Hollywood Sequels and Wheat Trading!

Hollywood studios have always been fascinated by making sequels, trilogies, franchisees. Just to name a few, Matrix, Jurassic Park, Godfather, Lord of the Rings, Ocean's (11,12,13), Pirates of the Caribbean, Shrek, Indiana Jones, Star Wars, Star Wars Prequel, Back to the Future, Spiderman, Harry Potter, James Bond and the list goes on and on! Lets refer to this entire category of films (sequels, trilogies and franchisees) as sequels for ease of reference.

The reason is for making sequels is a practical no-brainer! There is already a existing, firm and at times cult like following for the first movie then why not cash in, add in some more glitz and masala, more special effects, (supposedly) more entertaining storyline, an excellent PR campaign calling it the "Best Ever", a well made teaser campaign and there you have it...!!

Not many sequels are actually planned... The success of the first film more often than not inspires the next.

In my opinion sequels are a failure in principle but a successful ploy in fooling the audience. A failure because hardly any does justice to theme and the thought behind the main movie. Or even worse it has the same old antics repackaged... But yet we find that they're a commercial success on most occasions. It is probabaly the single most guaranteed way to earn a million dollar profit.

It brings us to a very important principle in economics... Law of Diminishing Returns!

The sequels are hit and badly at that by this law. The law of diminishing returns states that at every consequent attempt a higher amount of effort is required to achieve the same level of output. So for example if a farmer in Punjab gets an output of one ton of wheat from a kilogram of planted seeds on a piece of land, he'll have to put in more than a kilogram of seeds to get the second ton from the same piece of land.

Now lets see how it relates to our sequel problem. The studios need to spend considerably more amount of money in coming up with a story that (atleast in theory) surpasses the original, have to pay the actors a much higher sum, have to spend a bomb on special effects, PR and marketing takes practically sinks them. And inspite of all this most sequels face sub-par reviews. So there you have it a much much higher effort for a sub-par job!

Inspite of this how is record for the the highest grossing film shattered so often by a sequel. (They sometimes even win Academy Awards for it, which is yet another myth to be busted some other day!) The answer too lies in the wheat economy of Punjab.

Each year the ticket prices for movies are sky rocketing. The number of viewers of the movies is increasing with more screens each year, add to that the ever increasing target population of 16-60 in most cases. I haven't even factored in the anticipation, hype and cult following! So that's where the profits come from in reality. The sequels dont make money because they're great but they make money the same way the farmer in Punjab makes it... By being wise enough to understand the demand-supply economics and adjusting the price in such a way that the extra efforts for the second ton of wheat are actually justified!

Cheers!