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Hollywood leadership in flux: The business model changed
Posted: MinervaDoe @ Sun Mar 26, 2017 2:12 pm
Hollywood's studio leadership is in flux: The business model is changing

Hollywood has weathered multiple periods of disruption throughout its more-than century-long existence, all driven by technological advances. The end of the silent movie era in the late 1920s killed the careers of stars who couldn’t make the transition to talkies. The rise of television in the 1950s stirred fears that people would stop going to the cinema.

Decades later, studios were forced to adapt to VHS tapes, which upended how consumers watched movies in the home. The late Jack Valenti, who ran the Motion Picture Assn. of America for nearly four decades, famously described the threat of home video in 1982 by likening the VCR to the Boston Strangler. Those fears quickly proved to be misplaced as videotapes and later DVDs became a key profit center for the studios.

Now, emerging digital platforms and mobile technology are creating fresh anxieties about the future of the big screen. While annual box-office revenues has been relatively stable because of global blockbusters and higher ticket prices, movie theater attendance has remained stagnant. Cinemas in the U.S. and Canada sold 1.32 billion tickets last year, which was flat with 2015 and down from 1.4 billion a decade ago, according to a new report from the MPAA. Studios have long relied on foreign markets to power growth, but even the international box office is cooling off, thanks to a dramatic slowdown in China.

All this has made the job of running a studio more perilous than ever, especially as studio profits have inevitably eroded. Total profit for the seven biggest film studios declined an estimated 15% to $4.18 billion last year, a drop of $700 million from 2015, according to investment firm Cowen & Co. Much of the pain was felt at two studios. Paramount lost $445 million last fiscal year, and Sony recently took a $1-billion write-down on its film business.

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