Hollywood's death spiral, part 2.

The numbers behind the industry.
Aug. 1 2005 9:13 AM

Hollywood's Death Spiral, Part 2

Are movie theaters facing extinction?

(Continued from Page 1)

The more likely strategy—if it rightly can be called a strategy—is a wait-and-see inertia. "I don't think any of the studios are going to go all-out to change the entire model," one studio executive, who was deeply involved in the decision-making, noted in an e-mail. "They will likely continue their self-serving wishful thinking that movies will still be movies, and revenues will grow overall" until "theaters shut down." Whatever Hollywood does—or does not do—the moviegoing audience cannot be taken for granted. Back in the 1940s, when studios owned the movie houses and television was not yet available, more than 60 percent of the population went to the movies every week. Today, about 9 percent of the population goes. Just as the movie houses replaced vaudeville houses, home theaters with high-definition television could replace the multiplexes if the death spiral continues.

Edward Jay Epstein is the author of The Big Picture: The New Logic of Money and Power in Hollywood. (To read the first chapter, click here.)