THE CRAP SHOOT

The Crap Shoot (continued)
There are several ways to address this risk. One way is to reduce costs so that the project will still be profitable with even a small audience. Sometimes this means a small production (like CLERKS); other times, it means using directing tricks to avoid costs, such as having characters talk with their backs to the screen or using stock shots (like RECORD OF LODOSS WAR). Unfortunately, this technique has a tendency to affect the quality of the film, which is a production risk that can reduce the potential audience size. Here the trick is to only reduce the audience to a level that can still support the film.
Another way is to make the project appeal to as wide an audience as possible so that, statistically, everyone might want to buy the product. Sometimes this method is affected by addressing the production risks and making a killer product. Other times, the production company will simply try to please a lot of people at once which, in my opinion, also creates a production risk since a watered down product is not as appealing as a solid artistic vision. However, as most people can tell by examining the movies that come out of Hollywood, the big studio executives must believe that losing the solid artistic vision is an acceptable risk (see also below). Another way to address audience risk, and the last I will mention, is to make your product for a customer who already exists either by making a sequel or by adapting a product from another media. Sometimes this makes for a sub-standard product (the Nadia movie: SECRET OF FUZZY), and other times it doesn't seem to matter. However, predictable audiences do reassure financers and reduce sales risks, even at the possible expense of increasing production risks (more below).
Each type of project will be susceptible to each of the different types of risks. However, specific risks are often more challenging to address for specific types of projects. Some risks carry more weight than others to different people, and thus carry more weight in the companies that those people control. Let us examine each type of product, its risks, and its rewards.

Quick Chart
Reward Rank:	Risk Rank:	Type:
1	2	100% Original Production
3	3	Adaptation
4	4	Sequel
2	1	Derivatives

100% Original projects mean 100% of the money goes back to the production company so, as you might imagine, such a high percentage of reward involves quite a bit of risk. Legal issues are of the least concern to a 100% Original project, but that is the only good news, since a 100% original project will not have any established track record to help lower sales risks, and no primed audience ready and waiting for the product. A part of the sales risk and the audience risk can be addressed by spending a lot of money on advertising and by selecting a product with a high audience potential. This explains why Hollywood spends so much money on marketing films made for the "mainstream." Production risks are pretty much the same for all projects, but on a 100% original project, this is one of the few risks that can be addressed without buckets 'o money, since attention can be paid to quality and detail in the product. However, the trade off is usually buckets 'o sweat. Examples of artistically and commercially successful 100% original products: EVANGELION, TENCHI MUYO (all right, TENCHI is derivative, but derivative of so many different shows at once that it is truly original). Examples of not so successful 100% original product: DRAGON CENTURY, ISHTAR (the live action movie).
Adaptations rely upon the established work from another genre, so the reward is split between the production company and, through royalties, to the original creators. While legal risks must be addressed for adaptations, this is usually accomplished fairly easily with the use of contracts. The advantage for adaptations is that they come with a built-in audience for the product which can greatly reduce the sales and audience risks. Production risks would remain the same even though the product is based upon an already successful product, since there is always a risk in the adaptation process from one media to another, or delays in getting approval from the original rights holders. Examples of adapted successes: RANMA 1/2, AKIRA, SAKURA TAISEN. Examples of poorly adapted projects: MERMAID FOREST, APPLESEED.
Sequels have some of the lowest overall risk around since the budget can be calculated based upon the known audience from the previous incarnation. This allows for the audience risk to be all but eliminated, especially if one makes allowances for audience attrition because it is a sequel. Legally, the risks are low since contracts can be made based upon the previous version, and sales risks are fairly low because the product is a known commodity with an established track record. The highest risk, and the reason for the reduced reward is from the production risks. It is hard to make the same thing twice and make it look like a new product, and if the previous product was successful, the talent will frequently demand a raise increasing the overall costs. Finally, the sequel frequently underperforms when compared to the original, so revenues are even more depressed. Examples of successful sequels: GUNDAM 0080, TENCHI MUYO IN LOVE. Examples of disappointing sequels: MACROSS II, BUBBLEGUM CRASH.
Derivatives are not as risky as 100% original products because they are based upon other projects and hence have a road map to follow. However, the sales and audience risk is not greatly reduced from an original project since the production company has to solicit the product without acknowledging its source (usually). In fact, it is possible that the audience will never figure out that the product is the same, or, even worse, recognize the derivative nature of the product and become offended. The production risk remains similar to that of an original production since all of the recognizable aspects of the original product must be changed so that they are recognizable to the audience and yet, not recognizable in a court of law. Legal risks are the highest for derivative projects, and cannot really be eliminated (otherwise it would become an adaptation). However, by its very nature the derivative project avoids royalties, and, if it is not prosecuted, can enjoy significant profit margins, thus making it potentially as lucrative as the 100% original project. Still, historically, the derivative project changes so many successful aspects of the original and lacks many talents present in original productions, which in general will reduce the revenue potential. Examples of successful derivatives: BUBBLEGUM CRISIS (even the music is a delightful rip off!), THE LION KING (yeah, the Disney one). Examples of poorly executed derivatives: DOG SOLDIER (they could have chosen more inspiring material than RAMBO III), WATERWORLD (the live action snooze fest).
Artistically, I am inclined to appreciate the effort of a 100% original project the most, however I can enjoy a good product even if it is a complete rip off. Yet, the artistic perspective has yet to do more than exercise a weak influence on the audience, otherwise there would never have been a FRIDAY THE 13TH PART 8, or an action hero named Jean Claude Van Damme. The final test of the success of a project will be its financial success: will it pay the bills and salaries?
After all, the film is a sum of many different parts, and in today's capitalistic world, the parts to be summed must also include the sales, marketing, licensing, and management aspects of the project or company. Disney is an excellent example. Even though they have made the same basic film plot 5 times in the last 10 years (Girl meets Prince, they fall in love, beat up some evil villain with goofy side kicks), their sales force addresses every sales risk, their production team addresses every technical production risk (if not half of the artistic risks), and the management only greenlights films that will address the audience risk. As I have said at least a couple of times so far, as long as people continue to buy the same thing, Disney will be happy to make it. While I consider this to be a shame artistically, the finance guy in me is green with envy, and the business side marvels at the efficiency of the machine.
My only hope is that if I ever get my chance to green light my own project, I will remember to keep all my different parts in balance and to review every single risk so that I can roll that lucky seven. After all, if you keep winning, you get to keep rolling the dice.