Andrew Charlton: On the Attention Economy, Fragmentation, and Future Hollywood Film Industry Strategies

In recent years, plenty of ink has been devoted to analyzing the challenges facing the film industry both now and in the future. A review of the available statistics seems to indicate a rough road ahead for Hollywood, as the number of movie tickets sold in the United States has dropped to levels not seen since the days of silent film. For an industry that long held the mantle as the foremost visual medium in both the U.S. and abroad, the decline has been shocking and precipitous.

Finding a solution first demands that the central cause of the issue is accurately identified. As is often the case with economic analyses, pinpointing the cause of declining U.S. ticket sales is complicated by a multitude of interrelated factors -- including, for example, the so-called “sequel machine,” global audience growth, mobile’s increasing popularity, and audience fragmentation, among many other things -- contributing to the issue in some way.

It’s also worth noting that even though ticket sales are down, there is evidence of growth in domestic box office numbers due to the increasing cost of purchasing a ticket, leading many to pose a chicken-or-the-egg type of question: Are costs on the rise in response to the decline in ticket sales, or are declining ticket sales in response to the rise in ticket prices?

Andrew Charlton, a renowned economist currently serving as director of AlphaBeta Advisors, dutifully points out that such a question does not properly account for the diverse social and economic factors that ultimately influence the health of any given industry. Although the economist agreed that the aforementioned issues have indeed played a role in the decline in domestic ticket sales and the ongoing rise in ticket costs, the idea that a single issue could be the dominant cause of the challenges facing Hollywood both today and in the future likely misses the mark by a wide margin.

Instead of a single dominant cause -- enhanced to some degree by a variety of other contributing factors -- economists like Charlton are likely to take a more holistic view in order to better accounts for the impact of the host of interconnected issues potentially affecting a particular industry. As a number of analysts have pointed out, for example, audience fragmentation should be viewed as hand-in-hand with the increasing popularity of mobile devices and applications.

As younger audiences invest more of their attention to mobile devices and applications, there is simply less time available to invest in going to the movies. The fact that digital media platforms like Netflix have given a home -- as well as an almost unheard of level of creative freedom -- to some of Hollywood’s most talented directors, actors, and screenwriters has only exacerbated the challenge currently facing Hollywood, and this only begins to scratch the surface of the issue.

Of course, the film industry is still incredibly powerful and lucrative, even if the sharply declining numbers might be cause for legitimate concern. At this point, there is still more than enough time to develop a holistic strategy that accounts for the rapid social and economic changes taking place in the U.S. and abroad.