Universal Pictures chief Ron Meyer caused a splash late last week, when he admitted that "we do make a lot of shitty movies," and listed Land of the Lost, The Wolfman and Cowboys & Aliens among the studio's clunkers.

But the really fascinating thing about Meyer's presentation at the Savannah Film Festival was the insight he gave into why so many movies are crap: there's a kind of downward spiral where the more movies flop, the more risk-averse the studios become, and the more they make movies that are probably going to flop.

Meyer's comments came just before Universal had a bad weekend — Universal's Eddie Murphy comedy Tower Heist crashed and burned at the box office, being beaten by Puss in Boots. Meyer had been trying to set up a controversial deal to release Tower Heist on Video on Demand just a couple weeks after it hit theaters, and now he must be wishing he'd succeeded.

Now Tower Heist looks likely to join a long line of recent flops for Universal, including Dream House, The Change-Up, The Thing, Your Highness, Scott Pilgrim, Repo Men, The Wolfman, Cirque du Freak: The Vampire's Assistant, and many others. If it wasn't for the Fast & Furious and Fockers franchises plus Despicable Me, Universal would have had a pretty dismal last few years.

Movie Line's account of Meyer's remarks in Savannah is pretty fascinating, and well worth reading in its entirety. Super briefly, here are the highlights:

1) He goes into the problems with The Wolfman and Cowboys & Aliens, and says Land of the Lost was "just crap."

2) He says 3-D only makes sense for a small number of movies, like the otherwise-unappealing Journey to the Center of the Earth 3-D.

3) Says that the projects he recently killed, The Dark Tower and At the Mountains of Madness, were just too risky.

4) Says almost nobody can afford to do what James Cameron did with Avatar, and he's proud of A Beautiful Mind — but he wouldn't do it again because he'd rather make money than make critically acclaimed award bait.

What's interesting is the innate contradiction there — Meyer says, on the one hand, that he hates the fact that his studio puts out shitty movies like Land of the Lost and The Wolfman, or mediocre movies like Cowboys & Aliens. On the other hand, he says that aiming too high, with potentially brilliant projects like Dark Tower, Mountains of Madness, or something visually ambitious like Avatar, is too risky. And he wouldn't do Beautiful Mind again.

So Meyer wants movies that are better than Cowboys and Aliens, but not as good as A Beautiful Mind. Not mediocre, just not great. (What's in between mediocre and great? I think the answer to that question would be worth a billion dollars in Hollywood.)

Let's just state the obvious — Meyer wouldn't be apologizing for Cowboys and Aliens and Land of the Lost if they had made money. If Land of the Lost had been a runaway hit, he'd be talking about how Land of the Lost 2 was going to be a lot of fun.

It also seems likely that Universal's recent box office misfortunes have made the studio more risk-averse. Meyer says that Dark Tower and Mountains of Madness were both going to be super-expensive films that might not make enough money back. That calculation might have turned out the same way regardless, but it might be easier to justify a big outlay for a couple of prestige projects if the last several gambles had paid off.

Looking at the list of Universal films for the past decade, it's amazing how few of them stand out as having been great. Children of Men, for sure. I liked Despicable Me a lot. Drag Me to Hell was fun. Slither. And Serenity, of course. Out of those, only Despicable Me was a monster hit.

So after chewing over Meyer's unusually candid remarks for a few days, I'm left with the feeling that there's a downward spiral at work here — one that will probably get worse as box office receipts continue to fall. As people get more and more used to watching movies on demand at home, on their big flat panel screens — a trend that Meyer seems happy to try and cash in on — they'll be less likely to go out of their houses to see a movie on the off chance that it might not totally suck. As more mediocre movies fail, Universal and other studios will try to find the level of "fun concept and cute actors" to get you into the theater.

You can also expect to see more movies budgeted in the $100 million to $150 million range, not so much the $200 million and up range — what Mountains of Madness and Dark Tower have in common with Avatar is the high price point. With visual effects getting ever more expensive, you have to spend a lot of money to make a huge, visually stunning epic — as opposed to a smaller risk, which is a movie with just a few big greenscreen sequences or a few big action set pieces.

That, in effect, means that the economics of movie-making are pushing us towards movies where something unusual happens in the real world, or there's a portal, or there are a couple big fight scenes. Not so much with the "become immersed in a strange alien world" stuff. Oh, and one of Universal's most profitable recent movies? Was Skyline, which made an amazing profit margin on a teeny budget because it was filmed in someone's apartment. Everybody hated Skyline, but it made stupid amounts of money.

Also, R-rated movies are going to have to be cheap, like low-budget horror movies. Big-budget movies had better be family friendly, or at least accessible to teens.

So reading between the lines of Meyer's comments, it sounds like the sort of movies he's likely to be greenlighting going forward are: 1) Modestly budgeted. 2) Family friendly, unless they're much cheaper. 3) Movies which "show how great the human spirit is" the way he feels United 93 did. 4) Movies which may turn out to have a decent story, but not a great or particularly challenging story. In other words, comfortable, middle of the road fare.

And you know, sometimes diner food is pretty tasty. You just don't want to eat diner food for every meal.