Summer is now officially over, and for Hollywood the results were not good. No, the industry didn't suffer a repeat of the string of debacles that hit last year, when one mega-budget picture after another—White House Down, The Lone Ranger, Pacific Rim, Turbo, R.I.P.D.—unceremoniously tanked. In fact, the news was actually worse.
Last year at least the hits made up for the misses. This year the North American summer box office was down 15 per cent overall. Movies like The Amazing Spider-Man 2 and the latest Transformers installment drew crowds to the multiplex, but smaller crowds than in the past. And there are signs the core audience is losing interest: According to the MPAA, the number of frequent moviegoers (once a month or more) last year fell in every age demographic between 12 and 49, with the biggest drop coming among 18-to-25-year-olds. It's not hard to figure out why: As producer Lynda Obst put it recently, “How many times can you see the same cities destroyed? How many ways are there to destroy them?”
Not enough, apparently.
Blockbusters have dominated the multiplex in recent years because despite the mega-flops, the Hollywood studios found them on average to be a sure-fire strategy for minting money. Last year, in her book Blockbusters, Anita Elberse of Harvard Business School offered intellectual justification for this strategy. Though the safer course might appear to involve making a larger number of pictures at smaller budgets, she wrote, “producers can’t afford to walk away from big bets—doing so would actually increase their chance of failure in the long run.” What’s more, Elberse argued, the “laws of consumer behavior” that explain this apply not just to Hollywood but to entertainment of every stripe: From Justin Bieber to Lady Gaga, “blockbusters will become more—not less—relevant to popular culture, and blockbuster strategies will thrive.”
This was a gratifying message for embattled entertainment executives. Publications like the Financial Times and Bloomberg Businessweek found it "persuasive" and "convincing." In reality, it's neither. When I looked at her evidence for a summer cover story in The Milken Institute Review, I found it pretty seriously lacking.