Author: Sergio Sparviero
Abstract: Academic, trade, and popular publications commonly assert that 80 percent of motion pictures fail to make a net profit, suggesting also that the main players of the motion picture industry operate in highly volatile market conditions. More importantly, major film companies use this argument to negotiate for better terms with their production and distribution partners, to lobby for stricter copyright protections, and to argue in favor of media conglomeration as a hedge against adverse market conditions. This article disputes these assertions by calculating the full range of income that major motion pictures derive from their primary and secondary markets. It demonstrates that a large share of studio films are ultimately profitable, therefore challenging the arguments that conglomerates make with industry partners and government policy makers.
Citation: Sparviero, Sergio, Hollywood Creative Accounting: The Success Rate of Major Motion Pictures (2015). Media Industries Journal 2.1, ISSN: 2373-9037.
Full paper on SSRN: http://ssrn.com/abstract=2617170
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