When it comes to the U.S. motion picture industry, legendary screenwriter William Goldman put it best when he said "Nobody knows anything." For the most part, this statement is true, and it's this fact that makes the economics of filmmaking such a risky business. The economics of filmmaking just do not work and what you see could best be described as the "dysfunctional economics" of filmmaking, but through various articles, case studies, and videos such as De Vany &Walls, Arundel Partners, and The Trillion Dollar Bet--it's easy to see how and why people continue to wrestle with the economics behind this industry. As De Vany & Walls theorize, "Nobody knows what makes a hit or when it will happen." This means that the only time you'll know whether or not a movie is going to be a success is after it has been released! As De Vany & Walls also point out, "Film audiences make hits or flops and they do it, not by revealing preferences they already have, but by discovering what they like." This is when an information cascade begins to form--which will either boost a film or sink it. …
