In a trend that will do nothing to discourage perceptions of Hollywood as a risk-averse sausage factory, a computer program is taking the guess work out of investment.
24 Nov 2009 - 12:00 AM  UPDATED 6 Nov 2012 - 4:33 PM

The concept of an all-powerful computer pulling the strings has long been attractive to Hollywood, from the rogue super computer of 1970's Colossus: The Forbin Project and WarGames' simulation obsessed WOPR in 1983, to the Terminator franchise's self-aware Skynet and more recently Eagle Eye's malevolent manipulator ARIIA. They're machines gone wild: logical, ruthless and prone to viewing humanity as a problem to be erased.

Now, however, Hollywood is obsessed with a new machine, one that stays firmly off the screen. Relativity Media, a financing house backed by a New York-based hedge fund, has become a mainstay of film production in recent years, using a raft of computers, and their associated programmers, to run a complex risk assessment algorithm that evaluates every element of a project and provide a percentage chance that it will deliver a return on their investment.

The algorithm – which really needs a catchy name based on an acronym – was originally designed to evaluate financial instruments (nice work spotting those mortgage backed securities), but it now uses 65,000 rows of a Excel spreadsheet to consider everything from an actor's box-office draw in France (apparently Natalie Portman is the go) to whether it would be better to have an R or PG rating or more fight scenes.

Ryan Kavanaugh, the 34-year-old head of Relativity, has been quick to stress that it's a tool, one designed primarily to weed out probably failures. He calls it a “rejection tool, not an acceptance tool.” Profiled recently by Esquire, Kavanaugh explained his philosophy: “Volatility is a bad thing in any business. We're just not going to take big risks. That means we'll probably never hit a home run, because the model makes it hard for us to swing for the fences.”

Kavanaugh is intent on making modest hits with the odd surprise (such as they experienced with 300), while avoiding a business destroying flop. He probably wouldn't have financed The Matrix (despite the related subject matter), because no spreadsheet could have foreseen how it became a phenomenon, but then again he would have avoided Waterworld. Given that Relativity will have a hand in up to 35 Hollywood releases next year, his decisions now matter, especially as the global financial crisis has dried up many other sources for backing.

The program also can't foresee what will happen after it delivers its report: there was no input, for example, to establish that Evan Almighty would have massive budget overruns that resulted in a production cost of approximately $200 million (the computer had liked Morgan Freeman as God and Steve Carell as the lead). It also said yes to Paul Blart: Mall Cop, which was successful, but not exactly fulfilling.

Quality supposedly has no place in this equation, but the movies have a way of seducing even the toughest outsider. Relativity backed Jim Sheridan's Brothers, a forthcoming domestic drama about two siblings and the wife caught between them that stars Tobey Maguire, Natalie Portman (big tick from France) and Jake Gyllenhaal. Kavanaugh admits he fell in love with the script and worked hard to assemble the right inputs for his computer. Somewhere The Player's Griffin Mill is chuckling to himself.