Crunching Numbers In The 'Hollywood Economy'How do Hollywood studios make money? Journalist Edward Jay Epstein goes looking for answers in The Hollywood Economist, explaining the complicated relationship between distributors and studios — and revealing why the humble cup holder may be the greatest technological advancement in the history of Hollywood.
The percentage of Americans who go to the movies on a regular basis has dropped drastically since the 1940s. A large studio may spend $50 million on a single ad campaign for a blockbuster film. And before a studio can take a profit, both the local theater and a regional or national distributor take their cuts of the box office.
So how does Hollywood still make money?
By resting on its laurels, at least in part. Investigative journalist Edward Jay Epstein reminds Fresh Air contributor Dave Davies that studios "have a library of movies, of thousands of titles."
"Those titles, they can sell over and over again to television stations, to cable networks, to pay television, to put them on DVD, [to] license them to games," Epstein says. "This brings in a steady and major flow of money, which pays for production."
Epstein is the author of the new book The Hollywood Economist, which looks into more than one Hollywood mystery — including what exactly is the difference, if any, between a studio and a distribution company.
"Studios are in two businesses," he explains. "One is making films; the other is distributing movies. For the large studios, when we're talking about studios and distributors, what we're actually talking about is the same."
Epstein is also the author of Inquest: The Warren Commission and the Establishment of Truth,Cartel and Dossier: The Secret History of Armand Hammer.
On how movie watching has changed since the '40s:
"In the 1940s, [going to the movies] was the national pastime. Approximately 67 percent of the American public — every week, on the average — went to a movie. And they didn't just see movies — they saw newsreels, they saw cartoons, animation, shorts, a second feature — but it was their weekly pastime. Today, less than 10 percent of the public, on the average, go to the movies in a week."
On film studios charging for digital reels:
"Now when films are shown digitally, there's a digital file. But the movie companies — the studios, the distributors ... still charge — this is not something they make public — they still charge the film for what they call a digital copy, even though the digital copy might cost them $50 rather than $1,000. ... So they have a basic scam going on, and that is charging for something that doesn't exist."
On cup holders in theaters:
"When I was traveling with a theater owner ... [to the movie-industry convention] ShoWest, he said, 'You know what the greatest technological advancement in the history of movies is?' And I thought he was going to say sound or color or even widescreen. He said, 'The cup holder — because the cup holder allows the patron to put the cup down, go and get popcorn and come back to the seat, so they get two or three hits from the same customer at the popcorn stand.'"