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Monday, August 23, 2010

Why the movies matter

Almost everyone likes to watch a movie. Besides providing entertainment, films can have profound social impact (e.g. To Kill a Mockingbird and Philadelphia).

But there’s another reason why movies matter. The film industry is a $60 billion global market. This figure includes box office receipts, DVD rentals and purchases, etc. It probably does not include derivative income from licenses to toy manufacturers, book publishers, etc. No matter how you add it up, this is big business.

Although an individual movie can bomb and lose money, overall the movie business is highly profitable. And for the most part, it’s “made in the USA”. Hollywood is one of the largest profit pumps in the American economy.

I can’t think of another USA-centric industry with similar size and profitability. So much of the software industry which began in the USA has moved offshore that its direct impact on our economy is less than one might expect. Feature films are certainly made elsewhere in the world, but for 100 years Hollywood has held its market share remarkably well. As proof, the USA is often criticized for the cultural imperialism of our cinema. Other USA cultural exports, like professional sports, haven’t achieved nearly the same impact.

The main threat to the economic vitality of the film industry is piracy, which undermines a critical American asset. The music industry will never be the same after MP3 and Internet technology, perhaps deservedly so. But I hope the same fate does not befall the movie industry.

Until recently, the AMC cable channel ran a series on Sunday mornings called Shootout. Its hosts were Peter Bart and Peter Guber, veterans of the film business. Some guests on Shootout were merely promoting their new movies, but there was also serious discussion about the film business – as distinct from individual films. The series ran its course and is no longer broadcast, but I learned a lot from it.

The next time you see a Steven Spielberg or Jennifer Aniston film, remember that even if it’s not great cinema, it’s good business for America.