Anything to do with the economy has a domino effect.  Why Hollywood can’t figure this out is beyond me.  When people start loosing jobs and retirement plans, they loose money.  When money gets tight, people stop spending.  The first things to go are the frills in life.  DVD’s are frills.

How could Hollywood have thought their frills industry wouldn’t experience problems?  Sure, people are still going to movies in the theaters but this is just a small part of the studios’ income.  As the river of money dries up, the powers that be have found big red targets painted on their backs.  Entertainment companies which are tottering on the edge of going broke are under pressure to turn things around when the public they depend on for that turn around are desperately trying to keep their own head above the high tide mark. 

Universal has installed a new co-chairman and given her the thankless job of fixing the colossal mess the studio is in.  Edward Jay Epstein, an author of a book on the Hollywood money plight had some interesting ideas about the whole Hollywood situation.  He believes there will be more job executions at the upper levels in Hollywood before the last song is played but he doesn’t believe the dissections will bring an end to Hollywood’s dilemma.  He believes, “the problems are so enormous they can’t be solved even by making better movies.”

Epstein sites the rising expense of making movies and the dire deficiency of money in Hollywood movie making as the main culprit in the studios’ financial woes.  With money tight, some of the funding for films is going away.  The studios are blaming cheap movie rentals of DVD’s for their problems when the problem is the result of ignoring the warning signs when something could have been done to stop the massive hemorrhage long before now.  The escalating DVD sales of the past only put a plaster patch on the problem and allowed the studios to continue with business as usual. 

The consumer doesn’t want to spend money on a DVD they will only watch once when they have better options on television or by renting them cheaply from a box;  specifically Redbox rentals to name at least one outlet.  Even the video rental stores are a better deal than outright buying the movie.  Changing the format of the movies only forces the movie watcher to go out and purchase a new method for watching the movie.  In tough times, people don’t want to spend money on upgrades for entertainment. 

So when will Hollywood get a clue and figure out that they have to learn to live within their budget?  That is a very good question.

Source: InsideRedbox