Theatrical Movies As Capital Assets

In 2007, I estimate that studios spent $20.0 billion producing original theatrical movies. These movies were shown in theaters in 2008 and will be sold on DVD and broadcast on television for decades to come. Because of their long working life, the international guidelines for national accounts recommends that countries classify production of movies and other entertainment, literary and artistic originals as an investment activity and then depreciate those movies over time. However, BEA did not capitalize this category of intangible assets until the July 2013 benchmark revision. In order to change the national accounts, I collected data on movie production from 1915 to 2010. I then calculated how GDP statistics change when theatrical movies are classified as capital assets.

To preview, my empirical results are:

1. Theatrical movies have a useful lifespan of at least 80 years;
2. Over the past decade, nominal movie production has grown slower than the overall economy. As a result, nominal GDP growth falls slightly when theatrical movie production is classified as a capital investment;
3. Thanks to improvements in computer technology; prices for shooting new movies have been constant over the past decade.