During the Oscars this weekend Hollywood will be covered in gilt and glamour. Yet beneath the surface is an industry that is suffering writes The Economist.

• Profits from movies are decreasing while those from television are rising. This is best signified by the fact that Seth MacFarlane – a man who is known for the TV series Family Guy – will be hosting the Oscars this year.
• People are still watching as many movies as they used to. But they’re getting them in ways that generate lower profits such as through Netflix and other online video streaming services.
• Yet film costs are rising. Technology was expected to make films cheaper, but instead they have become more expensive as directors expect to be able to take their films through expensive post-production processes.
• The rise of social networks mean that when films get negative reviews, the news quickly spreads, and the movie bombs at the box office.
• Emerging markets are not the panacea that they have been for other industries. They pay less for their movie tickets, and rampant piracy means that there are no DVD sales to be had.
• To ensure that people make it to the theaters, studios have focused on films with in-built audiences such as sequels, or those based upon notable characters or books.
• They have also started to pay actors less, and hire first-time directors who demand less money.

Read more about what the movie studios are doing to keep profits up, some hard numbers behind the trends, and why Hollywood, of all industries, should be worried about having hit maturity as well as much more, over here.

Source: The Economist