The Magazine

Hollywood Means Business

Apr 25, 2005, Vol. 10, No. 30 • By MARTHA BAYLES
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The Big Picture

The New Logic of Money and Power in Hollywood

by Edward Jay Epstein

Random House, 416 pp., $25.95

HAVE YOU NOTICED THAT THE silver screen is looking a bit tarnished these days? I'm not being metaphorical. If you are old enough to remember gazing up at immense, brilliant screens alive with crisp, clear images, then you are probably too old to enjoy complaining about the dingy screen flickering with blurred images that is the rule in today' s multiplex--because if you do bellyache, the reply, invariably, is that SukEmIn Theaters use only state-of-the-art technology, and that maybe you need to stop by the optometrist at the other end of the mall.

Take heart. The tarnish is real, according to Edward Jay Epstein. In lucid detail he explains how theaters cut costs by employing just one projectionist to run several screens, with the frequent result that neglected machines jam, allowing the projection lamp to burn a hole in the film. "To prevent such costly mishaps," Epstein writes, "multiplexes frequently have their projectionists slightly expand the gap between the gate that supports the film and the lamp. As a result . . . films are often shown slightly out of focus." Likewise, theater owners are loath to change projection bulbs, which cost $1,000 apiece. So even the sunniest sequences look like nuclear winter.

Does anyone care? Not really, says Epstein. Theater owners are in three different businesses: showing movies; showing advertisements--previews, which must be shown as part of their contract, don't generate any revenue--and selling popcorn and soft drinks. The only business that makes a profit for them is the third, so it makes sense to cater to teenage males, who gobble the most popcorn and slurp the most soda. This demographic is reputed not to give a hoot if the picture is fuzzy and dim, as long as they can see the explosions.

As for the good people in Hollywood, they are just as happy if the rest of us stay home and watch DVDs, because that is where they make their money. If nothing else, The Big Picture will cure you of ever confusing today's entertainment industry with the old pre-World War II studio system. Back then, the neighborhood theater was where the action was, with 90 million Americans ("about two-thirds of the ambulatory population") attending every week. The tickets cost a few dimes, and the program included a newsreel, a comedy short, a serial, a cartoon, a "B feature," and "the main attraction." These offerings all came from the same six or seven big studios, who also owned the theaters. So the profit (called "box office" because all those dimes got collected in a strongbox) went straight back to Hollywood.

The press still reports on "box office" as though it were profit, but as Epstein shows, "in 2003, a relatively good year, the six studios lost money on the worldwide theatrical release of almost all their titles." This is because, first, the moviegoing audience is much smaller than it used to be: In 1957 Americans bought 4.7 billion tickets; in 2003 they bought 1.57 billion. Second, the audience for a given film must now be "created": In addition to the cost of production (which now averages about $63.8 million) and of prints for theaters ($4.2 million), the studio must spend $34.8 million for advertising. After the ritual of theatrical release, the real profits begin to flow: from foreign release (also something of a ritual), licensing to cable and satellite TV (pay dirt), video rental (dwindling), DVD sales (growing), related merchandise like soundtracks, toys, and games (double pay dirt), theme parks (requires planning ahead), and finally, sequels (nice work if you can get it).

The reader will catch the drift. The most lucrative movies are those that fire on all seven cylinders. Ordinary mortals call these "blockbusters," a term derived from the wonderful world of munitions. But the industry calls them "locomotives," because they drag a lot of dead weight behind them. Without gigantic, repeatable successes like Indiana Jones, Terminator, Die Hard, Star Wars, Star Trek, Back to the Future, Batman, Harry Potter, The Fellowship of the Ring, Toy Story, Finding Nemo, and Shrek to keep them in the black, the six major studios would have run into the red 30 years ago.