The Greatest Quote on Hollywood...
"Hollywood only pays out money that they expect to get back."
- My Remaining-Nameless Hollywood Friend
And he's right. Hollywood is a business town and always has been.
Essentially what happened is that in the 1960s, the studios blew practically all their holdings on big Biblical epics that didn't fare very well in the political climate. They hired a lot of young kid directors like Marty Scorsese, Michael Cimino, Stevie Spielberg and George Lucas (to name a few) because a lot of them could make a feature length movie for a shorter budget (thanks to years of making their own). Their ideas were the movies that broke the bank throughout the 1970s. By the 1980s, the studios were back on their feet with a little help from a new invention: the BLOCKBUSTER. ANd thanks to a little screw-up by a film called Heaven's Gate, the studios had an excuse to take away creative control from the very people who helped them.
Another factor is that the old studio system had artistic businessmen like Louis B. Mayer and his contemporaries; guys who could be creative and still balance the books. But they were old and out of touch by the 1960s and dead by the 1980s. And as you know, the yuppie era of the 1980s gave a HUGE boost to corporate whoring and the studios became subsidiaries of communications conglomerates.
Today, the CEOs of enormous conglomerates send off their underlings to be the CEOs of the studios, which are now little more than subsidiaries they acquired in mergers. These lackeys choose their own lackeys called "executies" to make all the financial decisions. Unfortunately, the job security for these guys is the same as it is in the financial world: one decision could make you a god or it can lose millions and your job with it. So every time a project comes up, no matter HOW ill-equipped these guys are to creativley deal with the project, they feel the need to interfere and put their own .02 in so that it LOOKS like they are single-handedly responsible for a film's success, even if it destroys any meritorious traits of teh story. So executives wield a great deal of power, but their jobs are hanging by a thread.
These people are trained BUISNESSMEN...not artists. They need for a film script to be broken down into formulas so they can understand them, much like financial reports. Remember Shakespeare in Love when they list the reasons for how "Romeo and Ethel the Pirate's Daughter" will work?: "fighting, debauchery...a dog"...well, that's exactly how they do it these days. They look at the box-office of the most successful movies and convert all the themes and characters into aggregates and variables in financial equations; the result is they basically rearrange these elements in different ways to come up with the same solution...thus, the same damn movies over and over again.
Hollywood only spends what they intend to get back. That's why Armageddon is given a budget of $100 million and Monster's Ball is given a budget of $4 million (or so). Because the first will make $200 million at the box-office and the latter will make $8-9 million.
And the rest I blame on audiences.