Is Hollywood recession proof? Yo-Yo economy brings unwelcome real-life drama

New-York-stock-exchange

Image Credit: Stan Honda/Getty Images

With so many random twists and turns making everyone want to take their money back, it feels like the stock market is being directed by M. Night Shyamalan.

Fears of a double-dip recession accelerated this week due to the downgrading of American credit and wild fluctuations on Wall Street, and businesses everywhere are on edge, waiting to see whether the hardships that hit in 2008 will strike again. Hollywood is no different, though the traditional view is that entertainment is recession proof. People still want to be entertained, perhaps more so in tough times… um, right?

“Yes and no,” says Karie Bible, box office analyst for Exhibitor Relations. “People always say, ‘Everyone went to the movies in the Great Depression to escape their troubles,’ but really there was only one studio [MGM] in the black back then. Everyone else was bleeding red.”

Though box office rose in 2009 after the economic collapse in late 2008, studios across the board have clearly felt the pain, suffering layoffs, and cutting back on more risky big-budget pictures to maintain fiscal austerity. (MGM, coincidentally, has struggled to remain in existence.)

We’ve already seen budget-wary Universal kill pricey projects like a trilogy and TV show based on Stephen King’s The Dark Tower and Guillermo del Toro’s At the Mountains of Madness. Studios are still making movies, but they’re also taking fewer chances.

Escapism does fare well, but … “[Films] about the thing that’s bothering everyone? Not so much,” says Patrick Corcoran, spokesman for the National Association of Theater Owners.

So maybe that Wall Street sequel wasn’t the best idea. (The original hit in boom times, remember.) And Margin Call, opening this fall, may have its work cut out for it.

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Image Credit: Barry Wetcher

So what’s behind that idea that movies are recession-proof?

“Generally, when economic downturns hit, we have seen an increase in box office and attendance in six of the eight last recessions,” Corcoran says. “People seek relief in forgetting their problems, so they go to the movies, and it is the least expensive form of entertainment.”

Do you scoff at that assertion, because ticket prices have been rising? Okay, that’s true, but so have the costs of everything: sporting events, stage shows, and pretty much all types of outside-the-home amusement. When money becomes tight, “people tend to cut back on big-ticket things, like theme parks and concerts,” Corcoran says.

Movie tickets have had a steady creep upward, particularly when the premium of 3-D is added in (and the always overpriced popcorn and a package of Skittles still requires a second mortgage on your home,) but they are still are on the low end of the cost spectrum when compared to other diversions.

Box office rose 0.6 percent in 2009 and was up 5 percent in 2010. In the midst of a seeming recovery, sales have been down this year, 4.8 percent, according to Bible. Corcoran says this summer has been better, thanks to Transformers: Dark of the Moon and the final Harry Potter movie, but even if tough times presage better box office, theaters aren’t immune to the crisis, particularly in the way it dried up credit. “We’re in the middle of a big digital transition and some of that involves financing,” says Corcoran. “We would be farther along than we are if it weren’t for difficulties in the economy.”

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Another sector of the film industry that can be hard hit: indie flicks. Studios can finance their own pictures, but those scrappy, upstart filmmakers trying to convince outside investors to take a chance on their stories have found a lot less of that money in recent years, and fewer studios willing to spend on acquiring the next Napoleon Dynamite or Blair Witch Project.

It also hurt that there was a kind of “indie bubble” thanks to that movie and others, which led studios to pick up some movies for wide distribution that just wouldn’t have a mainstream appeal. “Historically, funding for independent film has suffered in times of economic hardship, and a part of that is, in flush times, there’s a rush into that space,” says Keri Putnam, former production chief at Miramax and current executive director of the Sundance Institute. “That certainly happened in the 2000s.”

Sales picked up at this January’s Sundance Film Festival, with movies like the bittersweet romance Like Crazy and the cult drama Martha Marcy May Marlene getting distribution, though the price tag ($4 million and a little less than $2 million, respectively) were a lot less than the record $10.5 million paid for Little Miss Sunshine in 2006.

Right now, Putnam says it’s too soon to gauge what broader investor fears will do to the indie market. “I haven’t heard of any deals falling through,” she said. “It’s way too soon to worry.”

When it comes to a shaky economy, it’s the one time Hollywood is just fine with an anti-climax.

For more movie news, follow Anthony Breznican on Twitter: @Breznican

Comments (41 total) Add your comment
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  • Rupert

    Yep

  • Jay

    I hardly ever go to the movies anymore… mostly due to the prices. The movies that I watch are the ones Netflix delivers to my door.
    If I’m going to spend my hard-earned money on “entertainment”, I buy a video game. For around $50 I can get months of entertainment (provided I get a GOOD game)

    • halligator

      You got that right. Video games give the most for your dollar.

    • Sally in Chicago

      I was shocked! shocked! when I paid $11.50 to see the Planet of the Apes pics. I swallowed hard….but it’s matinee and neighborhood movies for me from here on.

      • baerman

        I got so burned for the last couple of movies I saw this summer. 2 stupid comicbook movies, and cowboys and aliens. I’ve never felt so ripped off by simply going out to see movies before. They were terrible. The worst.

  • Ap

    I only go to the weekend matinees. The AMC on 42nd (NYC) still has 6.00 movies before noon.

  • Lee Harvey

    Our dead economy has killed my trips to the theatre. Thanks again, G O P.

    • baerman

      I squarely blame the producers for these bad movies lately. It is on them. The writing was bad. The acting was OK. And no amount of FX is going to make me want to spend another 13 dollars on a movie this summer.

    • alan

      You mean Frank, Harry and Nancy.

  • Fridge

    It’s about $40 for me and my fiancee to go to a movie, including the tickets, popcorn and a pop and/or candy for us to share between the two of us, so we’re pretty selective. We used to go 3-4 times a month, but anymore we maybe go once a month if that. Plus the movie has to be one we really want to see. Otherwise we just wait until it comes out to rent, or we just buy it and go out for dinner instead.

    • Nancy

      The only movie I didn’t ask for a refund for in the last six months was Cars 2. My kids never got bored at the cinema before this year. But now, they tell me, Mom let’s go this is awful. And I get a refund. If they don’t like it, we just get up and leave.

  • Clete

    I seldom go to movies anymore, not because of the prices. Sunday matinees where I live are reasonable. It’s the content and the audiences. I work for a University, so I can see all the car crashes and moronic looking people I care to see, don’t need to go to a movie to see them on the screen. The the audiences (except for certain movies) talk either to themselves or to people who call them on cell phones, very annoying. Another point is that movies don’t start when they are advertized, have to get in twenty-thirty minutes of commericals and prevues.

  • kate middleton

    I don’t see how people can afford to go regularly anymore, especially if it’s a family. It has to be a really good movie for me to want to spend $20 for us to go (not including any snacks or dinner before). We probably go once a quarter.

    No need to spend the money on movie unless I know it will be good – considering I can get everything on Redbox for $1 3-4 months later.

  • MWeyer

    I enjoy going to the movies as a lot of films still have a “big-screen” aura that watching on TV can’t capture. Plus, if the audience is good, it’s worth it, watching “Captain America” in a packed midnight theater much better than alone on TV. But I agree on the high costs (I stick to afternoon shows) and one can hope Hollywood gets the message to look for quality over money-grabbing.

    Then again, let’s not forget people flocked to the Smurfs last week so never underestimate the American public’s need for mediocrity.

  • wendy

    AT $10-$12 a movie, then if you get a drink/popcorn before even sitting down you’re out around $25. why do that when i can wait a few months and rent it at redbox for a buck, and be able to pause the movie for potty breaks? it’s ridiculous how much money it takes to go to movies. i’d rather go see a play.

  • who-R-u-tryingToKid?

    trying to convince us in this article that going to the Movies is still the cheapest form of entertainment in today’s tech age is a scream! .. gotta’ go, my downloaded copy of “Planet of the Apes” is ready.

  • Meli

    Why should I pay $12 to sit and watch 45 minutes of commercials, followed by 45 minutes of previews that do nothing to make me interested in seeing the film they’re promoting, then watch a feature that has bad writing, bad directing, and big-name stars who are do one insipid rom-com after another because they’re getting paid big money and not stretching their abilities as actors or even testing the waters of creativity as movie stars, PLUS put up with the screaming children and cellphones? Right now I can put that $12 to better use.

  • jane

    Our household spends money on what we think are really good movies, which is probably why we’re at the theatres more in the fall when all the award contenders are released. The movie going experience is fun and has become increasingly more expensive, especially here in Los Angeles, but I don’t think It’s not an all or nothing cost. You can go to matinees, skip concessions. Regardless it comes down to the quality of the movie – is this film worth my money?

  • Lynne

    Wow. No offense to you guys that pay all that $ for snacks and drinks, but you dont have to buy all of that. Use your common sense and buy all of that stuff at the store and put it in your, or your girl’s, huge purse.
    I dont go to the movies too often, but when I do, I spend $ for my ticket (with school ID Harkins gives the matenee price for shows after 6pm) and pre-bought snacks that my best friend puts in her purse. Spend no more than 8-10$ per person, and thats if we even get snacks and drinks.

    • Meli

      I guess you haven’t been accosted by the Theatre Police, who will tell you if they catch you eating something not from the concession stand to either put it away or leave. Movie theatres make money off the concessions, not off the ticket sales.

  • Sally in Chicago

    The movies are costing a lot because of the high salaries of the actors — $20Mil and up. Some of these so-called actors are no talents, they play against green screens & CGI, that’s not really acting. It’s posing.
    Movies can be made a lot less, but if you read the credits everybody has their uncle, cousin, sister on the payroll.

    • Meli

      Tell Andy Serkis, who has to act without words when he’s using Performance Capture, that he’s not acting. Or are you saying Charlie Chaplin and Lillian Gish weren’t real actors because they worked in silent films?

  • Laura G

    Now that we have kids,my husband and I rarely got out to movies. Our nearest theatre is 30 minutes away so if you add up travel and movie time, the babysitter gets quite expensive for our three kids.

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