Movie Economics: Why Hollywood Keeps Recycling

For major companies, it's a win-win. In a high-confidence economy, they could flesh out old favorites and people will still buy them. But it raises a question: why, in a more pessimistic economy, do companies increasingly produce recycled media? According to Ipsos Research, when people are cautious of the future, they will delay, curb, and reprioritize their spending. To lessen their fear of the future, the research found that nostalgia has become one of consumer's preferences (Mittal & Gwiasda, 2022). In the movie industry, when the economy became uncertain, they could play the nostalgia card.

Figure 1. Generational Share of The Labor Force, source: U.S. Department of Labor

Figure 1 shows the generational share of the U.S. labor force, with Millennials and Gen X comprising 36% and 31%, respectively. Notably, Gen Z now makes up 18% and is rapidly growing as new income earners. This matters because Gen Z, born between 1997 and 2012, represents a rising consumer base with distinct media nostalgia, having grown up with titles like How to Train Your Dragon, Lilo & Stitch, and The Amazing World of Gumball. With the 2025 Consumer Confidence Index hovering between 52 and 64, signaling cautious spending, major companies may find it safer to revive familiar IPs than risk investing in new content.

How The Market Plays

The decision to play it safe by the companies is understandable. In a time where people are not encouraged to consume tertiary goods, companies have to make a safe product in order to get their investment back. This is called risk-aversion. 

Risk-aversion means an investor, in this case major companies, choose to produce something that is less likely to lose money. Hence, making recycled content. As Mckenzie (2023) notes, sequels reduce uncertainty for producers when the original film is successful. Throughout the 2020s, major companies such as Disney or Warner Bros are getting more risk-averse. In Disney's case, it is evident that Disney spends a lot of budget to produce Star Wars-related content or make live-action of its famous intellectual property (IP). In Warner Bros, they are playing safe by renewing Amazing World of Gumball, making a remake of Harry Potter, and releasing the third reboot of the Superman film franchise.

Does this mean major companies are always risk-averse during periods of economic pessimism? Not necessarily. Disney, for instance, wasn't fully cautious during the height of the pandemic. In 2021, they released Jungle Cruise, a film about a researcher searching for a mystical tree while being pursued by supernatural enemies. Sounds familiar? The film clearly echoes the adventurous spirit of Indiana Jones. One might assume that, like Indy, Jungle Cruise could evolve into a franchise. But with a reported budget of $200 million dollars and global box office earnings of only $221 million dollars, it fell short of expectations---a financial disappointment for a company of Disney's scale. After this underperformance, Disney shifted its focus more heavily towards producing contents related to well-established intellectual properties such as The Lion King, The Little Mermaid, Lilo & Stitch, and others. The first three live-action movies managed to give Disney a hefty revenue of $2.241 billion dollars. 

Risk aversion becomes increasingly important because this playing field is only played by a few companies. In other words, the movie business is an oligopoly market. Excluding major OTTs such as Netflix, Prime, and Apple+, the major content that we get from Hollywood is only produced by five companies: Disney, Warner Bros, Universal, Paramount, and Sony Pictures. 

Think of all the shows that you liked or watched. Spongebob? It's from Nickelodeon, but that company is owned by Paramount. Despicable Me? Universal owns it. How To Train Your Dragon? Universal owns it. Mission Impossible? Paramount owns it,  Karate Kid? Sony owns it. Practically, these five companies dominate the market. 

This condition then makes these companies interdependent on each other. Due to that environment, the decisions of one company affect the way other companies do. One example is that major companies have to be strategic when releasing a film because if the movie is released at the same time, it will create a zero-sum situation. Take an example from these two movies, How To Train Your Dragon Live Action and Lilo & Stitch Live Action. The Warner Bros movie was released on June 13, 2025, and the Disney one was released on 23 May, 2025. This example shows how studios are not willing to pit their movies on the same day because the risk is too strong. 

The other important thing to see is that because of their interdependence, there is a First Mover-Follower Strategy. In this market, Disney is the first mover because the company holds the majority of the box office market share at 17%. Followed by Warner Bros with 15%. This strategy is best exemplified when Warner Bros produces HTTYD Live Action. This action could be seen as Warner Bros trying to imitate the success of Disney's Live Action such as The Lion King, Cinderella, Beauty and The Beast. Those Disney films manage to give revenue of $3.46billion.