Can Hollywood keep hanging on to its aging business model?

Everywhere you look in the entertainment world these days, you see more and more people crossing the digital divide, using a staggering array of new devices to read books, watch TV shows, listen to music and, yes, even read the newspaper. The one business that seems largely immune to all this dramatic change is the movie business.

In Hollywood, the maxim seems to be: If it ain't broke, don't fix it. Even though DVD revenues are in decline, movie theater revenue is up again this year (though actual attendance is down slightly) as people continue to flock to see films the way the industry wants them to--in theaters with big screens and popcorn at the concession stand. While nearly everything is different about the way we now consume much of our music, TV and news, the moviegoing experience is largely unchanged from the way our grandparents saw films 75 years ago. As it turns out, Hollywood has something special going for it: Moviegoing is an irresistible social experience. People love communal events, where they can experience something together, bound together by a similar passion or commitment. It's why the key forms of entertainment that still reliably make lots of money are all examples of social experiences--live concerts, sporting events and moviegoing. In fact, the strategy studios use to lure millions of moviegoers to theaters is strikingly similar to the strategy baseball team owners have used in recent years to stimulate attendance at their ballparks. It's what you might call creating scarcity to drive demand.