring last summer's hit Iron Man 3 to the country before it unspooled in the US, which led to a massive haul.

If this trend continues it could open a whole new door financially for studios and possibly move international markets into first position for film openings. With all that in mind, it should be a little clearer why this wasn't as big of a risk to Warner Brothers as first thought. In addition to creating a relationship with someone who has the potential to be a major player down the line, the studio also gets to experiment with what could be a global game changer.

In an industry worth billions, all of a sudden $100 million doesn't seem like a bad gamble.

Are you ready to profit from this $14.4 trillion revolution?
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer Amazon.com in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2920964, ~/Articles/ArticleHandler.aspx, 9/1/2014 5:20:29 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 17,098.45 18.88 0.00%
S&P 500 2,003.37 6.63 0.00%
NASD 4,580.27 0.00 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/29/2014 4:00 PM
TWX $77.03 Up +0.08 +0.00%
Time Warner CAPS Rating: ***

Advertisement