Chapter 559: The Collapse of DreamWorks

Throughout June, Duke kept busy with preparations for Iron Man. While working, he also kept a close eye on the box office performance of Batman Begins. After all, the stronger the foundation this first film built, the more explosive the sequel's release would be.

Following George Lucas's Star Wars Prequel 3: Revenge of the Sith, the North American film market in June welcomed Mr. & Mrs. Smith, starring Brad Pitt and Angelina Jolie, DreamWorks Animation Studio's major release Madagascar, and Spielberg's War of the Worlds. Combined with the lingering momentum of two blockbuster hits from May, market competition grew incredibly fierce.

The box office for Batman Begins inevitably began to slide, but the drop remained relatively steady. It pulled in $36.28 million throughout June. By the time July rolled around, the film's North American box office had reached $239.07 million, making it a foregone conclusion that it would break the $250 million mark.

In the overseas market, Batman Begins premiered in over ninety countries and regions, grossing $235.66 million. Its combined global box office reached $474.73 million; crossing the $500 million threshold was only a matter of time.

However, compared to Duke's other films, the overseas box office performance for Batman Begins was slightly lackluster. Typically, mainstream action, sci-fi, fantasy, and war films that dominated North America would see overseas numbers hitting 1.2 to 1.5 times their domestic gross, if not more.

The dark, realistic style of Batman Begins somewhat affected audience reception once it left the North American market.

In other words, the film was a bit too complex and lacked lighthearted entertainment value.

Yet these results were more than enough to satisfy Warner Brothers and Duke. After all, this was the reboot of a franchise that had previously suffered a catastrophic failure. Box office numbers like these proved that Batman had truly been reborn.

The upper management at Warner Brothers had even decided not to set a budget cap when Duke produced the second Batman film.

Of course, this was entirely relative. Duke wasn't James Cameron; while he exclusively directed massive blockbusters, he wasn't a bottomless money pit.

All of that was a matter for the future. The second Batman film would have to wait until after Iron Man hit theaters anyway.

One film a year was Duke's absolute limit. If he pushed the pace any faster, he wouldn't be able to guarantee the quality, and the rest of his team wouldn't be able to handle the strain.

Beyond the massive box office success, merchandise sales for Batman Begins were equally strong. After nearly two months in theaters, related products brought in over $130 million in North America. Overseas sales pulled in nearly $80 million. The comics performed exceptionally well; with Batman's resurrection on the big screen, various editions of the comics instantly became bestsellers. DC Comics saw its June revenue jump by nearly thirty percent month-over-month.

Then there was the Batmobile, with its wild, ultra-cool design. From early May until now, the various configurations had sold nearly 400 units combined, generating massive revenue for Lamborghini and Warner Brothers.

According to the contract, on top of his twenty percent cut of the box office, Duke also received an eight percent cut of all Batman merchandise revenue.

The revenue generated by a major blockbuster was truly astonishing.

In Hollywood, a studio could fund three to five massive productions simultaneously, and typically, just one massive hit was enough to recoup the investment and turn a profit. Even the films that lost money in the short term could eventually reach profitability through long-term ancillary markets, provided they weren't utterly terrible.

Of course, Duke's films didn't fall into that category. Every movie he directed—even the ones with the lowest box office numbers—could recoup its costs through the box office and secure a basic profit.

In July, a major event rocked Hollywood.

The Island, released over the Independence Day holiday, suffered a dual failure in both critical reception and box office earnings, much like Kingdom of Heaven and Flyboys back in May. The sci-fi epic, carrying a production budget of $126 million, only managed to scrape together a little over $12 million in its opening week. In its second weekend, earnings nosedived to $5 million. Its North American box office would inevitably fall short of $50 million, making massive losses a foregone conclusion.

As if serving as the straw that broke the camel's back, The Island laid bare the various crises plaguing the struggling DreamWorks. Even the personal relationships among David Geffen, Steven Spielberg, and Jeffrey Katzenberg had been pushed to the brink of a split.

Surrounded by a pack of wolves on the outside and fraught with internal crises, DreamWorks—the studio that had once aspired to become Hollywood's newest titan—had reached the turning point of its destiny.

By mid-July—earlier than Duke remembered—DreamWorks officially announced its bankruptcy and restructuring, shutting down its heavily hemorrhaging record and television divisions and ceasing to independently distribute its own films.

Giving up its distribution rights meant DreamWorks had completely bowed down to the Big Six Companies. Everyone in Hollywood knew that only a studio with a vast distribution network could truly stand at the pinnacle of the industry. DreamWorks might restructure, but the new entity would no longer be the DreamWorks originally envisioned by the Big Three.

Looking back, Duke could still vaguely recall the glorious scene of DreamWorks' founding in 1994.

When the three Jewish geniuses—David Geffen, Jeffrey Katzenberg, and Steven Spielberg—finally decided to establish a film studio independent of Hollywood on Robert Zemeckis's advice, they had perhaps never thought of failure.

The three men shared a lot of similarities: all were of Jewish descent, none had completed a full college education, all were overflowing with creativity, and all commanded massive personal resources.

At the time, many people dissatisfied with the major studios' dominance over Hollywood placed immense commercial expectations on the newborn DreamWorks. They hoped these three phenomenally talented figures, armed with vast resources, could forge a new landscape in Hollywood.

When DreamWorks was founded, Spielberg hosted a business dinner at his home. Duke still remembered how the number of admiring guests kept swelling until Spielberg's wife had to run to an outside store to buy extra linen tablecloths just to accommodate them.

The glory of that time stood in stark contrast to their current situation.

Why did DreamWorks fail? The Big Six Hollywood Companies were an inescapable factor. They, along with closely aligned figures like Duke, had never once relaxed their siege against DreamWorks.

Of course, putting aside the external environment and management factors, the failure of DreamWorks was also inextricably linked to the vastly different temperaments and divergent focuses of its three founders.

Simply put, what was it like when these three radically different personalities held a regular breakfast meeting?

Duke had heard Tom Hanks recount it more than once—David Geffen's words were usually very short and his tone very gentle. Katzenberg was Mr. "Substantive Issues," and he strictly capped meeting times at under twenty-two minutes. Spielberg, meanwhile, possessed the mind of a cartoonist; he could sketch anything on paper and then turn it into reality.

For instance, when discussing a matter with someone, David Geffen would say, "We think you're absolutely brilliant. It would be perfect if you could join us, but if you can't, we still think you're brilliant."

Katzenberg, on the other hand, would say, "You're brilliant. Now here are seventeen reasons why you should work with us."

Spielberg would say, "I loved your performance in that movie five years ago, the scene where you made the platypus dance on the table. The fact that you could do that means you can do anything."

That was how they ran their meetings, and they would definitely wrap it up within twenty-two minutes.

The ideological divide among the three men was massive. If DreamWorks had developed smoothly, these wouldn't have been issues. But in times of crisis, colliding philosophies brought conflict, and as DreamWorks sank deeper into the mire, these ideological and professional contradictions inevitably evolved into personal feuds.

As a result, the Big Three fractured, and DreamWorks' ability to cope with external crises was weakened.

From DreamWorks' fate, Duke also saw another kind of future for himself. If he hadn't chosen to continue partnering with Warner Brothers after his initial success, but instead ambitiously developed independently, where would he have ended up? He likely would have ended up in a state even worse than DreamWorks.

Failure is accompanied by either a desperate counterattack or an even more devastating collapse. DreamWorks simply lacked the power to fight back. After announcing bankruptcy and restructuring, the Big Three finally went their separate ways.

David Geffen completely bid farewell to the DreamWorks system and the Hollywood film and entertainment industry, taking his billions to focus entirely on his own philanthropic endeavors.

Jeffrey Katzenberg took the helm of DreamWorks Animation Studio. Leading the only profitable division in the entire DreamWorks system, he continued to compete against his nemesis Michael Eisner and his old rival Disney Animation.

Steven Spielberg became the new master of the spun-off DreamWorks Live-Action Film Studio. However, the director—who had never once attended a DreamWorks financial meeting—was not a qualified operator and was currently searching for a suitable distribution partner.

In a short span of time, what was once Hollywood's seventh-largest film studio had completely disintegrated, making the dominance of the Hollywood giants even more apparent.

While he felt a twinge of sorrow over the fate of DreamWorks and the Big Three, Duke didn't harbor much sympathy. After all, his emergence was one of the key reasons why DreamWorks had collapsed earlier than it once had. Someone who had personally struck blows against DreamWorks had neither the right nor the need to offer sympathy.

Naturally, Duke wouldn't feel regret. Given the chance to do it all over again, he still wouldn't stand on DreamWorks' side.

After reflecting on DreamWorks' fate, Duke resumed his own pre-production work. Following a series of large-scale auditions, the crew had already narrowed the candidates for the female lead down to a relatively small shortlist.