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THE VANISHING BOX OFFICE
     
    The regular movie audience has been so decimated over the past six decades that the habitual weekly adult moviegoer will soon qualify, if not as an endangered species, as a niche group. In 1948, 65 percent of the population went to a movie house in an average week; in 2008, under 6 percent of the population went to see a movie in an average week. What changed in the interval was that virtually every American family bought a TV set. In 1948, when home TV was still a rarity, theaters sold 4.6 billion tickets. By 1958, TV had penetrated most American homes, and theaters sold only 2 billion tickets. The Hollywood studios tried to counter television with technology dazzle, including wider screens (CinemaScope), noisier speakers (surround sound), and more visually exciting special effects, but technology did nothing to stem the mass defections. They also tried epic, three-hourmovies, such as
Ben Hur, Lawrence of Arabia
, and
Dr. Zhivago
, that, although they succeeded individually, had little effect on the weekly movie audience. Even the much-heralded fantasy bonanzas of Spielberg and Lucas could not halt the decline. By 1988, ticket sales hovered at 1 billion. The studios, realizing that they could no longer count on habitual moviegoers to fill theaters, devised a new strategy: creating audiences de novo for each movie via paid advertising.
    Audience-creation is a very expensive enter-prise—in 2007 the studios’ average cost for advertising a film was $35.9 million. Studios justified this expenditure on the grounds that huge opening-weekend audiences would help turn a movie into an “event,” generating word-of-mouth and other free advertising that would continue to bring moviegoers into theaters, and, later, into video stores.
Titanic
, for example, took in only a modest $28 million over its opening weekend. Two weeks later, after it had become a word-of-mouth event, the movie had earned $149 million. It wound up grossing a phenomenal $600 million at American theaters. While no other film has equaled the success of
Titanic
, such “event” films are what studios depend upon to pay the bills.
    What terrifies top studio executives now is the dearth of word-of-mouth event movies. “Word of mouth is no longer a factor,” Thomas McGrath, a former Paramount vice president explained. Instead, studio marketing chiefs try for big opening numbers by driving with a drumbeat of TV ads the one audience they can rely on: male teens. While with $36 million of ads they can still manufacture weekend teen audiences, they can no longer create the event movies that the studios need. Meanwhile, a quantum leap in quality in high-definition DVDs, television sets, and digital recorders threatens to further erode the edge movie theaters have over home entertainment. Studio executives are coming to grip with the reality that they have as much chance of reversing the secular shift of audiences from the theater to the home as King Canute had in commanding the tide to recede.
    But what alternative do they have? The skill that movie executives have honed over the years is audience-creation. Even if it takes $30 to 50 million to herd teens to the multiplexes, and the movie fails to earn back that outlay, they hope it will lead to a future franchise. To abandon that hope means the end of Hollywood, as they know it.

THE REEL SILVER LINING
     
    The public most often sees Hollywood through the lens of paparazzi cameras and the PR wires of publicists as a wildly extravagant, if not recklessly wasteful, place from which stars, accompanied by personal entourages, fly to lavish parties in private jets. But there is a less profligate side to Hollywood: the culture of the suits, in which the tight-fisted executives who run the studios pride themselves on their ability to pinch pennies out of movie budgets and wring profits out of unlikely places. Consider, for example, the profits studios found in their graveyards of dead