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Progress in the film industry

Filmmaking is a technology too, and like other technologies it gets better

Published onJun 23, 2021
Progress in the film industry
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In a 2020 essay for the New York Times, Ross Douthat argued the western world is currently living in an age of decadence, by which he means “economic stagnation, institutional decay and cultural and intellectual exhaustion at a high level of material prosperity and technological development.” He points to technological stagnation, political stagnation, and cultural stagnation. Among other things, he argues we’re making the same movies, over and over again.

That perception isn’t wrong. RadioTimes looked back at the top 20 grossing films each year going back to the 1980s and found the share of them that are sequels, prequels, and reboots has indeed grown sharply.

Complaints about the dire state of movies today has always seemed like something of a puzzle to me. Movie-making is a technology like any other. Why wouldn’t it progress, as we gain more knowledge?

And more specific to the case of making movies, the costs to create, distribute, and learn about quality films have never been lower. If this was any other technology I would expect steadily improving quality (as we learn more about how to make good movies), an increase in the quantity of new films (as they become cheaper to make), and an increase in the identifiable quality of the top films (as the web makes search easier).

But maybe film is different, because, unlike technology, for art we also care about originality? This, by definition, must get harder over time. Every idea can only be original once. Still, is it really true that all possible ideas have been tried, and we should consign ourselves to reboots? In other domains, we don’t expect to run out of new ideas.

Joel Waldfogel, in his 2018 book Digital Renaissance: What Data and Economics Tell Us About Popular Culture helps resolve the mystery. Actually, he argues, there IS an explosion of new films AND they’re quality is steadily increasing.

The number of new US-origin movies listed each year on IMDB has exploded in the digital era, from 1200 per year in 2000 (and far less before that) to 3400 in 2016. Of course, as Waldfogel notes, these listings could be biased since IMDB listings are crowd-sourced and IMDB’s user base grows over time, but there’s been a qualitatively similar explosion in submissions to the Sundance Film festival (2500 submissions in 2004, 3700 in 2010). The number of movies from each year available to watch on JustWatch also shows the same trend. So does the number of movies released to theaters.

So the falling cost of making movies has indeed increased the supply.

From Waldfogel (2018)

Are those new movies any good? Certainly not all of them; but the best of the crop seems to be getting better and better over time. Using data from Rotten Tomatoes, Waldfogel looks at the rotten tomatoes score of the 10th, 50th, and 100th best rated movie in each year. The trend is way up, especially for the lower rungs.

From Waldfogel (2018)

Speaking for myself, I’m a bit of a RottenTomatoes skeptic. They report the share of critic reviews that are favorable, so a movie that is uniformly rated as an “A+” would receive a 100% rating from RottenTomatoes. But so would a movie universally regarded as a “B.” An alternative review aggregator, Metacritic, instead attempts to attach a numerical score to all qualifying reviews and report a weighted average. This differentiates movies that earn very high marks from critics (“a new masterpiece!”) from those that are merely ok in everyone’s eyes (“a passable movie”).

I was curious how trends looked on Metacritic, so I used their annual “best of by metascore” lists for each year to count the number of movies scoring above 90 or 85 in every year from 2001 (the year Metacritic was founded) to today.

Author calculations

The metacritic movie don’t show the same steady upward trend as rotten tomatoes. But since 2012 things have definitely been improving. Over 2001-2012, there were about 14 movies per year scoring 85 or higher and 4 per year scoring 90 or better. But in the last 7 years, this number has more than doubled to 31 movies rated 85 or better per year, and 9 movies per year rated 90 or better.

All that said, I remain a bit cautious of these review aggregators. If you look at the Rotten Tomatoes top movies of all time list, they say the best movie ever made is Black Panther (493 reviews, 97% positive). Citizen Kane comes in at #9, presumably punished for having only 84 reviews (100% positive though).

Still - those caveats aside, it’s tough to make the case for stagnation in film based on data.

So, to return to the motivating question: how to square the apparent increase in the quality and diversity of films with the dominance of repetitive franchises?

I think the resolution lies in the distinction between what the major studios are doing and what the independent studios are doing. These two behave quite differently. While the overall number of movies is way up, this is entirely due to increased production from independent studios. The majors have actually reduced their output since their late 1990s peak.

From Waldfogel (2017)

Why the divergence?

I’m an economist, so my default starting place is to assume studios are trying to maximize profits. For any given budget, there are two ways to do that: make many cheap films, each of which attracts a smaller audience, or make fewer expensive films, each of which attracts a large audience. Technology has developed in such a way as to make the first strategy attractive for small independent studios and the second attractive for major studies.

For independent studios, the reduced cost of filmmaking equipment, the availability of non-traditional distribution outlets, and reduced search costs have all made it easier to create a relatively inexpensive movie and find an audience for it. Accordingly, they have pumped out lots of new movies. Because there are lots of these movies, many using relatively less well known personnel, and because they may target specific interests or audiences, their overall quality is really variable. But that means the best of them are really really good.

But for major studios, these changes have been far less useful for pursuing a strategy of making many films. Major studios already had effective distribution channels, and so the emergence of non-traditional distribution outlets doesn’t really help them find an audience. Moreover, camera and editing equipment is a much smaller part of the cost of movies. Instead, major studio films rely heavily on a small fixed set of people - actors and directors with name recognition who can pull in audiences - and technology doesn’t really do anything to make this group more productive (i.e., they can’t make that many more movies than in the past, because their time is just as limited). Waldfogel points to evidence that the cost of personnel (directors, actors, writers, producers) make up 1/3-1/2 of the cost of major studio pictures.

So technological progress hasn’t done much to help major studios make movies for the same cost. Instead, they’ve decided to follow the alternative path, investing more in each movie and trying to ensure it sells many tickets. Maybe that’s because better data on consumer viewing and the talent of new filmmakers (who can prove their talent in the indie ecosystem) makes it easier to identify movies that can make a return. Or maybe that’s because new overseas markets present new potential audiences, but only with an extra outlay of marketing. In any event, if major studios are making fewer movies, they will have less appetite for risk on any particular movie. This is going to lead them to prefer reliable movies with a built-in audience - namely franchises and sequels.

The result? A better than ever independent film scene, but a lot of passable-but-not-great franchise films in the megaplex. And since the independent scene tends to focus on niche audiences, while the major studios try to capture big audiences, it is inevitable that the latter will dominant our shared conversations.

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Cited in the above

Innovation as combination: theory


Articles cited

Douthat, Ross. 2020. The Age of Decadence. New York Times, February 7.

Ling, Thomas. 2019. Are there really more movie sequels and remakes than there used to be? RadioTimes, September 19.

Waldfogel, Joel. 2018. Digital Renaissance: What Data and Economics Tell Us about the Future of Popular Culture. Princeton University Press.

Waldfogel, Joel. 2017. Cinematic Explosion: New Products, Unpredictability and Realized Quality in the Digital Era. The Journal of Industrial Economics 64(4): 755-772.

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