Hollywood, Olympics, Networks Lose Their Magic

The Oscars this year were as disappointing as the Olympics.

When I was a kid, Hollywood was the center of the entertainment universe, and a few lucky Olympians, like Peggy Fleming or Bruce Jenner, would enter that world. In the cosmic balance, the stars seemed more important to Middle America than the president.

This year, it was strikingly different. The best one-word headline for the Olympics might well be "yawn.'' There were some astonishing athletic performances, like women's Alpine skier Lindsey Kildow. She had to be airlifted to a hospital after a crash during a training session but still competed in the downhill not long after she was released. But the ratings were poor, the worst on record, with primetime viewership down 37 percent from the 2002 Games.

This year's most-famous Olympian might have been Bode Miller, who was also the most conspicuously boorish athlete at the Games. Even before he arrived, he was awash in notoriety after admitting that had skied while "wasted.'' Despite a poor performance, he remained a story, with his antics and carousing providing fodder to a press pool clearly short on real news.

Downhill Path

While the people at the Oscars were as beautiful as ever, Hollywood seems to be on a similar downhill path. The box-office statistics from last year were abysmal. Hollywood suffered its longest slump in modern history, with revenues down 19 weeks in a row compared with the previous year. The final 2005 tally, according to Nielsen: a 4 percent drop from 2004.

A cynic might wonder if the talent pool has dwindled. Tom Cruise, after all, is no Marlon Brando. (I'm not even sure he's a Howdy Doody.) But, sad as it is to admit, a clever industry like Hollywood selects the stars that most appeal to the public. It's hard to imagine the box-office story would be different if Clark Gable and Cary Grant were making movies today.

The quality of the acting isn't the problem. The popular culture is undergoing a seismic upheaval because of technology. When I was growing up, there were almost no computers, and our television received two channels. The movie theater in my hometown showed one movie a week. If you wanted entertainment, you were the captive of Hollywood and the networks.

TV Window

That is why the Olympics were so huge. The television network triopoly meant that the Olympics was a heavily hyped blowout and about the only thing remotely worth watching when the events were on. Competing networks showed reruns. Viewers ascribed importance to the Games because television was their window to the world.

But now my television has hundreds of channels and is connected to an Xbox. As of 2004, almost 75 percent of U.S. households had access to the Internet at home. Now there are many windows to the world, and each has a different view of what is important. So it's unlikely that anything created in Hollywood or on a television network will ever again achieve the status of the old days. Too many other things will be competing for the audience's attention.

The best thing competing against them increasingly will be video games. We have only begun to see how dramatically these technologies will change our world. Great theater is effective when it persuades the audience to suspend disbelief and recognize the characters and situations as momentarily real.

New Reality

But there is more than one way to create a pseudo reality. Television, stage and movies have a significant disadvantage with respect to the latest technologies. Their audience sits and watches. A computer-game enthusiast can be made to feel like he enters a new reality, as if it were possible to float down the Ulonga-Bora with Hepburn and Bogie on the African Queen.

The companies that offer audiences thrills like that are now among the biggest players in the entertainment industry. While the gaming industry is currently experiencing a slow period as gamers move to next-generation platforms, it had a banner 2005, with sales of hardware, accessories and games for console and portable systems totaling $10.5 billion.

Sales of PC games contributed almost another $1 billion, according to research firm NPD Group. By comparison, the domestic box-office take for 2005 was $8.8 billion. It's important to note, though, that this figure doesn't include DVD sales.

If you compare the thrill one gets running madly away from a ravenous beast in the computer game "Quake'' to the experience of an action flick such as Cruise's "Mission Impossible,'' the movie doesn't even come close. It's far more exciting to be in the middle of the action.

Online Players

Even more popular than games like "Quake'' are those in Vivendi Universal SA's Half-Life series, which spawned "Counter- Strike,'' the world's most-popular online video game. There you can wander in a virtual world that feels more real than any movie, because quite simply, it is. The other characters you meet are other players. The plot no longer has any boundaries.

Hollywood's ability to compete with such games will decline steadily as computing power becomes cheaper, and talented creative artists increasingly devote their lives to computer entertainment. While software hasn't yet produced its Shakespeare, it will. When it does, sitting and watching a movie will be a much tougher sell.

Disappointed Hollywood investors scheming to recapture lost entertainment dollars should get used to failure. It will likely only get worse.

Technology has changed, and a better form of art is on the way. My son rarely comes across a tape cassette. Maybe his son will never go to a movie.

Kevin A. Hassett is a resident scholar and director of economic policy studies at AEI.

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