Wednesday, September 16, 2009

Think Hollywood is having a tough year?

This has not been the greatest year for Hollywood; only one summer flick ("Transformers II" of all things) has cracked the $300 million mark that customarily signals blockbuster hit status. The Economist reports that business is much worse in the underground film industry in northern LA, where they make films with titles that cannot appear in a family-friendly PG rated blog. As an economist, I merely will take note that actors' salaries have fallen because fewer such films are being made. This appears to be a consequence of a sharp leftward shift of the demand curve (brought about by the recession and competition from substitutes available at a lower price, i.e., free).

As for me, I have only seen one movie in a theatre this summer ("Julie and Julia," which pulled a mere $80 mil probably because it had no explosions or chase scenes), but plan to catch "Up" and "Star Trek" when they come out on DVD through Netflix this fall. Movies we enjoyed this summer: all 13 episodes of "I Cl-Cl-Claudius" and "Rififi."

1 comment:

  1. I think the NetFlix/DVD/Redbox/Blue-Ray aspect of the market has to be considered. I don't bother going to movies anymore since I have a great home theater system. Thus, I am perfectly happy to wait a few months for the DVD (blue-ray) to come out. This drives down movie ticket sales, but I would assume raise DVD sales. Of course, the marginal revenue of DVD sales is lower now because of NetFlix and RedBox.

    Consumers have a viable substitute for the traditional movie theater now.