Open Forum Friday: Is The Movie Industry Recession Proof?
There’s no question that the big issue currently on a lot of people’s minds (here in North America, at least) is the U.S. financial crisis. Everyone is wondering how it will affect them, and the movie industry is no different. Stocks for most of the major media companies have all been dropping, and a lot of the studio execs have been holding meetings to reassure stockholders and employees that it’s only a temporary slump. Jeffrey Katzenberg recently reassured Dreamworks investors by saying, “Both traditionally as well as recently, we have seen that our product is, at worse, recession-resistant and, more optimistically and historically, has actually been recession-proof.” It’s certainly not the first time we’ve heard this from people in the industry, but is it actually true?
I suppose the theory is that when their purse strings are tightened, people will still shell out for entertainment and escapism. I can understand that to an extent, but when people are really strapped for cash, I tend to think they would avoid buying Blu-ray players and other more extravagant expenditures. It is also said that hard times inspire art and creativity, but on the flip side, when funding for movies becomes a lot harder to find, studios will be forced to take less risks. The thought of Hollywood taking fewer risks than they are right now is a depressing one indeed. What do you think about this? Do movies and entertainment actually qualify more as a necessity than a luxury? Will you still pay to see movies even when money is tight? Do you think this will have an impact on the movie industry in the long run? Give us your thoughts here on Open Forum Friday.
Comments (14)
As much as people bitch about ticket prices and whatnot, movies are still a really cheap entertainment option. Spending $10 for two hours of entertainment is a pretty good rate when compared to other forms of entertainment.
Posted by Liz on September 26th, 2008I think we have a long way to go before people stop watching movies in some way. Maybe movie theaters will suffer a bit.
I heard an interesting story on NPR today (this is where everyone tunes out) that explored whether the video game industry was functioning now like the film industry did during the Great Depression. During the depression, people still went to the movies in droves, the story argued because of an escapist drive on the part of audiences.
I don’t play video games anymore and don’t understand how grown adults can prefer playing video games to watching films (as many interviewed in the story did), but hey, whatever floats your boat!
Also, I agree with Liz. $10 is really not that much, once every week or two, to see a movie. I have friends who bitch about paying to see new releases because of the $10 price tag but have no problem going to bars on Friday and Saturdays and paying upwards of $50-$60 for the pleasure of getting shitfaced and turning into a puking hungover wreck in the morning. Doesn’t make sense to me.
Posted by Joel on September 26th, 2008Consider how shitty a lot of new movies are, I wouldn’t allow myself to be paid 10 bucks to watch a movie that I know is crap. In the past few years I’ve become very choosy as to what will interest me, let alone what I’ll go pay to see in a theater. Otherwise, I just wait until it comes out on DVD in the used section for 10 bucks and buy it then, only if it meets my criteria.
Posted by Baychuk on September 27th, 2008“Spending $10 for two hours of entertainment is a pretty good rate when compared to other forms of entertainment.”
Exactly. You’d spend five times that at a bar for the same duration of entertainment as Joel said.
“Maybe movie theaters will suffer a bit.”
They already are. I’ve worked at three theatres in my life (as projectionist and even assistant manager) and two of those (even one with a large amount of patrons) are closed now. My guess is that in another decade or so movie theatres (in rural areas specifically) will be few and far between like the video game arcade is today. I’m not spending seven dollars on popcorn anymore and when its cold outside my jacket allows me to smuggle canned drinks. (In doing this I’m effectively an asshole because I love the theatrical experience and I’m helping destroy it…for those that don’t know concessions are the only thing that pays bills at a theatre.)
The Great Depression verified that movies are recession proof (Joel is right; the movie industry boomed back then)…but that was way before torrents and DVD ripping software.
Posted by Ryan M. on September 27th, 2008The answer is YES! When $10 is unaffordable the country is finished!
Posted by entertainmenttodayandbeyond on September 27th, 2008#5 The answer is YES! When $10 is unaffordable the country is finished!
Posted by entertainmenttodayandbeyond on September 27th, 2008
It is heading that way in the USA….maybe after martial law is instilled.
Posted by Baychuk on September 27th, 2008“The Great Depression verified that movies are recession proof.”
Posted by Matt on September 29th, 2008Very true. During every economic crisis thus far, the movie industry has persevered, and most studios have even profited. When studios or distribution companies go down, it seems that the reason is that they’re financing disastrously unprofitable movies, and not that the overall economy is in some sort of downturn.
But I also agree with Sean that if economic conditions deteriorate to a point that it becomes detrimental to movie companies, then “studios will be forced to take less risks.” And therefore will have to stick with their proven guns, be unoriginal, and produce a bunch of things we have already seen.
Thank you for posing some very important questions regarding the current
economics of the film and entertainment industries. I appreciate your ability to shine a stage light on the economic crisis specifically in Hollywood. I agree with you when you write that “when their purse strings are tightened, people will still shell out for entertainment and escapism,” but I have to wonder if the current prices for movies are just too high? At about $10 a ticket is it absolutely necessary to sit through a film dedicated to the glamorous life of a Chihuahua? Are Leonardo Dicaprio and Russel Crowe, seen in their upcoming flick “Body of Lies,” even worth $10 when the economy has really hit a low? I think it is also worthwhile to consider the fact that people have become much more dependent on consumer products, like DVD’s and consumer services, such as Netflix. These products and services also steal the box office’s thunder, not to say that they hurt the industry as a whole.
I think that ultimately what will determine whether or not people keep spending their money on entertainment is the value of the products that Hollywood produces. An amazing product is obviously harder to pass up and thus more likely to be successful in a rougher economic outlook. I also appreciate your point that in hard economic times “funding for movies become a lot harder to find and studios will be forced to take less risks.” It is easy to forget that the studios are also affected, and effectively restricted, like the rest of us during economic hardships. I thought it was a valid and interesting point to bring up the idea that the restrictions placed on the movie studios will result in less creative freedom. In an industry when it is usually all about the money anyhow, when money is tight, it is definitely all about the money in Hollywood. I definitely agree with your opinion that this will be a depressing reality for Hollywood if these economic restrictions do come to fruition. The last thing Hollywood needs is more big-buck blockbusters and fewer significant and challenging films.
Posted by Jessica Hagy on September 30th, 2008It is true that the film industry has always shined through times of recession. Look at the thirties during the depression! The film industry was one of the only industries that made it out. The studio’s did better than just break even during those days! In our history, entertainment always seems to be a form of escapism during times of financial hardship. We tend to forget about the smaller studio’s and/or independent movie’s though! And that has made up a much larger amount of the movie’s seen today in this country!
These films are NOT recession proof. Most of the time, these films won’t even get launched in an economy such as ours. Why? Remember all those banks that were freezing assets and loans? Well, for the small business (i.e. independents) these loans are necessary in order to get a movie off the ground! This economy is already hurting from the IOU disaster. And it has hurt the film/video industry just as hard! Add on top of that a writer’s strike that lasted about 4 months and the upcoming actors strike and bam: For the first time you’re seeing the film industry in a world of hurt from an economic crisis! Of course, really the industry has seen slowing ticket sales for the past 2 decades. Studio’s can’t rely on their b-movie’s, 3D glass’s, and double feature night anymore. The production cost of the average blockbuster movie has skyrocketed, and advertisement strategies like 3D and double feature night can’t bring the type of income that used to be expected. We’re seeing more films shot over seas and in Canada as well. Why? Because of the tax incentive. The problem is that if this country is hurting, chance’s are those countries will feel the pinch as well.
So, while most of you are talking about ticket sales and DVD sales, we should really be thinking about what it costs to make a film. Because that’s what really determines whether the film industry is doing well. If you can’t make as many movies, you don’t make as much money, and your investors won’t be investing as much! Now this isn’t true for everyone, right? Because we haven’t really discussed the largest factor of the dying film industry: the television! Yes, it seems video has killed the motion picture star.
Posted by David Chronister on October 8th, 2008Question for those of you in the know: Our small town is being wooed by a team of developers who want to build a movie studio/ w/ back lots, production facilities etc. and the town is so excited and convinced its a win win for our town of 60K people. Is the PRODUCTION business recession proof? Im concerned this project will fail and our town fathers are convinced it will be a sure economic boon. Insights appreciated. In this economy is there financing for this kind of project of building a movie studio in small town usa? Thanks,
Posted by carolyn davis on October 9th, 2008I wonder whether people will pay $10 or just download stuff from the internet?
Posted by snorkel on October 17th, 2008Movies may see a shrinking audience but rentals will likely boom. As always, there’s more poor people than rich and when they start watching their budgets they’ll be less likely to spend their money on a $5 soda and $5 popcorn when they could use that $10 to rent 3 or 4 movies at their local rental place.
Then again people won’t stop dating and like Liz said up top, movies are still relatively inexpensive compared to other forms of entertainment.
Posted by Dan on January 18th, 2009I have been doing research for a school project, and all the info I have found so far points to the fact that during recessions and financial crisis the movie industry often booms. People need to get away from it all. The only difference now is that the movie industry must make good movies as a viewer believing a movie is bad could have much more drastic influences on their revenue than it would have when people didn’t have a care when going to the movies.
Many parents and even students see the movies as a great way to spend time with friends or family without spending too much money. It is still cheaper to see a movie rather than go to an amusement park.
Most theaters have early showings that are cheaper so instead of the usual dinner and a movie, people are choosing to save some cash, see the early showing, and grab lunch.
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).
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Gruss
Danni
Posted by DAWillie on November 8th, 2009Leave a Reply