Economics of entertainment


The economics of entertainment encompasses a wide range of factors, from the impact of historical decisions on movie pricing to evolving media consumption models and the adaptation to streaming platforms. Here are key insights into several aspects of entertainment economics:

  1. Hollywood Economics:

    • A 1948 antitrust decision intended to reduce monopoly pricing in the movie business actually led to an increase in ticket prices and introduced inefficiencies in the industry.
    • Film production is unpredictable, making it hard to predict which movies will succeed, and pricing strategies often aim to maximize initial attendance to generate buzz, rather than tailoring prices to individual films.1
  2. Evolving Media Consumption:

    • Media consumption has become more granular with platforms like YouTube and Netflix changing the landscape. This shift affects traditional viewership metrics and introduces new economic models through subscription services that prioritize access over ownership.2
  3. Streaming and Entertainment Economics:

    • The streaming model has significantly altered the economics of entertainment, turning it into a flat-fee business where creators are paid a set amount without potential profit from high viewership numbers. This has impacted the revenue potential for creators and shifted the industry towards a cost-plus production model.3

      Hollywood Economics

      Explore the impact of a 1948 antitrust decision on the movie industry and the unexpected consequences it had on ticket prices and film distribution. Richard McKenzie and Art Devaney discuss the inefficiencies and uncertainties of the movie business, highlighting the unique challenges faced by studios and theaters.


      Richard McKenzie on Prices

These discussions reveal the dynamic and evolving nature of entertainment economics, influenced by technological advancements, regulatory decisions, and changing consumer behaviors.