With so many random twists and turns making everyone want to take their money back, it feels like the stock market is being directed by M. Night Shyamalan.
Fears of a double-dip recession accelerated this week due to the downgrading of American credit and wild fluctuations on Wall Street, and businesses everywhere are on edge, waiting to see whether the hardships that hit in 2008 will strike again. Hollywood is no different, though the traditional view is that entertainment is recession proof. People still want to be entertained, perhaps more so in tough times… um, right?
“Yes and no,” says Karie Bible, box office analyst for Exhibitor Relations. “People always say, ‘Everyone went to the movies in the Great Depression to escape their troubles,’ but really there was only one studio [MGM] in the black back then. Everyone else was bleeding red.”
Though box office rose in 2009 after the economic collapse in late 2008, studios across the board have clearly felt the pain, suffering layoffs, and cutting back on more risky big-budget pictures to maintain fiscal austerity. (MGM, coincidentally, has struggled to remain in existence.)
We’ve already seen budget-wary Universal kill pricey projects like a trilogy and TV show based on Stephen King’s The Dark Tower and Guillermo del Toro’s At the Mountains of Madness. Studios are still making movies, but they’re also taking fewer chances.
Escapism does fare well, but … “[Films] about the thing that’s bothering everyone? Not so much,” says Patrick Corcoran, spokesman for the National Association of Theater Owners.
So maybe that Wall Street sequel wasn’t the best idea. (The original hit in boom times, remember.) And Margin Call, opening this fall, may have its work cut out for it.
So what’s behind that idea that movies are recession-proof?
“Generally, when economic downturns hit, we have seen an increase in box office and attendance in six of the eight last recessions,” Corcoran says. “People seek relief in forgetting their problems, so they go to the movies, and it is the least expensive form of entertainment.”
Do you scoff at that assertion, because ticket prices have been rising? Okay, that’s true, but so have the costs of everything: sporting events, stage shows, and pretty much all types of outside-the-home amusement. When money becomes tight, “people tend to cut back on big-ticket things, like theme parks and concerts,” Corcoran says.
Movie tickets have had a steady creep upward, particularly when the premium of 3-D is added in (and the always overpriced popcorn and a package of Skittles still requires a second mortgage on your home,) but they are still are on the low end of the cost spectrum when compared to other diversions.
Box office rose 0.6 percent in 2009 and was up 5 percent in 2010. In the midst of a seeming recovery, sales have been down this year, 4.8 percent, according to Bible. Corcoran says this summer has been better, thanks to Transformers: Dark of the Moon and the final Harry Potter movie, but even if tough times presage better box office, theaters aren’t immune to the crisis, particularly in the way it dried up credit. “We’re in the middle of a big digital transition and some of that involves financing,” says Corcoran. “We would be farther along than we are if it weren’t for difficulties in the economy.”
Another sector of the film industry that can be hard hit: indie flicks. Studios can finance their own pictures, but those scrappy, upstart filmmakers trying to convince outside investors to take a chance on their stories have found a lot less of that money in recent years, and fewer studios willing to spend on acquiring the next Napoleon Dynamite or Blair Witch Project.
It also hurt that there was a kind of “indie bubble” thanks to that movie and others, which led studios to pick up some movies for wide distribution that just wouldn’t have a mainstream appeal. “Historically, funding for independent film has suffered in times of economic hardship, and a part of that is, in flush times, there’s a rush into that space,” says Keri Putnam, former production chief at Miramax and current executive director of the Sundance Institute. “That certainly happened in the 2000s.”
Sales picked up at this January’s Sundance Film Festival, with movies like the bittersweet romance Like Crazy and the cult drama Martha Marcy May Marlene getting distribution, though the price tag ($4 million and a little less than $2 million, respectively) were a lot less than the record $10.5 million paid for Little Miss Sunshine in 2006.
Right now, Putnam says it’s too soon to gauge what broader investor fears will do to the indie market. “I haven’t heard of any deals falling through,” she said. “It’s way too soon to worry.”
When it comes to a shaky economy, it’s the one time Hollywood is just fine with an anti-climax.
For more movie news, follow Anthony Breznican on Twitter: @Breznican