Leftism and Hollywood's Unprofitable Business Model

For the first time in recent memory, the upcoming holiday season will feature few big-name Hollywood films. Apart from a new James Bond title (which, with unknown actor Daniel Craig debuting as 007, is no certain hit), the Tinseltown slate appears quite low-key, with the young adult fantasy Eragon, Sylvester Stallone's Rocky sequel Rocky Balboa, and the animated penguin comedy Happy Feet emerging as the most prominent of an otherwise unassuming bunch.

Some may call this an anomaly (blockbusters did, after all, reign last year with King Kong, Harry Potter and the Goblet of Fire, and The Chronicles of Narnia all grossing upwards of $200 million), but a growing cadre of industry insiders actually believe it is the wave of the future. No less an authority than George Lucas, for example, has announced plans to save large sums of money by producing only smaller films.

So what is the Star Wars head honcho thinking? Larger productions are riskier because most Hollywood films actually lose money. The studios' hit-miss ratio is so poor, in fact, that fully 90% of all theatrical motion pictures fail at the box office. Profit comes only from the other 10%, which perform so stunningly well as to (ideally) both cover the other films' losses and generate profitable additional revenue. Sound like a solid business model? Countless spurned film investors would argue a resounding "no".

But while Hollywood has accepted this financial model for many years, it was not always the name of the game. Before the mid-1960s, a far larger percentage of films made money, primarily because many more Americans regularly attended screenings. In 1960, for example, fully 45% of all Americans went to the movies weekly.

Alas, however, this was not to last, as moviegoing nosedived dramatically in the late '60s to about 10% of Americans each week, a level that has remained consistent to the present time. Resultingly, most films can no longer command the audience numbers required to turn a profit. Even today's blockbusters depend largely on high ticket prices for much of their revenue; adjusted for inflation, the box office grosses of the modern era's most popular films lag far behind those of classics like Gone With The Wind and The Wizard of Oz .

So what happened? Why have audiences deserted theaters in droves? Some blame the rise of alternative entertainment such as video games, DVDs, and the Internet. But really, the box office exodus began long before those media became popular (or were even invented).
The answer I believe, rather, is that starting in the late '60s, Hollywood films began to assume a leftist bent far out of touch with the average American's sensibilities. Industry critics loved it, but most moviegoers simply felt shunned and tuned out. This pattern has continued to the present day, with numerous leftist darlings (to name merely a recent few, the gay cowboy story Brokeback Mountain and the anti-Iraq war polemic Jarhead) regularly winning heaps of critical acclaim but flunking at the ticket counters.

Finally, however, it seems filmmakers and producers are taking note, and perhaps the tide is at last turning the other way. In addition to Mr. Lucas's new direction, family-friendly Disney has achieved tremendous recent popularity, certain production houses (such as billionaire Philip Anschutz's Walden Media) now specialize only in morally upright films, and conservative filmmakers have even launched their own festival. It's far from a complete makeover, but signs of a Hollywood renaissance certainly exist.

If the studios want to continue creating elaborate productions, then they must mitigate risk by catering to mainstream American tastes. Otherwise, the era of smaller films appears here to stay. And Luke Skywalker would not be happy.