As the nation's
glitterati gather in Los Angeles tonight for the
77th annual Academy Awards, they will celebrate the role
of actors, directors and writers in creating a distinctive
American art form: the motion picture.
behind the familiar rituals - red-carpet interviews and
opening of sealed envelopes - the business of Hollywood
has undergone some fundamental changes since the Oscars
became a national pastime.
America's movie studios still compete for stars and the
kind of buzz that tonight's awards generate. And yes, Hollywood
has always been geared toward making money. Increasingly,
however, the movie business is
just one high-profile outpost in a world of clashing entertainment
giants that value the "synergy" of video-game
spin-offs, fast-food tie-ins and soundtracks as much as
the creation of original pictures.
changes have been a long time in the making, and they are
rooted in the evolution of technology and American society.
Slowly but surely, they are transforming the way movies
are made and how they are distributed to audiences in this
country and around the globe.
was so much simpler in 1929, when the Academy of Motion
Pictures Arts and Sciences first began voting on Oscars.
Back then, 95 million Americans - or over 70 percent of
the American population - went to the movies in an average
week. This massive outpouring was not a product of expensive
national marketing campaigns; it was simply the result of
regular moviegoers going to see whatever was playing at
their neighborhood theaters. Even as late as 1947,
about two-thirds of Americans went to the
movies in an average week. The vast majority of these movie-goers
were adults (For children, there were cartoon matinees;
for young teens, "B" westerns on double-bills).
As a result, Hollywood studios made movies for adults.
a small fraction of that audience remains. Last year, 30
million Americans went to the movies in an average week
- only slightly more than one-tenth of the population. Television
and other diversions have taken over.
As the movie-going crowds have dwindled, they have also
become disproportionately young. More than 60 percent of
frequent movie-goers last year were under the age of 21.
Consequently, Hollywood not only makes movies for younger
viewers, it has to find those viewers - and attract them
- by spending huge sums to advertise on the television programs
they watch. In 2003, the last year the data was compiled,
the six major studios spent an average of $39 million per
film just to get audiences and prints
into American theaters, which was more than they recovered
from the box office.
To make matters worse, the costs of producing films have
also risen astronomically. Correcting for inflation, costs
have increased more than 16 times since the 1947 collapse
of the studio system, which freed movie stars to seek more
lucrative deals. (Star salaries have not been the only factor,
of course, but consider this: Arnold Schwarzenegger received
a fee of more than $29 million for "Terminator 3").
By 1980, when most of the studios' worldwide revenues still
came from movie theaters, every studio was losing money
on its overall movie business, no matter how large the success
of such 70s hits as "Love Story,"
"Jaws" or "Star Wars." By the 1990s,
this had become routine.
as one Fox executive explained to me, the theatrical
releases evolved to fill a different role; they became launching
platforms for licensing rights, much like the runways at
haute couture fashion shows.
In other words, they help establish movies for the market
where money is really made - home entertainment. And no
wonder: Fewer than 2 percent of Americans now go to movie
theaters on a given day, while more
than 95 percent watch something at home on TV.
Responding to this new social reality, the companies that
owned the major Hollywood studios have aggressively diversified,
buying their way into American homes. Today, the corporate
parents of the major studios own all
the television broadcast networks in America - CBS, NBC,
ABC, FOX, UPN and WB. They have also purchased almost all
the profitable cable networks, including ESPN, CNN, Turner
Broadcasting, Nickelodeon, the Disney Channel,
USA and MTV; the two most important pay-TV channels, HBO
and Showtime; and the largest satellite broadcasters in
the world, including DirecTV, Sky Broadcasting and Star
2003, the studios were taking in almost five times as much
revenue from home entertainment as from theaters.
So how does all of this influence the way movies are made?
For one thing, Hollywood increasingly invests its resources
into products that appeal to the home audience - and to
its new gatekeepers. These include the Wal-Mart executives
in Bentonville, Ark., who allocate shelf space for DVDs,
and the powerful executives who run network television
and pay-TV. This means giving the green light to films that
meet the family-values criteria of these gatekeepers. Not
surprisingly, in the last 5 years, the number of R-rated
films released annually has dropped from 212 to 147.
It also means selecting movies that mesh most profitably
into the myriad ventures that define the Big Six entertainment
companies - Disney, Sony, Time Warner, NBC Universal, Viacom
and the News Corporation. These
ventures run the gamut from merchandising tie-ins to theme
when you flip on the television tonight, remember this:
Even as movie studios have become role players in today's
home entertainment economy, the Academy Awards ceremony
(which some 40 million Americans will
watch on Disney's ABC network) still serves as an important
platform for those members of the Hollywood community who
places a high value on prestige, acclaim and, yes, the art
of motion pictures. As such, it serves as the only remaining,
and still surprisingly potent, lobby for films that transcend
the economic logic of Hollywood.