This Just In: Movies Don't Make Money

Report says studios lost $1.9 billion last year.

In marked contrast to the music business, which has spent the last seven years dealing with declining profits and assorted bad news, the 21st century has seen the film industry repeatedly setting new records for ticket receipts. The movie biz is healthy, right?


Not if you believe "Do Movies Make Money?," the just-released report from Global Media Intelligence. In an article published yesterday, Variety takes a look at the numbers crunched by GMI, and according to the report, things aren't looking good. In fact, GMI says the Hollywood studios will post a $1.9 billion loss on the movies they released last year. Yes, that's a "b" in front of the "illion." Seriously, check it out:

Analyzing the 132 pics distributed by the U.S. majors in 2006, it estimates a pre-tax operating loss of $1.9 billion after five years of exploitation across all global media. That compares with a profit of $2.2 million for all new studio releases in 2004.

"We believe there is little chance of the negative revenue trend reversing in the coming years," commented the report's New York-based author Roger Smith.

The main problem, as identified by GMI, is that people aren't buying DVDs the way they used to. Aside from providing interesting commentary on the lifecycle of a format that was new territory for most consumers just nine years ago, the downturn in DVD sales (they're down by 12.5% just this year) hits the studios hard. As Variety puts it, the format has been "providing the lion's share of studio profits."

Of course, this report's release in the midst of a hotly contested writers' strike -- with the threat of actors' and directors' strikes looming on the horizon -- is purely coincidental. What, you think the industry that sends out Michael Eisner to call the strike "stupid" is incapable of at least mildly savvy PR? Think again. And look, the report helpfully takes a thinly veiled swipe at those greedy entertainers:

While the studios are currently in negotiations with writers, actors and directors over fees, these salaries are not the main issue; the current cost of producing, casting and advertising in the present environment simply exceeds the likely returns.

All of which might very well be true -- but the current overblown salary structure for Hollywood's top talent wasn't created in a vacuum, and for the studios to pretend otherwise (while releasing many, many bad movies) seems at least mildly disingenuous, no?

Source: Variety


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