Film industry: A profitable industry or another political institution?

 Film camera“Do I have to be cruel to be kind?” Shakespeare had once written in Hamlet. Now, time has passed and things have changed. People are entertained by almost the same things as in the past. Theatre gave way to the movie industry and cinemas are now one of the most common ways to escape from the hustle and bustle of modern times. What is more fun than watching people like you, living a completely different life than yours and maybe having achieved what you want while you still haven’t? Have we ever thought of what is happening in the shadows? Let’s try to investigate some of the key economic and political goals of movies.

Let’s start with the economic aspect of movies, shall we? The movie industry, like all competitive industries in the real world, want to make a profit (abnormal profit as we would call it in economics). In other words, they want to receive more money than invested. However, the way of calculating their profits goes beyond box office sales. This is of course one way of seeing it. A different way of seeing it is by also calculating the sales of DVDs, T-shirts, games and all sorts of merchandise produced after a great movie success (Harry Potter, Star Wars etc).

Popcorn in tubFurthermore, profits are attained by cinemas and the ‘distribution films’ firms. Let’s imagine we have a very long week at the office and we want to watch a movie with our friend. Putting aside the ticket fee (if we consider this is the price which the cinema pays to the distribution firm), we will most likely buy a snack and/or drinks.  This is pure revenue for the cinema. So the kind of movies the cinema chooses to show the market (in contrast with their competitors)  will affect the revenue.

Also, product and services’ commercials during films is something frequently used a lot. (Fast and furious movies largely promote Corona beer by showing Mr Torreto’s family and friends having lunch with their favorite beer). This pushed Corona’s sales upwards (economically speaking, shifted the demand curve of corona beers to the right). Because of this, a lot of people, after having watched these amazing films and going to a supermarket having to choose between a plethora of beers, were most likely to choose this specific brand (myself included). So, those are quite intelligent tricks for a production firm to use to pay for the movie’s expenditures, and thus accomplish higher revenues. However, the film industry can have a political effect. Let’s consider how many Hollywood movies and series are daily broadcasting around the world. These can have huge but long running effects, both in political and social culture, which I will try to explain.

Firstly, let’s consider something quite simple, but important, called soft power. Soft power is the technique by which someone can make viewers feel sympathetic (or furious) towards something. Movies can easily accomplish that. An example that spontaneously came to my mind is the movie “The Reader” staring the amazing Kate Winslet. This movie shows very easily how we can feel sympathy for a war criminal. (You can try to watch this movie and see what I am trying to explain here). Also, movies promote a specific way of living. Hollywood has been promoting western ways of social attitude for years now. Thus, see how many people feel comfortable consuming McDonald’s, or recognize Marlboro cigarettes (and I am speaking on behalf of a person who fell in love with American football and way of life mostly by movies).

Consider also, the use of the English language which can be heard and travel to every place television can reach. So, this way, we can daily communicate with the handsome doctors residing in Seattle, while at the same time with the power of a button on our TV controller, we can transfer to India. Movies are a very cheap plane ticket without even getting to the airport or getting on an aeroplane.

To sum up, the movie industry can be very economically influential while at the same time can be easily used as a political and foreign relations tool promoting a country’s culture.

Eleni is studying the BSc Economics and Politics by distance learning in Greece.


“Squaring the Circle? Defining and Measuring Performance in the Creative Industries”. in Oxford Handbook of the Creative Industries. C. Jones, M. Lorenzen and J. Sapsted (Eds). Oxford: OUP, 2012.





2 thoughts on “Film industry: A profitable industry or another political institution?

  1. on the contrary, the movie business isn’t as profitable as it should be. thanks to the internet and piracy. many people would rather “download” these movies and watch them in the comfort of their homes or on mobile devices whilst lapping on a treadmill . advancements in TV and mobile technology has enhanced the “viewing” experience to such extents that one doesn’t have to go to a cinema for that “cinematic” experience any longer.

    i do agree with you about how some cultures are promoted through movies. all this at the expense of other cultures which in turn get destroyed or maligned. your “cowboys and indians” plot. “the bad muslim blowing things up”. “africans finding salvation from worshipping their ancestors, thanks to the missionaries”. i can go on and on.

    great blog by the way.. i enjoyed it!


    Liked by 1 person

  2. I couldn’t agree more with you on this topic, especially when you said “Hollywood has been promoting western ways of social attitude for years now”. It’s so true that so many parts of the world are being imperialised by the West, let alone the United States of America. And yes, it’s also through movies (and perhaps other forms of media and entertainment) that exposes us to different culture settings, although it isn’t exactly the same experience as actually going there.

    Liked by 1 person

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