movie negative cost increased 60x since 1929

Some economic aspects of the U.S. movie business have changed relatively little from 1929 to 2007. The number of feature movie releases in both these years was about 700.  The total number of movie screens was 66% greater in 2007.  That’s less of a change than the 148% increase in U.S. population from 1929 to 2007.   The real value of box office receipts, measured relative to the Consumer Price Index, was about the same in 1929 and 2007.

In contrast, expenditure on making movies (negative cost) increased by an estimated factor about 60 from 1929 to 2007. Because this estimate is based on estimates more likely to err on the high side for average negative cost in 1929 and on the low side for averge negative cost in 2007, this estimate is more likely to be too low than too high.  Movie-making costs for feature films have increased enormously since 1929.[*] To cover their costs, feature films now rely heavily on non-exhibition revenue  such as DVD sales, television network distribution fees, and licensing for ancillary mechandise.

The large increase in feature film costs for studios and traditionally organized movie producers creates economic space for new ways of producing  and distributing movies.

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For the data and calculations discussed above, see the online movie economic trends spreadsheet (also available as an Excel file).  I’m grateful to Wayne Schmidt for making available online historical movie data. Check out some of the amazing projects Wayne has undertaken!

Note:

[*] No good, direct evidence seems to exist for the change in film distributional and promotional costs from 1929 to 2007 . Promotion costs are much larger than distribution costs.  Total advertising spending as a share of GDP was greater in 1929  (2.8%) than in 2007 (2.0%).  Film promotion costs probably did not increase as much as did film negative costs.

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