Economics of Hollywood

I’ve been watching a lot of videos about economics recently for research into a new project I’m working on. This channel Economics Explained is one of my favorites. The creator does a great job breaking down the topic and adds a fun bit of sarcastic humor. Bonus that he has a nice Aussie accent. 🙂

This video breaks down funding, product placement, tax incentives, box office income, and other topics.

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$42 billion dollars. That is the amount of money grossed by films at the global box office in 2019. Impressive? Definitely. Surprising? Probably not, especially when you consider that global box office revenues have increased year-over-year since 2005.

That was, of course, until COVID. As you’d expect, the pandemic has devastated Hollywood – resulting in an unprecedented seventy-one percent (71%) decline in global box office revenue. Worse yet, we all have to go another year without Daniel Craig’s No Time To Die – a title that has since taken on somewhat of an eerie meaning. But putting the absence of James Bond aside…movie ticket sales have actually been on the decline for nearly two decades – despite a steady increase in population over the same period.

What people are saying
about the RunPee app.

dd33803, 07/05/2023

This is a great app. I wish more people would support it

This app provides info about movies, reviews, ratings from people who have seen it before and after viewing. It has links to info about the movies. It let’s you know when there will be a lull in the action and how long it will last. If you want to know what happens during that time, you can check the brief synopsis (you have to click a link, so no accidental spoilers). It has a timer you can set (silent) to alert you to a break. It also tells you whether there is anything extra during or after the credits. It’s really a wonderful app. I’ve subscribed for a couple of years to support the developers, but I noticed some of the links to provide feedback didn’t seem to work today. They also made it free, with voluntary donations to see the pee-times. If you haven’t tried it, I encourage you to do so, and subscribe if you like it. I really hope the app is supported so it can continue to be maintained!

Developers note: RunPee doesn’t make much money but it supports itself nicely. Donations are appreciated, but not required. We’ll add as many movies to the database as we can until there are no more movie theaters.

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So, if people are going to movie theatres less often – and they are – then what exactly is driving the growth behind global box office revenue? To answer this question, you have to understand the economics of Hollywood. How do movies get funded? What is the role of government subsidies and alternative revenue sources? How can a movie gross more than its budget and still lose money?

And finally, what are the economics behind movie theatres and their twenty-dollar buckets of popcorn?