Business and Movies

The Oscars are this weekend and I’m excited to see which movies will win. I really enjoyed Avatar and Sherlock Holmes. I like to go to the theater to watch movies and I also like to buy movies to watch on DVD. The movie industry is big business. According to Strategic Finance magazine, the major studios spend an average of $72 million to produce and $37 million to promote. This magazine also showed how movies revenue has changed over the years.

Until the 1970s, consumers could only watch movies in theaters, attend film festivals, or wait until the movie was released to one of the major television networks (ABC, NBC, or CBS). Then videotapes (VHS) were invented which started to change the revenue streams for movies. Today movies make revenues from DVDs, pay-per-view, premium pay channels, and television license revenue. Recently the Internet has provided downloadable movies.

This article was directed toward management accountants to help them understand the lifecycle costs and revenues in knowledge-based industries such as motion pictures. I liked this article because it shows how an industry can change over time. The movie industry took advantage of new technologies to maximize their profits. I believe that for business people to succeed, they need to understand their industry. Business people also need to be able to anticipate and adapt to changes that will inevitably happen over time.

Young, Mark S. “The Business of Making Money with Movies.” Strategic Finance. February 2010. Pg 35-40.