The studios are investing unprecedented sums in spite of stagnating cinema audiences, banking on a boost in revenues from sales of DVDs and computer games.

Of nearly $10 billion due to be sunk into production ventures, some $6 billion is slated to be spent on new films, with a further $3.5 billion or so on marketing.

Warner Brothers’ Batman Begins and Harry Potter and the Goblet of Fire, Sony’s xXx: State of the Union, Disney’s The Lion, the Witch and the Wardrobe and Universal’s King Kong are expected to cost at least $150 million each to produce and market.

Variety, the film industry magazine, estimates that Warner Bros, the film-making division of Time Warner, will spend the most among Hollywood’s biggest studios, with $1.5 billion allotted for production and marketing.

The first of its big productions was Constantine, a supernatural thriller, released last month in the US, to be followed by Batman in June, Charlie and the Chocolate Factory a month later, and Harry Potter in November.

The company, which refused to discuss its budget, has been emboldened by the strong performances of the previous three Potter films, which have generated more than $2.6 billion at the box office, plus billions more in DVD and computer game sales.

Steven Gaydos, Variety’s executive editor said: “The cost of making films is just getting higher and higher, and even though studios may be making fewer films, they are throwing more money at these tent pole productions.”

The largest single project is by Disney, which is spending about $300 million making back-to-back sequels of The Pirates of the Caribbean. The first will be released in the summer of 2006.

The next biggest spender is expected to be Sony, with eight films in its line-up, with a cost of about $100 million, including Hitch, released in the UK in February, as well as Fun with Dick and Jane and a big-screen version of the television series Bewitched.

The Motion Picture Association of America is expected to announce this month that average production and marketing budgets rose further last year, having broken through $100 million for the first time in 2003.

Although production expenses are expected to be flat or slightly lower, advertising and marketing costs are soaring. One studio executive said: “The box office outside of the US is now very important, and we need to promote our releases simultaneously in a larger number of markets — you can’t just re-hash the same stuff.”

Budgets have also been boosted by the falling dollar, which means that shooting films in the UK and Continental Europe has become more costly, as has promoting films.

The overall spend in Hollywood will be increased by aggressive tactics from Paramount, owned by Viacom, which has slumped to fifth among the big studios in recent years. Paramount has installed new management to turn the decline around, and its biggest film this year is likely to be a $130 million War of the Worlds co-production.

Jim Bottoms, an analyst with Understanding and Solutions, a research group, said: “Studios are facing slowing growth in box- office returns, and in response they are turning out fewer, but bigger, films — especially those that allow them to generate greater spin-off revenues from DVDs, games and merchandising.”

PLAYING THE NEW HOLLYWOOD GAME

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