Sex And The Cinema

August 15, 2005

by Edward Jay Epstein

The Hollywood Economist

The numbers behind the industry.

In the New Hollywood, it's a liability and no nudes is good news
In the early days of Hollywood, nudity—or the illusion of it—was considered such an asset that director Cecil B. DeMille famously made bathing scenes an obligatory ingredient of his biblical epics. Nowadays, nudity is a decided liability when it comes to the commercial success of the movie. In 2004, none of the six major studios' top 25 grossing films, led by Spider-Man 2, Shrek 2, Harry Potter and the Prisoner of Azkaban, and The Incredibles, contained any sexually oriented nudity; only one had a restrictive R rating—Warner Bros.' Troy—and that was mainly due to the film's gory violence, not its sexual content. The absence of sex—at least graphic sex—is key to the success of Hollywood's moneymaking movies. Directors may consider a sex scene artistically integral to their movie, but studios, which almost always have the right to exercise the final cut, also have to consider three factors.

First, there is the rating system. For a film to play in movie theaters belonging to the National Association of Theater Owners—which includes all the multiplexes in America—it first needs to obtain a rating from a board organized by the Motion Picture Association of America—the trade association of the six major studios. All the expenses for rating movies are paid to the MPAA by the studio out of a percentage deducted from box-office receipts. As it presently works, a movie that contains sexually oriented nudity gets either an NC-17 or an R rating, depending on how graphically sex is depicted. The NC-17 rating, which forbids theaters from admitting children under the age of 18, is the equivalent of a death sentence as far as the studios are concerned. In fact, since the financial disaster of Paul Verhoeven's NC-17 Showgirls in 1995, no studio has attempted a wide release of a NC-17 film. As one Paramount executive suggested, because of their sexually related nudity, movies such as Louis Malle's Pretty Baby, Bernardo Bertolucci's Last Tango in Paris, and Stanley Kubrick's A Clockwork Orange would not even be considered by a major studio today. So far this year there has been only one limited release of an NC-17 film by a studio: the documentary Inside Deep Throat, which yielded Universal less from the box-office—$330,000—than it cost to wrangle media stars and others to free screenings and dinners to promote it.

If a movie contains less explicit nudity, it earns an R rating, which merely prohibits youth unaccompanied by an adult. Even though this option means that some number of multiplex employees—who might otherwise be selling popcorn—are required to check the identity documents of the teenage audience, theaters accept R-rated films, especially when, as was the case with Troy, the R is for the sort of graphic violence that is also the principal attraction. But even if an R doesn't prevent studios from staging a wide opening of a movie at the multiplexes, it complicates the movie's all-important marketing drive. For one thing, if a film receives an R rating, many television stations and cable networks, particularly teenage-oriented ones, are not allowed to accept TV ads for the movies. In addition, an R rating—especially for sexual content—will preclude any of the fast-food chains, beverage companies, or toy manufacturers that act as the studios' merchandise tie-in partners from backing the movie with tens of millions of dollars in free advertising. As a result, it becomes much more expensive to alert and herd audiences to R-rated films.

Second, there is the Wal-Mart consideration. In 2004, the six studios took in $20.9 billion from home-video sales, according to the studios' own internal numbers. (Click here to see data in Table 1.) Wal-Mart, including its Sam's Club stores, accounted for over one-quarter of those sales, which means that Wal-Mart wrote more than $5 billion in checks to the studios in 2004. Such enormous buying power comes dangerously close to constituting what the Justice Department calls a monopsony—control of a market by a single buyer—and it allows the giant retailer to effectively dictate the terms of trade. Internet mythology aside, Wal-Mart doesn't use its clout to advance any political agenda or social engineering objective, according to a studio executives involved in the process; it is "strictly business." Wal-Mart uses DVDs, especially the weekly released hits, to lure in customers who, while they pass through the store, may buy more profitable items, such as toys, clothing, or electronics.
Wal-Mart's main concern with the content of the DVDs is that they not offend important customers—especially mothers—by containing material that may be inappropriate for children. It guards against this risk with a "decency policy" that consigns DVDs containing sexually related nudity to "adult sections" of the store, which greatly reduces their sales. (Wal-Mart is less concerned with vulgar behavior and language.) These guidelines, in turn, put studios under tremendous pressure to sanitize their films of sexual content. The Wal-Mart buyer would merely have to order for their stores the "in-flight entertainment" version of DVDs, from which studios expunge nudity and other sexually explicit scenes for airline passengers (censorship that almost all directors quietly accept). In light of such leverage, studios have to weigh the Wal-Mart factor with great care.

Finally, movies with nudity are a problem for the studios' other main moneymaker: television. As became abundantly clear in the controversy surrounding Janet Jackson's wardrobe malfunction at Superbowl XXXVIII, broadcast television is a government-regulated enterprise. When the government grants a free license to a station to broadcast over the public airwaves, it does so under the condition that it conform to the rules enforced by the Federal Communications Commission. Among those rules is the standard of "public decency," which among other things specifically prohibits salacious nudity—which is why CBS had to pay a fine for Ms. Jackson's brief exposure. Because the FCC regulates broadcast television (though not cable television), television stations run similar risks—and embarrassments—if they show movies that include even partially nudity. So, before a studio can license such a movie to a broadcast network, it first has to cut out all the nudity and other scenes that run afoul of the decency standard. Aside from the expense involved, it requires the hassle of obtaining the director's permission, which is contractually required by the Directors Guild of America. The same is true in studio sales to foreign television companies, which have their own government censorship.

Since graphic sex in movies is a triple liability, the studios can be expected to increasingly find that the artistic gain that comes from including it does not compensate for the financial pain and greenlight fewer and fewer movies that present this problem. We may live in an anything-goes age, but if a studio wants to make money, it has to limit how much of "anything"—at least anything sexually explicit—it shows on the big screen. As one studio executive with an MBA lamented, "We may have to leave sex to the independents."

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