Is the Motion-Pictures Industry Recession Proof?

There is a longstanding belief among motion-pictures industry observers that box-office revenues are largely unaffected by poor macroeconomic conditions. This belief, which primarily grew out of the success of the film industry in the early years of the Great Depression, has been pervasive in the industry, and, to a lesser degree, among academics, despite a lack of empirical evidence to support it. This paper seeks to empirically evaluate the effect of recessions on box-office revenues of the U.S. motion-pictures industry using data from Box Office Mojo and the St. Louis Federal Reserve Economic Database from 1990 to 2019. This period, which includes three periods of recession, is analyzed using a number of time-series econometric methods. Results show that macroeconomic fluctuations do have a significant effect on film-industry revenues and a declining economy curtails growth, as measured in terms of the mean of revenue and persistence over time. The depth of a recession appears to be an especially important determinant. These results inform future models of the film industry by highlighting the importance of macroeconomic effects on the industry as a whole.