Published Jan 2, 2004

2003 was hard for many sectors of the economy. Even movies were hit hard, suffering a 4% decrease in gross as compared with last year. Why, in tough times like these, aren’t movies making money as the unemployed and underemployed escape their miserable lives through the fiction in the theater? Is it, maybe, because there are too many movies?

Too many is not always too many. Starbuck’s, for instance, has found that it can open coffee shop after coffee shop and only increase the total demand for the bitter brew. But they don’t have a coffee shop on every corner — and the motion picture industry does. I can’t find statistics on movies released this year, but in 2002, 81 movies were released just in November and December, and that’s a lot!

Let’s think about our average filmgoer, A. A is of a certain demographic, D, and particularly likes a certain star, S. A will intend to see every movie that features S, and a strong percentage of the movies targeted at D. Suppose A can see one movie a month. A prefers to see movies with friends. Suppose all of A’s friends share demographic D and some also are fans of S.

A wants to see a movie this weekend. A calls friends up and says, hey, want to see movie M? Friends agree that M stars S, so they decide to see the movie. Success for the production company!

Next month, A wants to see a movie, and likes the ad for film F which appeals to Ds, so A calls up friends. Some want to see other film O, which also appeals to D. The group may split into two groups, or the O fans may decide to give in and see F. Or they may decide to do something else. Adding that extra film to the mix complicated things and actually made the filmgoing experience more difficult and success for the production company lower.

I can remember, as a teenager, planning weeks ahead of time to see a movie to which I particularly looked forward. If we didn’t see the movie this weekend, well, we’d see it next weekend. With today’s crowded marketplace, fewer movies gross middling profits and more disappear early in their runs. The glut of films reduces moviegoers second chances, and, thereby, films’ second chances.

In college, I wrote a weekly movie review column for the student newspaper. Back in the old days, 1995 or so, it was actually hard to find a movie to see every week; many times I would look at the newspaper and realize nothing new and interesting had opened. No longer! Now the studios have zeroed in on my demographic; there’s something interesting to me as a young male, or a nature buff, or a horror movie fan, or whatever, practically every week.

Sure, I’m interested, but my total ability to consume movies has not increased, so I see a movie a month or less. Adding more movies sure won’t help me see more, because it’s not a matter of finding nothing interesting — it’s a matter of how many movies will I, or another average moviegoer, see a year. How can the studios optimize this?

It’s important to release the right number of movies targeted at the right demographics at the right time of year. There’s no point in releasing more movies than optimum; in fact, it’s probably better to release fewer movies than ideal, since the marginal cost of adding another movie is so high. A good starting value for ideal can almost certainly be developed from a detailed breakdown of last year’s take. Then err on the low side, and slowly and very strategically add pictures until the rate of increase in per-movie take drops. Then everything will be nicely optimized.

And for goodness sake, stop putting out so many movies. It confuses me.