Why is it that most movies seem to be created in cooperation with some unknown studio?

Question

I noticed that most movies appear to be created by a cooperation of at least one very well known studio (like Pixar, Paramount, Dreamworks, etc.) on the one hand and a company you've never heard of on the other hand (example: Jack Reacher has Paramount and Skydance Productions, the latter one I've never heard of). This gives the impression that most of these smaller companies are only ever working on a single movie (which sounds like a bad business model to me).

Why is that? Did I just not watch enough movies to know all of these? And why do the larger studios need the smaller ones anyway? I find it hard to imagine the big ones need their resources. How do such partnerships form? (Not a single question but I believe there is more or less is a single answer.)

Answer 1

Using the example for Jack Reacher in your question, Skydance Productions is a production company under Paramount, otherwise known as a subsidiary of Paramount.

From Wikipedia, the production company...:

may be directly responsible for fundraising for the production or may accomplish this through a parent company, partner, or private investor. It handles budgeting, scheduling, scripting, the supply with talent and resources, the organization of staff, the production itself, post-production, distribution, and marketing.1 Production companies are often either owned or under contract with a media conglomerate, film studio, entertainment company, or Motion Picture Company, who act as the production company's partner or parent company. This has become known as the "studio system". They can also be mainstream independent (see Lucasfilms) or completely independent (see Lionsgate). In the case of TV, a TV production company would serve under a television network. Production companies can work together in co-productions.

Another example of a production company would be Blue Sky Studios, which produced such films as the Ice Age series, Rio, and Horton Hears A Who. They've been owned by 20th Century Fox since 1997.

A production studio that's a subsidiary of a larger studio may specialize in producing certain types of films. In the case of Blue Sky Studios, they've exclusively produced CG animated films for 20th Century Fox. However, Fox also has Fox Searchlight, which specializes in independent and foreign/foreign language films (they're the US distributor for 12 Years A Slave). Others are more independent, like Twisted Pictures, best known for the Saw franchise. They've released films with the help of both Lionsgate and Universal.

So basically, the other studios you see listed are likely owned by the larger studio, but have their own managers and staff (usually freelancers) who handle the production of certain movies. The larger studio usually acts as the distributor. Think of it as a way for the larger entity to hand tasks off to others within the same company, and the production company is basically a "department" of the main company. The CEO of a company doesn't handle absolutely everything from the various departments, and instead hires/appoints others to handle those tasks, all reporting back to him in some way.

Here's a nifty list of production studios, listed as subsidiary, non-subsidiary, or defunct.

Long story short: welcome to the crazy world of the studio system.

Answer 2

Fox Searchlight, Disney Touchstone, other brands, exist to differentiate a film they might release from the standard, bigger brother studio release product. Searchlight releases small, character driven films. Touchstone used to do more adult material than audiences anticipated from Disney. That's why studios, like recording labels, have different labels/brands to suit different products.

For production companies, it often starts with taxes. If your fee for producing "Horror Junk 7" is $1M USD, you have, at your agent's and accountant's direction, formed a corporate company to take your revenue and pay your taxes, as a corporation. You, the owner of Systemic Latency Productions, get paid a salary and bonuses for your work for the corporation you own. The rest, shielded from personal income taxes, transfers out, after all debts are paid, at the end of the fiscal year, to your retirement fund. The corporation makes zero profit every year. All its revenue goes towards paying your salary and tax-free retirement contributions. So you pay no corporate taxes until you take out monies you've put away in the retirement fund.

It's the way the U.S. Tax system is structured. So almost everyone has a company that gets paid the producing and other fees. Letterman had World Wide Pants, Inc. if you remember. Leno had Big Dog Productions with a sketch of his large chin. The list is long, the reasons are longer.

Answer 3

Yes, a lot of tiny production companies are related to bigger ones... but a lot of them are owned/controlled by the director of the film or other important people associated with it.

Some directors use the same company for every film... Bad Robot, for example, is J. J. Abrams' production company.

Some directors use different production companies for each film. Terrence Malick likes tree names. Tree of Life was done under the production company "Cottonwood Pictures" while his other projects are each done by different companies: Weightless - "Buckeye Pictures" and Knight of Cups* - "Dogwood Films".

Answer 4

I'd like to address something that's been mentioned in passing in some other answers, but I feel plays a bigger role than is currently being indicated.

The well-known studios such as Paramount and Universal have extremely large, diverse portfolios that vary in content as well as quality.

As with any well-structured company, they distribute tasks to appropriate teams. The question, then, is why name and market those teams as separate companies? The answer is rather straightforward.

If you have ten sub-studios release films this year, you might have one or two notable successes and one or two massive failures. The sub-studios with the notable successes will become increasingly marketable (and can charge more for future work) while enhancing the brand of the parent studio. The failures, on the other hand, can be washed away by dissolving the unsuccessful sub-studio responsible (if only just by changing its name). Conversely, clients can rest assured knowing which sub-studio will work on their films, rather than rolling the dice with whichever team is available at the moment (as would be the case if projects were all ordered directly from the parent studio).

Answer 5

I think what your on about is the difference between who creates the movie and who distributes the movie.

The big names that you know are the ones that create the movie, but they generally hire smaller companies or smaller subsidiaries of themselves to distribute the movie and the distributors of the movie can differ from country to country.

For example most Disney films are made by Disney and yet in the UK the distribution of Disney films is generally done by Buena Vista (which is a division of Disney).

Also in some cases when filming is done across multiple countries film companies from that specific country tend to get involved in filming - last night I saw Our Kind Of Traitor (great film - highly recommend), and that was done by both Film4 and StudioCanal - StudioCanal (part of European TV station Canal) are a French film producer and Film4 are a British film producer (part of British TV station Channel 4). Bits of the film were done in England, France and Switzerland. I presume the England bits were primarily filmed by Film4 and the French/Swiss bits were done by StudioCanal and then the two studios worked together to create the film.