Quotes of the Day

In May, the first month of blockbuster summer movies, Hollywood brought out its big guns — sequels to Iron Man, Shrek and Sex and the City, plus the pricey action-adventures Robin Hood and Prince of Persia: The Sands of Time — and most of them turned out to be popguns. The month's total take was 11% below May 2009's in revenue and 19% down in attendance. Then last weekend, four more films opened: Get Him to the Greek, Killers, Marmaduke and Splice. They all "underperformed," in industry parlance, marking the first June weekend in five years that no new movie earned $20 million at the box office. The weekend gross dropped a parlous 28% from the same frame last year, despite a hefty rise in ticket prices.

All through the Great Recession, Hollywood enjoyed a relative boom. Last year the domestic box office — the revenue from movie theaters in the U.S. and Canada — exceeded $10 billion for the first time ever. Now the numbers look anorexic, big-budget films are flopping left and right, and studio bosses have begun wondering what has gone so horribly wrong. Is the recent downturn a blip in the business, or a harbinger of the end of America's long love affair with paying to see picture shows? Have audiences suddenly decided, "Moviegoing — that's so 2009"?

Ahh, 2009. Studio bosses stroke their three-day-bearded chins and sigh at the memory of that wonderful year. The summer season opened with a predictably profitable May menu of remakes (Star Trek), sequels (Night at the Museum: Battle of the Smithsonian), prequels (X-Men Origins: Wolverine) and Pixars (Up). Making money from familiar franchises is pleasing to Hollywood but not unexpected. Then, in early June, came the comedy smash The Hangover, which opened to $45 million and eventually took in $277 million on a $35 million budget. For the rest of 2009, the hits just kept on coming, often in surprise packages: a South African sci-fi parable (District 9), a strong-woman sports drama (The Blind Side) and an indie horror film (Paranormal Activity) that earned $150 million worldwide — 10,000 times its $15,000 budget. All those pictures, plus Avatar.

The gold rush continued through the first quarter of 2010, when James Cameron's eco-epic racked up most of its $749 million domestic take, the highest in film history. As soon as the Avatar avalanche abated, Tim Burton's Alice in Wonderland stormed in and soon joined Avatar as one of just six films to have earned more than $1 billion worldwide; for the first time ever, two films had crossed that magic threshold in the same year. Industry swamis predicted that 2010 would top the record haul of 2009, figuring that 1) Avatar gave the new year a great head start and 2) the rest of the year would naturally produce the same number of hits.

Hasn't happened so far. And June looks even worse than May, with only two inevitable hits — Toy Story 3 and Twilight: Eclipse — and a lot of romantic comedies and '80s retreads. Nor does the rest of the summer look so rosy for the industry. Instead of a reliable blockbuster like Transformers for the Fourth of July, we have M. Night Shyamalan's The Last Airbender, another stab at movie-izing a kids' TV show. Hollywood has learned the lesson that came too late to the wise guys on Wall Street: no industry is assured of ever rising profits. And at least for now, Hollywood has lost its audience-enticing mojo. Let's see why.

1. The Boom Wasn't All That Boomy
The five years from 2005 to 2009 showed remarkably consistent ticket sales, all in the range of 1.39 billion to 1.42 billion, according to movie-stats blog the Numbers. Indeed, in 2009 moviegoers bought no more tickets (1.42 billion) than they did in 1997; the 62% increase in box office revenue, from $6.51 billion to $10.65 billion, was entirely due to the gradual hike in prices. But the bust could be real: if current trends hold, the number of admissions this year will be 1.27 billion, the lowest since 1996. Historical note: None of the recent years comes anywhere near the 4 billion tickets sold in 1946, back before TV gave Americans a free, at-home option for watching entertainment. That's three times the tickets, when the U.S. population was half what it is today.

2. It's the Movies, Stupid
In the 1940s, filmgoing was a habit; the average person went three times a week. Today it's a habit for some — the under-25s, which is why Hollywood aims its product at them — but an event for most. The irregular attendee may scan the listings each week but won't necessarily go see anything. To get beyond the core audience, the studios must create something that is either new or better, at least by the industry's definition of quality. Who can explain why The Blind Side, the umpteenth sports-inspirational, or The Hangover, the 463rd rowdy-boys comedy, became such a megahit? Well, they did, and whatever that elusive essence, Hollywood hasn't been able to bottle it this year.

3. Where Are the Sequels of the Future?
Once upon a time, even the biggest hits were one-offs. Nobody made a Ben-Hur II or The Sound of More Music or Gone With the Wind: Tomorrow Is Today. Then, in the '70s, Hollywood invented two kinds of sequels: the organic (The Godfather Part II, the Star Wars trilogy) and the opportunistic (inessential follow-ups to Jaws, The Sting, The Exorcist, etc.). Sequels became the industry's answer to perpetuating a brand name. Today the problem is not that there are too many, but that there aren't enough new hits that warrant sequels. The joke is that Hollywood has become so sequel-dependent, it has forgotten how to make new hits.

It happens that we're late in the cycles of many franchises, which often hit the wall after three films. They get more expensive to make and usually show diminishing returns. Was there a compelling argument, beyond the need for greed, to make Ocean's Thirteen or Ice Age: Dawn of the Dinosaurs? Will Pirates of the Caribbean, rebooting after a four-year hiatus for summer 2011, rekindle the excitement of its first episode? Shrek Forever After proves that even a green ogre can be overexposed. Whereas the organic sequels — the Lord of the Rings, Twilight and Harry Potter franchises — kept expanding their audiences by offering narrative twists and character growth instead of rote repetition.

4. All Movie Ideas Have Finally Been Used Up
Genres have shelf lives too. One hit spawns a glut of like-minded films, and eventually the format exhausts itself and the audience. Nearly a quarter-century after Porky's and its spawn, Judd Apatow's The 40-Year-Old Virgin and Knocked Up revived the randy, guy-centric comedy. After a few years, the robust grosses dissipated, and Get Him to the Greek doesn't spark hopes for any further extension of the Apatow genre. Other genres, like rom-com spy movies (Killers), Arabian adventures (Prince of Persia) and possibly even the gore-fest horror film, may have reached their sell-by dates because audiences have seen it all so many times before. Richard Schickel, TIME's longest-serving film critic, once said about the challenge of reviewing Hollywood's summer product, "It's not that they're bad movies, it's that they're all the same bad movie." After frequent exposure to similar experiences, the mass audience may get the same sinking feeling.

5. Hollywood Fell in Love with Its Own Hype
Each week, industry insiders predict the weekend's grosses. And movies can make a lot of money but be deemed failures because they underperformed by not beating the early line of the experts, who can be as manic-depressive in their speculations as the Wall Street touts. On the Numbers, C.S. Strowbridge noted that May was a month with "not a single wide release beating expectations." That's the fault of the movies, yes, but also of overly optimistic expectations — by people like Strowbridge. He forecast that Marmaduke would earn $24 million last weekend; it made less than half that, $11.6 million. It's a bear market, and the savants keep seeing bulls. Look for an abrupt shift in the next few weeks to "Don't buy — sell!," and then some serious underestimation of hit movies. The expert view will be that they "overperformed."

6. The 3-D Cow Can Be Overmilked
Studio bosses saw 3-D as the best idea since sequels. Sequels allowed them to extend a popular franchise; 3-D let them charge premium prices. And since the surcharge was way more than the added cost of shooting in 3-D, they could mint money. Filmmakers only had to perform last-minute stereoptic transplants on their 2-D films, like Alice and Clash of the Titans, to give them the patina of an event and rake in untold extra loot. Except that Clash wasn't the smash it hoped to be, and Shrek Forever After, an actual 3-D picture, also "failed to meet expectations." It's likely that certain spectacular fantasy films — the ones by Cameron and Burton — will lure audiences to pay more for a unique experience. But as more movies play in 3-D and the format becomes the norm instead of an event, the glamour could wear off. And with it the grosses.

7. Ticket Prices Are Higher — Way Higher
They jumped 8% in the first three months of 2010, largely because of the 3-D surcharge for Avatar and Alice in Wonderland, but that almost didn't matter because attendance was up 10%. Then the ticket price went up another 8% in April. (The breakdown: 8.3% for 3-D, 10% for IMAX and about 4% for regular films.) "At one AMC theater in New York," the Associated Press reported in late March, "the price for a family of four to see a 3-D screening of DreamWorks Animation's How to Train your Dragon this Friday will be $63 before popcorn, soda or candy." Even going to plain old 2-D movies can cause sticker shock. Get Him to the Greek or Killers will cost you $13 at a Manhattan theater, should you choose to attend. And last week, the Los Angeles Times' Joe Flint reported that a ticket to the indie drama Solitary Man at Hollywood's ArcLight Cinemas — on a Sunday afternoon and at the box office, not on Fandango — cost $16.

Talk about rotten timing: the latest price hike coincided with the release of a lot of movies America wasn't that keen to pay for. The truism holds true: If audiences want to see a movie, it doesn't matter how high the ticket price is; if they don't, it doesn't matter how low. Filmmakers now have to lure people back to theaters. The shock of the new could do it, or a sweet twist on an old genre. I don't know the cure, but I can diagnose the disease: Hollywood has taken its audience for granted. And the audience has said, When you've got something worth seeing, call us.

• Richard Corliss
• The first few weeks of summer have been one disappointment after another for Hollywood. Why the blockbusters -- and box office -- are doing so poorly