Film-making's a gamble the casinos wouldn't touch

The $400 million gamble of Avatar was the equivalent of betting an entire company on red, something no casino would ever allow.

Not too long ago, the president of a large movie studio said that the movie and television business was a like a dice game in a casino. You make a bet. You play the (razor thin) odds. And then you roll the dice. He said these words in the magazine section of the Sunday New York Times, so you know it must be true. But the guy who ran the holding company that owned the studio that the president oversaw didn't like sitting in his pyjamas on a Sunday morning, opening his newspaper, and discovering that his underling was under the impression that the company he ran was engaged in something so risky, so unscientific, so irrational as a game of dice. And he especially didn't like it after making the case to a lot of institutional investors that his company was different, that they had a systematic and foolproof approach to hit-making, that they were a disciplined and serious bunch.

So the president of the holding company called the president of the studio on the phone - so the story goes; this was before everyone had e-mail - and reprimanded him. This is not a dice game, he is supposed to have said. This is not gambling. I do not run a casino. The president lasted about another year at the studio. And the guy who ran the holding company that owned that studio didn't last much longer, either, after a brutal merger fight. What he's remembered for, at least by me, is for insisting that his company was not a casino.

Which made me wonder: what was he being so defensive about? Casinos make a lot of money. Casinos, in fact, have a pretty perfect business. People go into a big building, they place their money down on a felt surface, then they perform some kind of weird, superstitious ritual - they spin something or roll something or pull something or look at something - and then they usually watch their money being taken away, after which they put some more of their money down on a felt surface.

I don't know about you, but to me, this sounds like a pretty good business model. And, unlike Hollywood, casinos actually do have a system. If - to pull a name out of the air - Bill Gates, say, bumped his head or got some kind of brain fever or got drunk one day and decided, "What the heck, I've got sixty-something billion dollars, let me live a little," and he sauntered into the super-glamorous, super-cool Wynn Resort in Las Vegas - in, like, a pair of fashionable jeans and a colourful T-shirt (I'm just setting the scene here) and tried to put down, I don't know, $5 billion on red (I mean, why not, right? He won't miss it.) and even if he somehow could carry that many chips from the cashier, they still wouldn't let him make that bet.

Some big guy in a bad suit and an earpiece would forcibly guide the fragile, brittle-boned Mr Gates into a quiet room where he'd be given another drink - not that he'd need another one; the guy almost put $5 billion down on red! - and he'd be told that in this and every casino, if you want to wager $5 billion - and by the way, they do want you to wager $5 billion - you must do it in smaller, mathematically precise increments. Because the game the casino is playing is a statistically perfect blend of odds multiplied by volume. The more bets you make, the better it is for them.

Hollywood is different. In Hollywood, the people who run the networks and studios - and own the holding companies that run the networks and studios - have decided that the key to success is making fewer projects, but spending a lot more money on each one. So, for instance, we've been treated to the high-wire act that was the $400 million gamble of Avatar, the equivalent of betting an entire company on red, something no casino would ever allow.

Although, let's be honest: it worked. Avatar is a billion-dollar movie. The gamble paid off. And all over town, studios are gearing up for more big-budget special-effects extravaganzas, because, hey, if Avatar worked, then so will the next one. It's all a matter of figuring out a system - And as any casino operator will tell you, the best way to get a customer to lose a lot of money is to allow them to convince themselves that they have a systematic and foolproof way to win.

So, when you get right down to it, that studio president, a few years ago, in the Sunday magazine of the New York Times, was completely wrong, and his cranky, doomed boss was right. Hollywood is not a casino. It's not a dice game. It's a lot more irrational. A lot riskier. A game of dice you can hedge. Rob Long is a writer and producer in Hollywood