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Manasa Kashi (JSGP)
Apr 9, 20236 min read

From Old Hollywood to Theme Parks: How Money Has Changed Hollywood Cinema For Good

Edited by Lathika V, a second year international affairs student
Manasa Kashi is a second year economics student in Jindal School of Governance and Public Policy.

In late 2019, renowned Hollywood director Martin Scorsese made headlines for calling the films of the Marvel Cinematic Universe “theme parks” in an interview. The director of The Departed fame went on to say: “It isn’t the cinema of human beings trying to convey emotional, psychological experiences to another human being”. Certainly, this seems to be a sentiment shared by many others, with a variety of opinion pieces and video essays being published in the last few years with titles such as “Why Modern Movies Suck” and “99 Percent of Movies Today are Garbage”. There seems to be a general feeling that cinema is not the same as it used to be - not as creative, innovative, or moving.

Audience appreciation for cinema is, of course, entirely subjective. However, it must be noted that the shape of the Hollywood film industry is vastly different than that of a few decades prior, influenced deeply by the forces of technology and the economic market. As a result, its output too would be tailored to the new contours of the industry’s requirements. In fact, an analysis of IMDb data showed that the proportion of fully original films (i.e., not sequels, prequels, spinoffs, reboots, remakes, adaptations or franchise additions) among the 50 highest-grossing films each year had shrunk to half of what it was in 2000. This essay attempts to explore some explanations for this evolution.

The DVD Decade

At the turn of the century, film distribution occurred primarily through two channels. The first was an initial theatrical release, followed some months later by a VHS or DVD launch, which could then be purchased or rented through chains such as Blockbuster. These were both seen as separate events, with each having their own audience and related marketing. Of the two, DVD sales often generated more in pure profit than ticket sales themselves due to the lower overhead cost of distribution - accounting for up to 60% of a company’s total profit according to one producer quoted in a LA Times article. Other means of profit also included television airing rights and international rights, but these made up a much smaller proportion of a film’s overall box office revenue.

When making production decisions, studio executives had to consider not only what would fare well in theatres but also what might generate enough interest to be deemed re-watchable enough by audiences to justify a DVD purchase. A film that perhaps did not meet its theatrical release expectations could be expected to make up for it in its DVD launch. Films that were deemed too unprofitable to justify the cost of a theatrical release at all could still generate enough to cover its investment via direct-to-DVD release with the proper marketing and promotion. Essentially, DVDs allowed a certain margin of error to studios. There was room in the budget to fund “riskier” scripts, because DVD sales were an all but guaranteed source of income. It was in these early 2000s years that Hollywood saw the release of such films as Juno, Little Miss Sunshine, and Crouching Tiger, Hidden Dragon - all of which were considered to be box office gambles that ended up becoming incredibly successful both financially and critically.

Then came the financial crisis of 2008, bringing with it a time of rapid destabilization for cinema. Audiences looking for an inexpensive night out began to turn more and more to theaters, choosing to spend less on DVDs. The release of Avatar pioneered an era of movies filmed in 3D, which could only be properly enjoyed in a theater setting as well. Executives could no longer rely on or even properly predict revenue from DVD sales, as exemplified by the DVD flop of hit movies such as Slumdog Millionaire and the James Bond installment Quantum of Solace, both of which failed to match ticket sales on DVD. In fact, 2010 was the first year in which ticket sales generated more income than DVD sales, industry-wide.

Enter Streaming

In January of 2007, the burgeoning media distribution company Netflix made a move that would fundamentally alter the landscape of cinema: they announced the launch of their video streaming service. While initially hampered by the lack of widespread access to high-speed internet, Netflix’s growth was swift, and by 2011 the company was signing contracts to produce original content exclusive to their platform. In just a few short years, streaming services would go on to become a household staple, just as the television had half a century ago. Today, it isn’t uncommon for individuals to hold several subscriptions, from Hulu to Amazon Prime Video to Disney Plus. DVDs are an artefact of the past.

From the viewer’s perspective, streaming provides an experience not all that different from DVD; one is able to return to a previously released film months or even years later as wanted. If anything, streaming offers an even more convenient viewing experience, cutting out the middle steps of searching for and buying or renting a DVD.

However, from the studio’s end, streaming is an entirely different economic model altogether. While DVD sales were a post-release source of income, streaming rights are typically sold before the release of a film. Platforms will often pay a premium over the film’s initial budget to own sole rights, but this decision is made on the basis of expectations about the film’s success. In this context, the pre-release promotion and audience sentiment plays a much larger role in its predicted success. We’ll return to this point later on in the essay.

Conglomeration and Commodification

Right from its so-called Golden Age in the 1930s, the film industry has been fairly consolidated, with 95% of production and distribution shared by just 8 companies even then. However, in the aftermath of the 1960 financial recession in the United States, many studios were absorbed into larger conglomerates that also produced various other consumer goods and services. Thus began what can be considered a commodification of the medium, as top-down management styles pushed for films to be produced in a more profit-oriented manner, as well as to serve as marketing for other products.

Bigger budgets are no longer a problem, as parent-companies have enough funds to cover production. But these budgets come at a cost: certainty. In the DVD era, certainty of profit came from the security net of DVD sales. Now, streaming platforms want to be certain that a movie they buy the rights to will be watched enough by its customers, studio executives want to be certain that theatrical releases will sell enough tickets, and conglomerates want to be certain that their ancillary products and merchandise will perform well.

Certainty of Success

One method of ensuring high viewership is to produce content based on established intellectual property (IP). If an animated movie has done well, then its live action adaptation probably will, too. A beloved book or video game is sure to draw in all those fans, plus some new ones to boot. People love superheroes, don’t they? Why not expand the team and build out a bigger universe?

Another is the use of marketing and media to build up hype. Ticket sales, especially early ticket sales, are important. So what better way to get people to flood to the theatres than to give them a surprise to look forward to? A mystery to solve, a story to unfold whose direction they have no clue about. And here, secrecy is important. Trailers have to be short. Actors cannot discuss the film’s content too much. Leaks must be minimised.

And there’s no better example of a studio that’s mastered these methods than the aforementioned Marvel Cinematic Universe. Owned by the Disney conglomeration, each film is transformed into a spectacle of massive scale, complete with easter eggs and merchandise - perhaps, one might say, a theme park. These films are based on existing IP: the Marvel Comics series, which have been a mainstay of the superhero comics genre for decades now and come with an inbuilt fanbase. Viewers know that these stories build on one another, and will converge eventually into an ensemble cast film, making each in-between film a mandatory watch in order to keep up with the narrative. Marvel is also well known for its near-comical secrecy measures - including having actors film alone and read multiple fake scripts to prevent accidental spoilers. Finally, their massive production machine has perfected the art of translating the characters into marketable toys, t-shirts, and lunchboxes. Eagle-eye viewers will notice that each new film brings a slightly different iteration of each superhero’s costume which, while relevant to character development, also conveniently makes for a new bobblehead to launch per film.

What Next?

Is this what makes the cinema feel empty? Do we, as viewers, know when we are being sold a piece of marketing as opposed to a passion project? And who’s to say that’s what these Marvel films are? Cinema, like all art, is inherently subjective. Each film is a product of its creators, of its time, and - as I have attempted to explain over the course of this essay - of the economic incentives that shape the industry. It’s impossible to say with any certainty that these films are necessarily better or worse than those made during any other decade. It remains to the test of time to determine what the future makes of these films.


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