Hollywood Movie Studios in Recession


Running head: Hollywood Movie Studios in Recession
Hollywood Movie Studios in Recession

The recession of the movie industry in 1968 triggered losses of up to $500 million due to low attendance and ultimately left up to 40 percent of filmmakers being rendered unemployed (Carini, 2000). With the development of TV movies, more people focused on staying at home rather than going to the movies. Also, with more international films being developed, the US film industry was dominated by competition. Unrelated businesses soon acquired the Hollywood studio industry and therefore the core thing about the industry was lost (Dirks, 2016). However, despite the fall of Hollywood, the film industry learned to rely on the young people as a source of income. They also learned to cut the cost of producing movies and therefore ensuring efficiency to ensure they recouped the returns that they had made (Formicola, Segers, & Weber, 2003).

Studios Positive Experiences during recession

The recession period provided an opportunity where only the best would survive and come out stronger than they were before. During the recession period, there was a high increase in the number of film industries. Theaters took advantage of the situation to penetrate the market (Formicola, Segers, & Weber, 2003). Even in the society today, in the period of recession or fall of some businesses, there has always been a rise of other organizations. It is always essential to note that when the industry is doing well, other will be attracted into the industry. Although it is competition in itself that ruined the film industry, it is the same game that enables the organizations to be better and produce a better film with better sounds and good picture.

The TV industry found the niche to penetrate and especially the color TV which people could access in the comfort of their home. The film industry was now left with the option of using the TV industry to air their movies (Hall, 2005).

Efficiency implies to the need to do things better and at a lower cost. Film production before the recession period was extravagant. Neale (2012) noted that the movie industry was spending thousands of dollars to produce one film with the belief that it would be recouped during the movie opening. It is the recession that found the movie industry in ballooned with high expenses and also faced with overproduction. It was an eye opener to the market to adopt new ways of film production that would not only lower the costs but also ensure that it was done quickly within a short duration of time.

It is during the recession that it was noted that Hollywood was neither creative nor original (Neale, 2012). There were no films that catered for the diverse culture in the society such as the Latin Americans. It was during the recession that Hollywood was made aware of the diversity of the ethnic background of people living in America. It was then that they were forced to find new and better ways of reaching the need of their various consumers. Movies were now produced for different cultures in the process of producing the films.

In the pre-recession period, the film and the TV industry operated together, but the film industry dominated the market. The film industries were seen to be unwilling to air their movies through the television (Neale, 2012). However, the recession period saw the rise of television viewer age. The television industry had lower prices of airing compared to the film industry, and it, therefore, put them at an edge of an era where the economy was in recession. It is during this time this movie industries started to appreciate the impact the TV industry has on the consumers. To date, the television industry is seen as the route through which most people opt to view the videos.

In addition to a “New Hollywood” was developed that was able to penetrate into the booming youth consumers (Hall, 2005).It is in this era that single directors were allowed to run the production of a move as opposed to having many people coming to a consensus. It, therefore, allowed for many youths to be able to approach the industry with many ideas that had the possibility of being used for better efficiency. It, therefore, brought in the originality that was lacking in the era before the recession.

Studios Negative Experiences during recession

Massive losses were encountered in the film industry during the recession period ranging reaching up to five hundred million dollars in the period between 1969 and 1972 (Formicola, Segers, & Weber, 2003). Also, they had to hire a new line of creative directors to deal with the changes in the needs of the society. It is during the recession that companies such as Paramount, Disney, and Warner experienced a major drop in sales at the theaters. A company like RKO was forced out of the market due to the losses experienced (Hall, 2005). Also, the major businesses in the industry were bought out by high net worth individuals and therefore seeing a loss of control by the corporate sector. Even though the sector tried to revive itself through the technology, the efforts were unsuccessful because the attendance in the movie theater had reduced drastically.

Hall (2005) noted that negative publicity further amplified the losses due to the negative reviews that people made. People associate the movie industry with high opening fees, and yet people did not feel like they got value for the money they paid to view the movies. People felt that they were being exploited by the film industry, and therefore they opted for other forms of entertainment where they felt there was better value compared to the movie. Given the era of unfair and intense competition, money was being taken to other areas of entertainment.

Unemployment closely followed the losses that were incurred by the organizations. It was led by the fact the organizations were not in a position to pay up their employees. In the recession period, forty percent of the filmmakers lost their jobs (Formicola, Segers, & Weber, 2003). It was noted that employment went down as fast as the profits were seen to go down. It is during the recession people that unemployment was seen that in addition to contributing heavily to the level of unemployment, people were additionally in a situation where they were underemployed. There was so little to do in the period that even those that were retained in the organization could not fully utilize their skills (Hoyt, 2014).

Preparing for a Recession

The film industry was highly hit by the recession because they were busy celebrating the success that they had enjoyed during the boom of the sound of music (Formicola, Segers, & Weber, 2003). There were no contingent plans for the future as to what would happen if the film industry fell. There were no innovative teams whose primary job was to foresee the future and plan for it. They suffered higher losses because they had not set aside funds for creativity and innovation. It is essential that the film industry maintains a team whose main responsibility is to plan for the future. They should be able to anticipate future developments and advise the organizations on the best plans.

Diversification is also key to preparing in case of another recession. By being always aware that there are better ways of doing things, they would have put their eggs in different baskets. The society today has many forms of recreational activities and therefore, the film industry is not viewed as a priority. The TV broadcast dominated the market when the film industry was falling (Hall, 2005).

It is essential that organization learn the importance of efficiency even on the periods where they are doing very well. It provides a kitty that will act as a buffer in a rainy day. From the studies, it is clear that the filmmakers had no plan in case the market performed poorly. They spent extravagantly in production and even though the money was recouped.it was not commensurate with the amount that would have been needed to sustain them until the market rose again.


It is evident from the studies that the recession hit the film industry the hardest ranging from the loss of profits, unemployment for its people and unfair competition. However, it is evident that it came to them as an eye opener for the challenges that the market can face. It enabled them to learn to adopt new and better ways of doing things.

The film industry is still critical to date. However, they do not rely on the returns from the opening day alone as they are aware that people today can easily access movies through their phones, laptops, and computers. Learning to diversify is, therefore, essential while at the same time providing that which the consumers desire.

In time, innovation has made the film production more efficient and easier and therefore in the case another recession were to occur, they would be more prepared and would not suffer such massive losses.


Carini, S. (2000). Emory Magazine | Feature: The Moviegoer. Emory.edu. Retrieved 15 August 2016, from
Dirks, T. (2016). Film History of the 1960s. Filmsite.org. Retrieved 15 August 2016, from
Formicola, J., Segers, M., & Weber, P. (2003). Faith-based initiatives and the Bush administration. Lanham, Md.: Rowman & Littlefield Publishers.

Hall, M. (2005). Crossroads. Lanham, Md.: Rowman & Littlefield Publishers.

Hoyt, E. (2014). Hollywood vault. California: Univ of California Press.

Neale, S. (2012). The classical Hollywood reader. Abingdon, Oxon: Routledge.

Did it help you?

Cite this Page

Hollywood Movie Studios in Recession. (2022, Feb 09). Retrieved from https://essaylab.com/essays/hollywood-movie-studios-in-recession

Need customer essay sample written special for your assignment?

Choose skilled expert on your subject and get original paper with free plagiarism report

Order custom paper

Without paying upfront