LOS ANGELES—They still sit on the northern edge of the Universal Pictures lot—symbols of an era when producers were the kings of Hollywood.
The Tuscan-style villa covered in ivy, with balconies and a fountain in an interior courtyard, was built to fit the tastes of Robert Zemeckis, the writer and producer of "Back to the Future" and "Forrest Gump." A huge, white modernist structure housed Ivan Reitman, who made "Ghostbusters" and "Dave." A blue Cape Cod house with Adirondack chairs in the front yard provided a cozy office for Michael Lobell, the producer of "Striptease" and "Honeymoon in Vegas."
All three buildings were constructed in the 1990s, a time when the film business was flush with cash, to entice their first occupants into production deals. Studios regularly gave producers millions of dollars a year as part of so-called "on the lot" agreements. In exchange, they got the right of first refusal on any project the producer generated.
Life is different for producers in the new, tightfisted Hollywood. The number of on-the-lot deals has fallen 52% since 2000, according to an annual survey by Hollywood trade paper Variety. Average spending on each producer deal has also dropped sharply, say studio executives. And houses aren't being built for anyone.
Funding in Hollywood's flush days came in large part from booming DVD sales, which peaked in 2004. Consumers were so willing to pick up a disc on their way out of Wal-MartWMT -0.74% or Target that even box-office flops often ended up profitable. Now, thanks to cheap options such as NetflixNFLX -0.49% and Redbox, home-entertainment revenue at studios is off about 40%, executives say, and it is easy to lose money on a movie.
Studios have responded in two ways. All have cut their slates of new pictures. The six major studios released 120 movies last year, compared with 204 in 2006. They also have sought to slash spending—and nobody has felt the brunt as much as producers.
"It's not something you'd want your son to be these days," says Mr. Lobell.
Producer is a nebulous title that can encompass everything from coming up with the idea for a movie to writing the check that made it possible. Producers who work with major studios are typically soup-to-nuts types who oversee every aspect of a production and ensure it finishes on time, on budget and with the original creative vision intact. Though they aren't studio employees, they are, essentially, the CEOs of individual films, and they are the ones to receive the trophy for best picture at the Academy Awards.
Before brand-name franchises like "Transformers" and "Spider-Man" became the locus of power in the movie business, megaproducers such as Jerry Bruckheimer ("Pirates of the Caribbean," "Bad Boys"), Joel Silver ("Lethal Weapon," "Sherlock Holmes") and Brian Grazer ("The Da Vinci Code," "A Beautiful Mind") were among the mightiest figures in Hollywood. That is because they had strong relationships with A-list talent and exclusive access to the most desirable original scripts and books—the main source of hit movies before the ascendancies of superheroes and toys.
"When I was a young executive, producers could kick and scream and muscle their way through a conflict to get what they want," says Nina Jacobson, producer of "The Hunger Games" films and a former Walt Disney Co. DIS -0.31% executive. "They can't boss around studio executives anymore,"
On top of hefty fees for producing individual films, the most powerful producers often received more than $5 million a year in "overhead" for staff salaries and other expenses from studios, which sometimes spent an additional $10 million or more annually to buy and rewrite screenplays on the megaproducers' behalf.
"In the 1980s and '90s, Hollywood seemed to operate like a welfare state, and rich producer deals were a key part of it," says Bruce Berman, chairman of Village Roadshow Pictures and a former president of production at Warner Bros.
Producer Joel Silver, left, with actor Bruce Willis in 1990. WireImage/Getty Images
To attract its first big-name producer in 1992, New Line Cinema, then a scrappy independent studio, gave David Permut ("Face/Off," "Captain Ron") equity along with a seven-figure producing deal.
"It was very sexy at that time," says Mr. Permut, who was lured from a first-look deal at Metro-Goldwyn-Mayer Inc. and a "second look" at Disney, which paid him for the next chance at any pitch MGM rejected.
Mr. Permut declines to say how much he made when Turner Communications acquired New Line in 1993 for about $500 million, or when Time Warner Inc.TWX -0.85% bought Turner in 1995. New Line is now part of Time Warner's Warner Bros. studio.
Mr. Silver, long the most powerful producer on the Warner Bros. lot, received lush treatment. As part of his multimillion-dollar deal, the studio paid for a personal publicist, driver and a projectionist who ran his home theater. It also paid for the renovation of a second bungalow added to the producer's office compound around 2000 that included a waterfall outside of Mr. Silver's office.
Like other Warner producers, Mr. Silver enjoyed occasional access to the studio's corporate jet and to its vacation villas in Acapulco and Aspen.
Mr. Silver's deal with Warner ended in 2012. A new agreement with Comcast Corp.'sCMCSA 0.00% Universal doesn't cover any professional expenses and only gives him access to the studio's distribution operation for movies he finances with independent investors.
Producer Jerry Bruckheimer in his office in 1998.Corbis
Mr. Bruckheimer's deal with Disney recently ended after 20 years because, he says, the studio didn't have enough movies for him to make anymore. His lavish deal included a "discretionary fund" that allowed the producer to use Disney's money to buy scripts without the studio's approval.
A new deal with Viacom Inc. VIAB -2.19%'s Paramount Pictures is significantly less generous, says a person with knowledge of its terms.
Mr. Grazer's Imagine Entertainment, which he runs with director Ron Howard, is still with Universal but has seen its deal cut substantially, according to a person familiar with the terms. He no longer employs a "cultural attaché," an assistant whose job was to introduce him to fascinating new people and ideas, as he did for much of the 2000s. An Imagine executive says the position wasn't cut for financial reasons.
Previously, Imagine's deal with Universal gave it "puts," or the ability to compel the studio to finance and release a movie it made under a certain budget.
Producer Brian Grazer, top center, with 'Ransom' director Ron Howard and actor Mel Gibson in 1996.Buena Vista Pictures/Everett Collection
Now, like many producers, Mr. Grazer must increasingly look outside of Hollywood to finance his movies. For a coming biopic of the soccer star Pelé, Mr. Grazer traveled to the Cannes International Film Festival to personally raise funds from investors.
"Everybody has to find ways to augment funding," he says.
Cuts don't necessarily mean a producer is on the outs with his or her studio. Michael De Luca says his annual overhead was reduced by Sony6758.TO -0.73% to $660,000, from $1 million several years ago, just before a run of hits that included "The Social Network," "Moneyball" and "Captain Phillips." Last month he was named a president of production for Sony's Columbia label.
Maintaining any overhead funds, producers say, is better than a dismal and increasingly common alternative.
"A lot of these deals now are just 'housekeeping deals,' " said a senior executive at one major studio. "That means they get an office, a secretary and a Xerox."
Producing fees, typically between $1 million and $3 million per film, have stayed roughly even. But producers' share of the spoils when a movie succeeds—historically a larger source of wealth—has been hit much harder.
Particularly rare now are "gross points," a once-common practice that gave producers and other talent a percentage of every box-office dollar, regardless of whether the movie broke even.
"There was a time not so long ago when as a studio you could have a movie lose money, and some of the money you lost was in the pockets of the person who produced it," says Ms. Jacobson, the "Hunger Games" producer.
At one studio, there are signs producers are becoming irrelevant.
The only credited producer on most of Marvel Studios' superhero films is the Disney unit's president, Kevin Feige.
Executives are taking a more active producing role at the company's Walt Disney Studios division as well. There is no independent producer attached to a live-action "Jungle Book" remake scheduled for release in 2015, nor to a new "The Sword in the Stone" currently in development.
"Most of these movies will have a producer on them at some point, but we sometimes decide to get the ball rolling ourselves," says Sean Bailey, Disney's president of production and himself a former producer.
No other studio appears poised to follow Disney's lead, in part because none release as few movies and few have as powerful a brand or as strong a trove of in-house movie franchises.
"Producers are as essential today as they have ever been," says Adam Goodman, the president of Paramount's film group.
Few producers are signing new studio deals, however, and the small number who are fit a different profile. Many are screenwriters who also produce, essentially overseeing both the creative and business sides of a film simultaneously. Successful ones include J.J. Abrams ("Star Trek") and Chris Morgan ("Fast & Furious").
"The writer-producer has become one of the most lucrative roles in town," says Mr. Goodman.
Similar deals have long been common in television, where writers produce and oversee programs. But as franchise films increasingly resemble TV series, with annual installments that need a guiding hand to maintain stability, the approach has come to make sense on the big screen, too.
"Each of these franchises is a billion-dollar company, and we're the main architects," says writer-producer Simon Kinberg, whose multimillion-dollar deal at 21st Century Fox Inc.FOX -1.13% 's Twentieth Century Fox has him writing and producing the studio's "X-Men" and "Fantastic Four" superhero movies.
The increasing importance of franchises poses a challenge for traditional producers. Previously, studios assigned them to the biggest movies they wanted to make, as was the case for Mr. Bruckheimer with "Pirates of the Caribbean." Now, they must stake their claim at the earliest stages to a film with sequel potential.
"One of the differences these days for all producers is you're looking for what could potentially be the next branded property before anyone else finds it," says Lorenzo di Bonaventura, who helped sell "Transformers" to Paramount and is now producing his fourth movie in the multibillion-dollar series.
In the past, it also was common for powerful producers to have several films in the works at the same time and assign deputies to handle the day-to-day management of each. But being an absentee landlord isn't an option anymore.
"I used to marvel at how many producers felt they didn't have to show up," says Mr. De Luca. "Now you have to really make yourself essential."