The question has garnered a strong sense of relevance as the film industry is finally confronted with the inescapable fact that movie attendance in 2011 pretty much tanked. Officially, the initial figures being presented float between 3.5 percent and 4 percent. 2011 presents the lowest box office return since 1995.

Of course, these are all basic estimates and are lacking adjustments. For example, the BOR in 1995 was $5.29 billion and $9.42 billion in 2011. Looks good until you adjust for the dollar difference between the two years. $5.29 billion in 1995 would today be $7.89 billion, which brings the two totals a lot closer. Even more interesting is the plateau effect that one finds in the figures for actual tickets sold over the past ten years. From 2000 to 2002, there was a steady increase in attendance. From 2002 to 2004, you have a basic period of stability. But from 2005 onwards the figures develop a free fall (with the exception of 2009 — this is known as the Avatar effect).

No matter how you shake the figures, movie attendance is going south and everybody has an opinion. Last December, Roger Ebert gave his reasons for why attendance is dropping. At Moviefone.com, they did a side show on their five reasons. Earlier this week my lawyer chewed up some billable hours (fortunately at another client’s expense) giving me his thoughts on the issue. Go on Goggle and you can spend a whole night trolling through online posts on this topic.

As you wade through all of these lists (usually a lineup of five top reasons — why five I don’t know), several issues stand out as the major points. First and foremost is the current cost of going to the movies. For the past several years, ticket prices have done a slippery slide upwards (except for the cost of 3D, which has taken off like a rocket). Everything else (for example concessions) has also gone through the roof. A family of four can expect to spend around $40 to $50 just to get into the theater, and if they end up at the concession counter, they can kiss the college fund goodbye. Hollywood insists that this isn’t really an issue because the cost of going to the movies is still cheaper than going to a professional football game. Not really a good comparison. Besides, they forgot to mention that this is one of the reasons why attendance at professional sporting events is also in steep decline. By the way, the actual cost at the stadium concession stand is arguably a little lower.

Add this to the other major recurring compliant: Why would anyone want to spend that kind of money on the crappy movies currently presented? This is a very touchy issue, because Hollywood will tell you that they don’t make crappy movies (heck, Chris Dodd will tell you that the crappy movies all come from Sweden). Oh sure, some of the movies may be slightly less than they had hoped, but everything they make is a solid piece of entertainment.

In the real world, Hollywood has always made a bushel full of crappy movies. Some of us even love crappy movies (Roger Ebert and I even share in some of the same favorites). Crappy movies are what once made Hollywood a cultural force. But in the old days, these were crappy movies that had the primitive and forceful ability to emotionally engage the viewer. Sometimes it felt a bit like a street mugging, but they were movies that could grab you by the throat, pin you against the wall and hold your attention. Most of today’s crappy movies lack that basic skill.

A perfect example was the release several years ago of the film Watchmen. In many respects, it was a surprisingly brilliant and carefully crafted adaptation of the graphic novel series. It had a high degree of artistic intelligence in its visual presentation. It was bold, extremely nuanced, vast and spectacular. But most of all, it was totally non-engaging at any emotional or basic psychological level whatsoever. Once the movie was over, you had a mild headache and no clear recollection of where you parked the car.

So you have a lot of non-engaging movies coming at you with an increasingly steep admission cost, and studio heads can’t figure out why lots of people are not going to their movies. Must be the fault of (reason number three) new technology. The lousy ingrates are staying home (if they still have a home) and watching recent movies on their TV (or laptop or iPhone or whatever). Basically, this is true. Why shouldn’t they? It’s a hundred times cheaper, and at least at home you can talk all you want through the stupid flick (and even go online while the movie is playing and Tweet about how bad it is).

But the rise of these new technological venues is neither a diversion nor a mere extension of the traditional distribution model for movies. It is a total transformation. The act of going to the movies used to be a primary form of entertainment. With the advent of television, the cinema became more of a secondary venue. It is now even less than that as it becomes an increasingly unnecessary process. At best, it has become a luxury (and one that an increasing number of people can’t afford). Any way you try to stack the deck (and Hollywood has been trying hard to stack it), the digital future is the only one that has any foundation in economic viability.

Which may be why my lawyer was slightly surprised by my response to his comment that he doesn’t much go to movies anymore. What could I do but roll my eyes and mutter, “Who does?” We have entered the post-cinema future and everything has changed. Within another ten years (or less), the movie theater will have about the same position as the classical concert stage: a specialized forum serving a limited audience for the presentation of an older art form.

The pop venue, whatever it evolves into, will be everywhere but in a theater.

First Robert Redford opened the current Sundance Festival with his State of the Union address. OK, Redford’s strong environmental stand is no surprise and he is a person who walks the talk. His line about the Republican debates (“…this mushroom cloud of ego hovering over everybody”) is also a pretty accurate description of Hollywood (wish I had come up with that line first). As for Mitt Romney and the Transformers movies, I don’t know. I haven’t a clue what Mitt Romney watches and I really don’t care. But Redford’s swipe at big-budgeted movies receiving government help via the Pentagon (as is the case with these movies) is as provocative as his suggestion that the US should follow the European model of government assistance to low-budget indies.

With the current political climate here in the States, it ain’t gonna happen. Instead, the main political focus is on the rise and fall (and threatened rise again) of the Stop Online Piracy Act. It’s sort of dead (and kind of not) and Chris Dodd of the MPAA is now busy threatening to hold politicians hostage if they keep opposing the act. So Dodd announces that the Hollywood purse strings are closed to selected politicians preparing to run for re-election (like maybe for president or something), which then provokes a movement calling for an investigation of Dodd for bribery. This did get Dodd to slightly tone down the rhetoric if not the ambition by the time he got to Sundance. Now he is simply referring to opponents of SOPA as a cacophony of hysterical white sound. Sort of like that great line from the old movie Beat the Devil: “Your lips move but you do not make a sound.”

Admittedly, Dodd is almost enough to drive a person out of the movie business. Maybe that is why George Lucas is retiring. He is fed up with the attitude in Hollywood and is tired of the mindless, out-of-control condition of the financially bloated tent pole movies. OK, to be honest my first reaction was that this sounds just a tad like Satan announcing that he is tired of all of the sleazeballs living in Hell. After all, Lucas is one of the original architects of this contemporary Hollywood system. But that is all the more reason to listen to him (and Satan may really be tired of the low-lifes hanging around him).

The negligent Hollywood attitude toward low-budget movie making is all too real, and Lucas’ concern about the ballooning budgets for Hollywood films is dead-on accurate. In fact, it almost sounds as if he has been reading this column (hey George, if you’re reading this, be aware that I can easily be hired). Most likely, he has been talking to his old pal Francis Ford Coppola, who has been saying the same things for the past several years (but I’m cheaper than Francis and I don’t do weird stuff with a horse’s head during business negotiations). Coppola has been looking at a digital, decentralized post-Hollywood future. Some studio executives are hoping that Coppola is just an old crank living in a wine cellar, which may be half true. But he is a crank living in a highly-regarded wine cellar, and he has a spooky habit of being right in these matters.

Lucas is not alone. A growing list of Hollywood stars are also becoming more vocal about the crappy big-budget movies that are being made. OK, movie stars are always a little more difficult to take seriously (especially when one of them is Megan Fox, for crying out loud), and I would personally be inclined to take Lucas’s opinion more seriously (hear that George, I’m sucking up big time).

But some, like George Clooney, are already doing the indie approach and doing it with some reasonably positive results. The vast majority of Clooney’s career has taken place within the low to medium indie zone. (Note to Clooney: I know I’ve been pretty snarky about you in the past, but you’re a forgiving kind of guy, right? OK, last time somebody used that line on me they found out that I wasn’t, but hey, you’re a bigger guy than I am. Right?).

None of this suggests that mainstream Hollywood is about to break its addiction to mammoth productions with runaway budgets. It’s not even clear how well some of these folks will actually stick to their guns. For example, Lucas is very conflicted in his stand and seems to want the freedom to pursue low-budget filmmaking as long as it is underwritten by his deep investment in his own tent pole movies. As for the actors, well, to be honest, only a few of them have so far displayed any decisive focus in this direction. Daniel Craig is willing to mouth off (and gee, is he telling us that Quantum of Solace was a confusing mess? I just thought I was having a stroke or something while watching it), but he appears to be increasingly locked into the $150 million-plus range.

So all of this public rabble-rousing may have little immediate effect. But the near unthinkable has now been placed on the table for public discussion. Likewise, the twin effect of dwindling box office and failed political efforts may be giving some folks in Hollywood a cold chill (how cold will be apparent when they fire Chris Dodd). Contrary to what they think, they may not be too big to fail. Instead, they could be in the process of doing a slo-mo crash into a thick brick wall and they haven’t a clue what is really going on.

Meanwhile, a strange but impressive lineup of folks is sounding ready to bolt out of the room before the roof caves in. Hopefully, they’ll remember a very important rule: last one out the door must turn off the lights.

And George (either one), don’t be hesitant to call me. I’m here for you, guy. OK, I’m really here for your money, but I’ve got some good ideas….

For example, George Lucas has recently blown the whistle on latent racism in Hollywood film production. Sure, this has also provided a neat PR plug for his upcoming release of the movie Red Tails, but Lucas is right in his assessment of mainstream Hollywood. Black directors have become more common, but they are more widely employed in TV than in the movies, and when a studio wants to drop $150 million on a tent pole epic, they  will hire someone like Michel Gondry before they’ll go scouting for a brother. I don’t even mean this as a slap at Gondry, but he was a really weird choice for The Green Hornet movie, and I can think of several black directors who would have made more sense.

But the same is true across the board. Back in the 1990s there was the brief appearance of movies by American Indian filmmakers, most notably Chris Eyre with his production of Smoke Signals. Eyre went on to do a pretty fine job for Robert Redford with the TV movie Skinwalkers (the Hillerman adaptation, not the horror movie). Thank God for television, because that is where Eyre is primarily working. Again, when a studio executive has a hot $150 million burning a hole in his pocket, he doesn’t think of signing up a Native American for the director’s chair. Heck, not even when the movie is about Indians.

And let’s not even get started about women. Sure, Kathryn Bigelow got the Oscar last year. Would you care to hold your breath until the next time this happens? Didn’t think so. Heck, until the recent release of Bridesmaids there was a moronic debate about why women can’t be funny (a dumb theory presented at great boorish length by Christopher Hitchens before he died and became inexplicably beatified). Women have been successfully doing comedy longer than Betty White has been alive, but it is still treated as a kind of bizarre mutation. Same goes for women directors (most of whom are employed in TV). Even Bigelow is rarely considered in the tent pole range.

By now, you may have noticed that TV is much more progressive in these zones than movies. Of course, TV pays less. It also runs through a lot more material. But mostly it is not as locked into the more limited mindset that currently predominates in the upper echelons of the film industry. Women have long been a major force for comedy in television. The black audience is one of the bigger viewer blocks. The Hispanic market has its own growing list of networks. Only the Indians have been largely ignored (with the exception of occasional PBS programs such as We Shall Remain, directed by — you guessed it — Chris Eyre).

For some, this suggests that TV is really part of a massive liberal conspiracy to ram political correctness down our throats. Most people who have ever worked in television can tell you that this theory is utter gibberish. TV is just as profit-focused as movies (in some ways, even more so). TV’s main focus is on viewers, not hidden political agendas. The demographic diversity of the viewership is what drives TV. This is in part dictated by television’s need to have various target markets for their advertisers. As annoying as the lousy commercials are, they actually force TV to seek a wide and divergent sense of the marketplace.

Mainstream movies basically don’t. In the old days, folks in Hollywood often referred to the rest of the land as fly-over country. There was Los Angeles and then New York. In between was some strange primitive place called “Kansas.” Occasionally, they would hear about Chicago. It seemed to have been located somewhere near “Kansas.”

Today, modern studio executives have the ability to access a wide range of thoughts and opinions concerning the tastes, views and attitudes of Americans across the country. Well, not first-hand or anything. They get various studies and reports, most of which are simply tests to see if they could find enough folks in the Los Angeles area who were up for going to a free screening. Otherwise, most people in Hollywood are without a clue regarding the rest of the country. They largely operate in a La-la Land bubble and still can’t find Kansas on a map.

TV has increasingly been dealing with an expanding structure (cable, DVDs, the Internet, etc.). This has forced television to plan for smaller audiences and concentrate on various approaches to niche marketing. The Hollywood movie industry is currently in a state of artificially-induced contraction as the major companies focus on fewer films, bigger budgets and an increasingly desperate drive to score huge audiences. Because of this, they are still operating with a homogeneous model of audience development. In this view, the audience is one big blob that will ooze into the theater seats every weekend for whatever over-produced piece of fluff they throw out there.

Of course, this isn’t working. Actual attendance is dropping hard (gross ticket income has dropped by at least 6 percent, but actual individual ticket purchases are plummeting by somewhere around 20 to 26 percent). Such a drop in TV would result in numerous shows being canceled and countless executives getting booted. In the film industry, it has convinced Hollywood to make even fewer films with even bigger budgets. This less than sterling example of responsible thinking would suggest that Captain Francesco Schettino may yet have a job at a major studio.

Which means that George Lucas is right, but for reasons far more institutionalized than he may even care to think. Things like racism and sexism are all part of the problem. But massive institutional stupidity is also a pretty big part of the picture. Especially when it comes to the audience. Many major players in Hollywood don’t have a clue who their audience is or what this audience might really want. To be honest, some of them don’t even care.

And a few still think that Kansas was a mythic place created by L. Frank Baum.

Take for example this week’s decision by the Academy of Motion Picture Arts and Sciences to change the means by which feature documentaries get qualified for nomination. Technically, this rule change for 2013 is supposed to make the nomination process more equitable (as explained by Michael Moore).

OK, I must confess that when I first read Moore’s explanation I thought maybe the poor lad had his ball cap on too tight. But let’s take a look at the current rules used by the Academy in this category. Currently, a documentary film has to have a seven-day screening in both New York and Los Angeles. So that rule stays the same. The ad requirement appears to have been dropped (“The motion picture must be exhibited for paid admission, and must be advertised during each of its runs in major newspapers…”). This rule even specifies the size of the ad. There is also the current requirement for the film to be screened multiple times during the day and evening. If, indeed, these points have been dropped for next year, that’s a good thing (especially the ad part, because daily ads are expensive). Unfortunately, the screening requirements stay basically the same and will still be a problem for many documentaries that are lucky to get two nights in the middle of the week.

The major change is that starting next year, the voting will shift to the full membership of the documentary branch of the Academy. Traditionally, the first round of voting was done by small committees overseeing different divisions of documentary movies. This system has long resulted in numerous claims of small groups of people being able to derail a movie from ever making the shortlist. In theory, the new system will prevent this. Well, maybe. Time will tell.

Of course, you’ve got this slightly odd extra ringer in the new system. Not only must the documentary be screened commercially for at least a week in both New York and Los Angeles, but it also has to be reviewed by either The New York Times and/or Los Angeles Times. Thirty years ago, this would have almost made sense (maybe).

Technically, The New York Times reviews every film that has a commercial run in New York. The New York Times averages about 760 reviews per year. This is a pretty noble achievement in today’s newspaper market. Question: How firm is the Times commitment to film reviewing?

After all, with last week’s dismissal of J. Hoberman from The Village Voice we have all been reminded that in modern journalism, film critics are a dime a dozen and the value of the dime has dropped to about three cents. Both The New York Times and the Los Angeles Times may have a strong desire to maintain an active arts section, but no one in their right mind should want to bank on anything in the fluid state of the contemporary print media. Even the new Academy rules leave open the prospect of changing this requirement when future development warrants it. We can call it the Gray Lady Down clause.

Either way, these rule changes will neither hurt nor help most documentary movies. Some people have already wondered why the Academy didn’t include the DocuWeeks program as part of the process. This forum is presented in both New York and Los Angeles. It is a major presentation site for documentary movies and is a more consistent and better managed clearinghouse than you will find in any commercial theater. Considering the unique and specialized nature of documentaries (and the fact that most commercial theaters and many critics avoid them), it would be a more comprehensive approach to the process. As it is, these rule changes sound like  just another spin on a wheel that never goes anywhere.

But the review requirement still bugs me. Oh sure, a review in The New York Times makes it all sound more official. But really, who cares? Part of the modern crisis in newspaper film reviewing (crisis as in it is vanishing) is rooted in the fact that the whole newspaper business is in massive flux as it stumbles through a radically changing world without a clue as to where it is going. Over the past decade, a variety of newspapers have folded. Many others have undergone major overhauls, normally resulting in massive layoffs and reporter rooms seemingly staffed by underpaid (or even unpaid) college interns. Where I live, we have the biggest daily newspaper in the state, and its weekday edition is often thinner than the weekly Clip N Save coupon rag.

So it is not surprising that the field of newspaper film critics has taken a walloping hit. Hell, at many papers even the sports department is getting whacked, and that was viewed as much more sacred than movies. The main reason many newspapers even had film critics was because it helped attract and maintain advertising from the major distributors. But many of the major players in movie PR have moved away from an emphasis on newspaper advertising (the focus is now TV and social networks online). In the past, film critics were expected to cover (either positively or negatively) the major Hollywood movies. There was no drive to cover much of anything outside that zone. The rationale was simple. Most publishers were too crass to care, and many critics were to lazy to bother (and keep in mind that at least some of these “critics” had actually been booted into the job after they had bombed out in the sports section).

Hoberman was an important exception to this. That is why many people in the indie film business will miss him. Unfortunately, the days of newspaper film criticism are over. For better or worse, it’s done. So I guess this is one of the reasons why I find the Michael Moore strategy at the Academy to be just a tad bizarre. It is as if they are preparing for tomorrow by grabbing a broken crutch from yesterday and hoping to hobble into the dawn.

Which suggests to me that this is another spinning wheel that is about to go flat. I just hope Moore has kept up his AAA membership.

So the box office figures for 2011 were still being sorted out, along with the various excuses, mutual blaming, general rounds of finger-pointing and bogus claims of victory. For example, Paramount Pictures is already claiming to be the number one film company in gross for the year with $5.17 billion in US distribution ($17 billion global). Of course, they spent something in the neighborhood of $1.4 to $2 billion in production and, most likely, several more billions in promotion and distribution, which means that the US box office roughly paid their costs and the rest became profit thanks to the current generosity of the global market. But it is still a profit (though made the hard way).

This is something you’ll want to keep in mind while looking at the current report from Box Office Mojo of the top ten major box office hits of 2011. Especially the fact that the vast majority of box office is now being generated overseas, often by a margin of 2 to 1 or even 3 to 1. Likewise, the actual rate of return is pretty thin due to the cost of production (a more detailed critique on this and other issues can be found in Mike Fleming’s excellent piece at Deadline.com).

Add to this debate the increasing panic about the box office slump in 2011, and the mix becomes  increasingly volatile. How big is the slump? A good question with lots of different answers. Basically, it is the worse seen in 16 years, though the official estimates are varying anywhere from 3 percent to 6 percent. Unofficially, the sky could be the limit.  Around the middle of 2011, the slump was closer to 12 percent and the overall figures since then don’t support the concept that there has been much improvement. Privately, I have a suspicion that the real slump is more than 12 percent, but I’m still having to sort out a tangled mess of figures. Thanks in part to the ticket price differences between regular screenings, 3D, IMAX, and other variations, distributors have more room to confuse the issue.

But the long and the short is that the Hollywood approach to the tent pole production isn’t working (don’t believe me, just check out a solid article by Oliver Lyttelton at IndieWIRE).  Of course, 2011 is the year that the majors started making noise about reining in the budget and gearing themselves toward a higher degree of financial responsibility. Sort of. Well, kind of, depending on how you define responsibility. Like an addict, Hollywood is planning to deal with negative news by banking heavily on the next round of tent pole productions. They’re attempting to pull back from film budgets of $250 million. But trimming down to $230 million isn’t exactly a major feat of responsible budgeting. It’s more like the alcoholic who decides that he will stick to a steady daytime diet of beer and save the whiskey and vodka for his nighttime drinking.

In contrast is the list of the biggest indie box office movies of 2011. In the number one slot is Midnight in Paris with a global take of $117.3 million. Made for an estimated $17 million, Woody Allen’s return to glory made roughly ten times its, cost which is much more than most major studio productions for the year. Unfortunately, what IndieWIRE doesn’t exactly mention in their piece is that it was all downhill from there. At number 2 on the list is The Descendants, which was probably made for around $20 million (total guesswork, since I cannot locate a budget figure for the film) and is slowly limping toward $40.3 million gross. Number 3 is The Tree of Life,the Terrence Malick meaning-of-life epic that lots of viewers couldn’t figure out. Made for $32 million, it took in a global return of $32.9 million. This could represent the Great Circle of Life, but it sure ain’t a profit.

2011 was a pretty poor year for indie movies in theatrical release. But it was also the year that new markets began to bloom as the VoD business made significant inroads into distribution. The 6th edition of the Deloitte: State of the Media Democracy study is due out at any moment, and advance reports present a clear movement among American consumers (once known as “the audience”) toward digital platforms. The concept of digital distribution has been lurking for years (Peter Broderick has been providing advice on digital distribution longer than some people knew it existed), but 2011 is the year it became a major commercial item.

So 2012 will undoubtedly be the major breaking point between the mainstream media and the indie industry. Hollywood is determined to dig itself in and rigidly stick with the current tent pole model. The indie system has been pressed to the wall and has virtually nowhere to go but online. In many respects, the indie system is better suited for digital distribution than the Hollywood model. Or at least it is better suited for it as long as the Internet remains a level playing field. This is part of the reason why the Stop Online Piracy Act has become such a major battle line. This is also why — regardless of the SOPA outcome — this fight will continue throughout 2012 in one form or another.

And it is another reason why the current divisions between the major companies and the indie system are beginning to resemble a war between heavy dinosaurs and fast little mammals. This war was first fought 65 million years ago. The little mammals survived, so you can guess who didn’t.