The Movie Studio Trying to Survive on Risk Taking Alone

Annapurna Pictures—the company behind If Beale Street Could Talk and Sorry to Bother You—is being scrutinized for the reported unprofitability of its films. But its quandary reflects broader problems in Hollywood.

Megan Ellison toting a Golden Globe in 2014 for Annapurna's film American Hustle (Matt Sayles / Invision / AP)

At this year’s Academy Awards, only two studios saw multiple feature films take home Oscars: Universal, which made Green Book and First Man, and Megan Ellison’s Annapurna Pictures, which won a trophy apiece for If Beale Street Could Talk and Vice. The two wins weren’t the most dazzling stat of the night, but they were a nice achievement for Annapurna, which had a rocky year punctuated by stories about its financial instability. After an initial report in October that the company was being forced into a “more responsible” direction by Ellison’s father, the tech billionaire Larry Ellison, another story ran this month in Variety, alleging that almost every 2018 film released by Annapurna was a box-office failure.

Since Megan Ellison launched it, in 2011, Annapurna has been a curious beast, starting out as a production company before evolving into a sort of mini-studio that distributes movies itself. Unlike indie studios such as A24 or IFC, Annapurna has the resources to lavish sizable budgets on ambitious films made by big-name directors. Rumors of its financial hardships suggest that kind of risk taking might soon become a thing of the past for the company—a sad prospect, considering the great work it has produced of late. Annapurna’s reported troubles are just further evidence that Hollywood has become an industry in which the best way to stay afloat is by embracing either crowd-pleasing blockbusters (as big studios have done) or sheer quantity (à la Netflix and its competitors). So far, Ellison appears committed to a different path.

Annapurna’s 2018 slate included Jacques Audiard’s The Sisters Brothers (budgeted at $38 million, it grossed $3.1 million domestically); If Beale Street Could Talk (which Variety reported as a write-down of $8 million to $10 million); Vice (which was nominated for Best Picture but will reportedly cost the company at least $15 million); and Karyn Kusama’s cop drama, Destroyer (a reported $7 million loss). Though all of these films received positive reviews, none managed to turn a profit at the box office, according to Variety, with the exception of Boots Riley’s Sorry to Bother You, which was made for a smaller budget and became a surprise summer hit.

Annapurna does have some safer projects on the horizon, thanks to a joint venture with MGM called United Artists Releasing, which will launch the upcoming James Bond movie in 2020. But Ellison’s dream of running a studio that independently distributes the films it produces will be tougher to realize than making money off an established franchise. Annapurna’s unconventional approach was evident with the first project it released by itself: Kathryn Bigelow’s Detroit, in 2017. A searing drama about police brutality, it was the kind of film that would usually get an awards-centric theatrical run in the fall, starting in major cities and slowly expanding around the country as word of mouth built. Instead, Annapurna took an interesting gamble and gave the movie a wide release in August. Detroit made only $7.1 million in its opening weekend, and finished eighth in the domestic box office.

The Variety piece both acknowledges Annapurna’s artistic clout and is dismissive of it; the lead image for the story is an illustration of Ellison lighting money on fire while surrounded by melting Oscar trophies. But Annapurna is taking risks in order to fill a gap in the industry, giving esteemed directors the resources to realize more daring creative visions—without the usual commercial pressures. The filmmakers who’ve worked with the studio include Paul Thomas Anderson, Richard Linklater, Spike Jonze, Wong Kar-Wai, and David O. Russell. When If Beale Street Could Talk won the Film Independent Spirit Award for Best Feature this year, the director Barry Jenkins shouted out Ellison personally in his speech. “Financiers do not put their money behind black authors,” he said. “Thank you for your money, my dear. James Baldwin thanks you.” The Variety piece prompted a fiery personal response from Ellison (who tweeted a GIF of Beyoncé being showered in cash) as well as statements of support for Ellison from various artists.

Hollywood’s other major innovators are tech giants, chiefly Netflix and Amazon, though Apple is making moves toward film distribution as well. These massive companies, which make much of their money from subscriptions, don’t release data about their streaming viewership to the public—which helps keep the profit margins for their films from being scrutinized too closely. Netflix doesn’t share the box-office totals for its films at all, even when they play in theaters (the company rents out the screens and pockets the money from ticket sales). Major studios such as Disney, Warner Bros., Universal, and Sony still have to live and die by opening weekends and global stock prices—which has pushed them toward big-budget, family-friendly films that can guarantee billion-dollar grosses, and away from the more fringe fare that Annapurna champions.

Several other midsize indie studios, such as Relativity and Open Road (which won a Best Picture Oscar for Spotlight), have ended up collapsing over the years, while STX Entertainment, which releases about eight films a year at price points similar to Annapurna, tends to favor more lurid genre projects. The Variety piece lumps Annapurna in with these mini-studios as another venture destined to fail. Ellison is trying to break that cycle. In a business as expensive as film distribution, a couple of flops in a row can be enough to doom a company, but for now, Annapurna remains.