Costs are becoming so prohibitive that companies like Disney are scaling back the number of projects that are greenlighted. And take a look at this from Cinematical. An analyst believes that Viacom's (NYSE: VIA) Paramount may have to merge with another studio, all because the media economics of today are killing studios. Not only that, but how many times have you heard Wall Street call on General Electric (NYSE: GE) to disassociate itself from NBC Universal?

Here's the thing: major movie studios need to adopt this model of $10 million pictures. This line of thinking shouldn't be reserved for a startup. Yes, they still are required to make tentpole productions that have much higher budgets (although the budgets for tentpoles should come down, as well), but if a company like DF Indie Studios has the tenacity to take on Hollywood and try to beat it by going small, shouldn't major studios, at least from a financial viewpoint, be able to go small as well? They should theoretically have an easier time of it. They could make, if they wanted, thirty films that cost $10 million a piece. Even if a big studio like Sony (NYSE: SNE) or News Corp. (NYSE: NWS) couldn't release all those films to theaters, they could easily fill their various media platforms with the product. Of course, the argument against such thinking is that a large corporation usually doesn't possess the kind of synergistic will to go small. Put another way, the egos currently entrenched in Hollywood studio systems would resist the order to self-impose the species of discipline necessary to disengage themselves from the world of high-powered agents and their overly-compensated clients. The big-star model is a drug that is far more addictive than any invented so far.

Yet, long-term shareholder value of media companies may depend on such a model being adopted by the big guns. If you look at the charts of a Disney or a Time Warner, ones that cover long periods of time, you'll note that they aren't the most attractive ones out there. I've been thinking about this a lot lately, and I'm coming to the conclusion that, even though many media companies should sport higher prices, they don't because the market just doesn't want to fool with the risk of content economics. Interestingly enough, the idea that equity should be used to pay for films is not only intriguing, but it's something I've been thinking about lately in terms of major studios. Why can't they simply float some stock to pay for a production instead of entering various co-production deals and foreign-rights sales? They'd keep more of the spoils that way. Media companies could use their cash flows to buy back the stock later.

I should say that I'm not so sure DF Indie Studios will have the discipline to see this model through. At what point does the model change if the company suddenly finds itself with a hit or two? When do we hear the inevitable "well, folks, maybe we'll make movies that cost a little more, say $20 million, because we're flush with cash?" And Boorstin does mention another wild card: will the new studio be able to release most of its films in theaters? It's an important point. We'll have to wait and see. At the very least, this model provides a requisite thought experiment for consideration within the minds of all the media-conglomerate executives in sunny California...

Disclosure: I own Disney, GE; positions can change without notice.