Intelligent Artifice

Hollywood’s Death Spiral July 28, 2005

There’s an article on Slate about the economics of Hollywood, how it is so hard to get accurate numbers on it, and how home entertainment is crushing theater box office.

Even as late as 1980, when the audience had television sets and video players, studios still earned 55 percent of their money from people who actually went to movie theaters. In 2005, however, those moviegoers provided the studios with less than 15 percent of their worldwide revenues, while couch potatoes provided it with 85.8 percent.

This change in audience location altered the balance of power inside the studios. It reduced the once-almighty movie distribution arms to minor players while awarding star status to the home entertainment divisions that produced well over three times as much revenue. Through this reversal of fortunes, the stage has been set for what a top studio executive warned could be “Hollywood’s death spiral.”

It is part of a series of articles.

(Via Kottke.)

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