Hollywood is on the edge of a nervous breakdown. Worried about an industry wide writers' strike, struck by a series of theater-chain bankruptcies , burdened with unreasonable corporate profit, requirements and seemingly incapable of producing consistently creative movies, the American film industry is in a period of soul-searching. There's little doubt it will survive this crisis. But most insiders agree there is disease at both ends of the business--where film are produced, and where they're shown---that may take years to overcome. While annual box-office income increases for nine straight years, largely due to increased ticket prices, the number of actual tickets sold declined for the second year in a row. The construction boom has added nearly 10,000 theaters(more than 200,000 more seats) in the last five years. But due to a static audience base, eight major chains have gone into bankruptcy and several others are in terrible financial situations. In fact, insiders say, Hollywood is now in a business it does not want to be in. "There's a general problem in that the companies that have the most consistent output of material are least interested in what they're making," says former 20thCentury Fox CEO, Bill. And, Bill adds, "We're in a period where movies are getting bigger and more costly and less interesting and fulfilling to an audience." Today the studios are under the stress to increase profit margins  for their corporate parents, and profit margins are hard to control in a business whose products are seen as impulse buys . Other business can increase profits by cutting costs--buying cheaper material, or making the candy bar smaller. Not Hollywood. "What we're cutting is risk," says the head of one major studio, who asked not to be named, "And risk is what great film has always demanded." While the studios are avoiding risky concepts, their competitors in the home entertainment business have been expanding the boundaries of the imagination. It was this pressure---in electronic games, the Internet, EVDs----that forced the movie theater chains into a self-destructive craze of expansion. What has directly caused major theater-chains in terrible financial situations?
Bigger movies More costly movies Increased ticket prices More theaters but an unchangeable audience base