25 Apr Tell Us What We Already Know

It sometimes takes a lot of work to tell us what we already know. That is one of my impressions after reading the recent Variety report about the current state of Hollywood, as analyzed by Michael Nathanson for Nomura Equity Research. Nathanson's report, based on ten years of scrutiny, seems to present a semi-optimistic picture of Hollywood's current direction as he maps out the its modern business model. Notice I have a “semi” in there. According to this report, Hollywood has succeeded in streamlining cost issues by reducing productions and focusing on a few selected tent pole releases. I guess that is one way of looking at it. In turn, these movies have a higher box office profile and generate much larger revenues. By and large, that is true. For every $300 million spent, at least $250 million is earned at the box office. The report suggests that the past decline in theater admission may now be on a slight upward tick. Actually, the real figures suggest that the decline may have at best bottomed out. The signs of life are erratic. The decline in the home-video market has possibly bottomed out as well. Quick note to Nathanson: don't bet on it buddy.