With that kind of opportunistic thinking, Feltheimer and vice chairman Michael Burns have built nine-year-old Lions Gate into the Southwest Airlines of the movie industry: a disciplined, no-frills, profitable independent studio. Last year the 18 films the company released grossed $344 million at the nation's box office, and 15 of them made a profit, a phenomenal success rate in Hollywood.
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Lions Gate keeps its bets small, producing or acquiring inexpensive niche pictures. It markets them cheaply but aggressively and relies on one of the industry's largest film and TV libraries to provide enough cash to ride out the ups and downs.
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Lions Gate moves fast and inexpensively. It makes and markets most of its movies for under $20 million, compared with the $100 million industry average. Lions Gate will usually acquire only finished art films, for example, because of the higher risk of execution. And even then it won't shell out much more than a couple million. "What we're really good at is figuring out how to position ourselves to make money most of the time, and if we lose money, not lose a lot," Burns says.
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The studio has proved adept at making hits out of projects others don't want to touch. Take "Hostel," for example, a horror picture in which European bad guys attack touring American college boys with power tools. Sony had Lions Gate distribute it because it was so violent. (It later grossed almost $50 million.)
And then there's "Saw," released in 2004, which begins with two people chained to a rusty pipe with only a handsaw to attempt escape. (The saw is too weak to break their steel shackles but just about right for flesh and bone.) Little money was spent on television or newspaper ads for the movie.
Instead, Lions Gate created an Internet site that put fans into scenes from Saw, with the question "How fucked up is that?" It flooded comic-book and horror conventions with posters bearing images of severed limbs. It even organized an actual blood drive, advertised with a poster of a sexy nurse (actually a Lions Gate marketing executive) who was drenched in blood.
Perhaps the topper was an amputee beauty pageant on Howard Stern's TV show. "My only rule is, don't get arrested," says Tim Palen, Lions Gate's co-president of theatrical marketing. All told, "Saw" cost $1 million to produce and $18 million to market. It made $55 million at the box office and spawned a lucrative franchise. (DVD sales have already topped $70 million.) "Saw II," which opened exactly one year after the first film and cost $6 million to make, trounced "The Legend of Zorro" (which cost an estimated $75 million) at the box office.
"Saw II" brought in $87 million in theaters and another $90 million in DVD sales. "There is no one else in Hollywood who could have made and marketed these films better," says Saw producer Mark Burg, taking a break from the set of Saw III, which will be released on Halloween. "There are even Saw conventions now."
