Focus Point - R-Rated BusinessCommentary by Pete du Pont
August 03, 2000
I'm Pete du Pont with the National Center for Policy Analysis. Are R-rated movies bad business? A couple of economists, Arthur de Vany and David Walls decided to find out.
In a study for Texas A&M's Private Enterprise Research Center, they discovered Hollywood continues to lose money on R-rated movies, yet continues to make them; in fact, that the combination of a big budget, major stars and an R-rating are a predictably bad investment.
Moreover, R-rated films are less than half as likely as PG releases to gross $25 million domestically; and G, PG and PG-13 movies all make more money and hold down costs better than R movies.
Yet more than half of the films released in the last decade were rated R, less than 3 percent were rated G.
Of course, there's nothing intrinsically wrong with R-rated movies. But de Vany's empirical evidence seems indisputable. So why aren't there more PGs? Major studio shareholders might want to ask.
Those are my ideas, and at the NCPA we know ideas can change the world. I'm Pete du Pont. Next time, rent control.