Lights, camera, action: Relativity does that stuff pretty much the same way other studios do. What sets it apart is what happens before and after the cameras roll. It begins with a tool called a Monte Carlo, a number-crunching computer program that big businesses and scientific outfits use to make projections based on historical evidence. Kavanaugh, who has had a way with numbers since a young age, learned about Monte Carlos while studying at the University of California at Santa Barbara before he transferred to UCLA in 1996, at the age of 21, while also starting a hedge fund. (The fund collapsed after the tech bubble burst, and Kavanaugh’s clients eventually lured him into the film-production business.)
To some degree, big studios have always used this kind of analysis. Tom Cruise action movies put backsides in seats? Then let’s get Tom Cruise in a new Mission: Impossible movie and the money will follow. But Relativity’s approach is vastly more technical than that. The studio’s program accounts for thousands of variables — from a movie’s stars to its release date to the type of film it’ll be shot on — and compares each of those variables to nearly every film ever made with at least one of the same attributes. It takes four people just to operate the program.
It’s fascinating. But does it work? Kavanaugh hedges in his answer. “I call it our movie-rejection system,” Kavanaugh says, “not our movie-picking system. Just because the program says a movie is likely to make money doesn’t mean we’ll make that movie. But if it says that 100 percent of the time, this movie is going to lose money, we are not going to make that movie.”
While the data-intensive approach has drawn comparisons to the stat geeks in Moneyball, the closer comparison is in Relativity’s attitude. Relativity isn’t looking for the big sluggers who hit lots of home runs but also strike out much of the time. Instead, it wants the steady hitters who will get on base consistently. “Big studios are swinging for the fences, and they lose money on 85 percent of the movies they make,”
Kavanaugh says. “They don’t have a hedge against those losses, so they need the one or two franchise movies each year to make up for the money losers. We do have hedges. We want to make movies that people will love, but it is a financially based system. We never take the huge risks. We just go for our singles and doubles and try to make some money on every movie.”
Kavanaugh plucks a Dr. Seuss book off a coffee table and tries to explain Relativity’s other movie-rejection system — the one that’s maybe more important than the Monte Carlo. “If someone comes to us and says we should make Oh, the Places You’ll Go! into a movie, we’re not going to buy the rights until we get everyone in the room — finance, marketing, distribution — and ask everyone if it’ll work. If any one of them says no, we won’t make the movie.”