Is Hollywood Running Out of Risk?

If we are to believe the conventional creed, Hollywood films are highly risky investments. The common view is that movies are like a box of chocolates. Their producers and distributors never know what they’re going to get when the movies open to the viewing public. They can be loved or hated. They can succeed or bomb. They can gross hundreds of millions or generate huge losses. In short, their ex-post performance is ex-ante unpredictable. But as James McMahon shows in his 2015 PhD thesis, this conventional view is seriously out of tune with the rapidly changing reality.