Edward Jay Epstein has perhaps the best, most consistent explanations of why a lot of movies are bad and how Hollywood actually works, which is quite different from how Hollywood is portrayed in the movies and media. The most recent excellent example of this isn’t in book form yet—it’s in an essential post called Role Reversal: Why TV Is Replacing Movies As Elite Entertainment, which explains why a lot of the better TV shows (The Sopranos, Rome, Entourage, True Blood—pretty much half of HBO’s output) are better than most movies: cable stations are now capable of targeting smaller, relatively discerning audiences, while movies, for the most part, aren’t. Until recently, the opposite was true. Read the post to learn why. See Alex Tarrabok’s post for an explanation that includes a nice demand curve graph.

Cable stations are, in essence, able to cater to adults. They’re not beholden to a censorship board that goes by the name MPAA. So they portray things like sex that many people are afraid of exposing teenagers to—better to let them see violence and explosions instead. As Epstein says in The Hollywood Economist: The Hidden Financial Reality Behind the Movies, “We may live in an anything-goes age, but if a studio wants to make money, it has to limit how much of ‘anything’—at least anything sexually explicit—it shows on the big screen.” Virtually everyone has seen porn by the time they graduate from high school, if not middle school today, but movies that want “to make money” can’t show people in real relationships, which tend to include sex.

This fact of studio life is a fact of life despite the dearth of real data on the supposed danger of sex; as Judith Levine points out in Harmful to Minors: The Perils of Protecting Children from Sex:

Evidence of the harm of exposure to sexually explicit images or words in childhood is inconclusive, even nonexistent. The 1970 U.S. Commission on Obscenity and Pornography, the ‘Lockhart commission,’ uncovered no link between adult exposure to pornography and bad behavior and called for dismantling legal restrictions on erotica. Not only did the panelists fail to find harm to children viewing erotic, moreover, they went so far as to suggest it could ‘facilitate much needed communication between parent and child over sexual matters.’

But is this a real change? Epstein says yes:

In the early days of Hollywood, nudity—or the illusion of it—was considered such an asset that director Cecil B. DeMille famously made bathing scenes an obligatory ingredient of his biblical epics. Nowadays, nudity may be a decided liability when it comes to the commercial success of a movie. The top twenty-five grossing films since 2000—including such franchises as Spider-Man, Lord of the Rings, Shrek, Harry Potter, Batman, and The Incredibles, contained no sexually oriented nudity. In fact, this absence of sex—at least graphic sex—is often key to the success of Hollywood’s moneymaking movies since it increases the potential audience of children in both the domestic and foreign markets. To be sure, directors may consider a sex scene artistically integral to their movie, but studios almost always have the right to exercise the final cut, and, if they want to maximize the potential revenue, they have to consider three factors.

Those factors include the rating system, the power Wal-Mart exerts on DVD sales (the company’s sales “accounted for nearly one-quarter of” DVD sales in 1997, and television censorship through the Federal Communications Commission, which regulates what can be shown on most non-cable TV stations. Taken together, these factors mean that Hollywood studios are most profitable when they don’t include nudity. But when they are most profitable, they are not necessarily producing the most artistically interesting material.

Note that merely showing nudity doesn’t make a movie artistic, and it’s obviously possible to make masterpieces without showing nudity. But the fact that Hollywood means that large-scale commercial movies are cut off from an important aspect of most people’s lives. And Hollywood executives wonder why their industry is being completely trashed by the Internet: not only can people pirates movies, but they can see as many naked people as they want with a single Google search. Sure, those naked people usually lack stories and decent lighting, but at least they’re available. To judge from what the average multiplex shows, you’d never know this, or you’d only know through implication. It’s like The Apartment happened and, while we’ve moved somewhat forward, we’ve not moved as much as we’d like to imagine.

Unless, of course, you’re watching HBO.

Epstein lists the “Midas Formula” that movie executives use:

1. They are based on children’s fare stories, comic books, serials, cartoons, or, in the case of Pirates of the Caribbean, a theme park ride.

2. They feature a child or adolescent protagonist (at least in the establishing episode of the franchise).

3. They have a fairy-tale-like plot in which a weak or ineffectual youth is transformed into a powerful and purposeful hero.

4. They contain only chaste, if not strictly platonic, relationships between the sexes, with no suggestive nudity, sexual foreplay, provocative language, or even hints of consummated passion. (This ensures the movie gets the PG-13 or better rating necessary for merchandising tie-ins and for placing ads on children’s TV programming.)

5. They include characters for toy and game licensing.

6. They depict only stylized conflict—though it may be dazzling, large-scale, and noisy, in ways that are sufficiently nonrealistic and bloodless (again allowing for a rating no more restrictive PG-13).

7. They end happily, with the hero prevailing over powerful villains and supernatural forces (and thus lend themselves to sequels).

8. They use conventional or digital animation to artificially create action sequences, supernatural forces, and elaborate settings.

9. They cast actors who are not ranking stars—at least in the sense that they do not command dollar-one gross-revenue shares.

Now, none of these are wrong in and of themselves—but they result in movies that deal with only a relatively small part of the human experience. Some movies, of course, get made that go beyond this, but the focus on such movies is probably detrimental to movies that aspire to be art. And a vicious cycle gets started: people who have real taste watch fewer movies because the movies are worse.

As movies get worse, studio executives realize they need to pander to teenagers, who can be lured out (“The studios zero in on teens not because they necessarily like them, or even because the teens buy buckets of popcorn, but because they are the only demographic group that can be easily motivated to leave their home”). Even this might no longer be as true, since video games are claiming a steadily larger proportion of teenage time, and every hour spent playing Halo is an hour not spent on a movie. As studios focus on comic book movies for teenagers, people with taste stop going to see them as often. They make sure they have subscriptions to HBO, if they care about that sort of thing. People like write unread blog posts like “Why are so many movies awful?” And the cycle continues. But at least The Hollywood Economist explains, clearly, lucidly, and quickly, why so many weekends in a row can pass with me wondering, “When will a movie I actually want to see come out?”