The Principle-Agent Problem of Hollywood

It seems as though the movie industry is hitting an all time low. The traditional movie seasons (i.e the summer months and Christmas) which used to be filled with blockbuster films are now witness to sequels, prequels, and remakes. A once proud staple of original and innovate films Hollywood is on the path to becoming the next GM (and there will be no bailouts for this failing franchise).

I recently came to an understanding of why this is happening when I finished watching Terminator Salvation. It was a seemingly monotone film with several flaws but what irritated me the most was the ending which left the possibility of a sequel up in the air. It seems as though consumers are stuck with hollywood prodcuers in a Principle-Agent problem, our interests of watching entertaining works of art are conflicted with a hollywood executives view of the next franchise of movies that can be marketed for years or the revival of an old franchise that experienced past success (The Terminator Series).

This problem does not seem to be ending any time soon because of our continued willingness to watch this rubbish. By continuing to consume this product we are exasperating the problem of moral hazard which will only ensure that we continue to be served this filth.