Plunging movie ticket sales, after a string of uninspiring remakes and movie sequels coupled with an explosion of the DVD and video game markets, are keeping audiences at home and have sent Hollywood into a deep existential crisis.
"This industry is facing significant challenges," said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp, a business support and research body.
Ticket sale revenues dropped five percent in the first 11 months of 2005 while the number of Americans going to the cinema fell by 6.2 percent compared with the same period in 2004, according to box office trackers Exhibitor Relations Co Inc.
The result is Tinseltown's most disappointing box office performance in 15 years as audiences, dazzled by their entertainment choices and disappointed by the mediocre films on offer, turned away from the cinema in droves.
Even the late November and December releases of blockbusters "Harry Potter and the Goblet of Fire," "King Kong," "Chronicles of Narnia: The Lion, The Witch and the Wardrobe" and "Memoirs of a Geisha" are unlikely to turn around the downward trend.
"It's not just a slump in box office, but also in sales of DVDs," Kyser told AFP. "This is mainly because of unattractive movies that don't appeal to young male audiences, the cost of movie tickets, parking (and) the shrinking window (between) a movie's theatrical and DVD releases.
In addition, Hollywood faces a major external threat: runaway production costs and the growing trend of movie producers to shoot in places such as Canada, Australia and New Zealand to cash in on much lower staff and production charges.
"Some studios are doing some moderate lay offs. LA's future is at stake," Kyser said, demonstrating the depth of despair in the US$9-billion a year industry.
Industry movers are battling to isolate the true causes of the slump, crossing their fingers that the big-budget money-spinners up Hollywood's sleeve will help ease the pain.
"Is it the movies? Is it the ticket prices? Is it because home theater and DVD?," pondered Exhibitor Relations Co's chief Paul Dergarabedian."I think because all this is happening at the same time, it is a combination of facts."
But he was optimistic for the future of the industry, saying that when Hollywood does dish up a good film, audiences still go rushing to see it.
"'Harry Potter' is showing that people still want to go to the movies but still they need a good reason to go," Dergarabedian told AFP.
The fourth film of JK Rowling's cult novels opened on November 18 and has so far raked in 244 million dollars, making it second most successful film of 2005, behind "Star Wars: Episode III - Revenge of the Sith."
"When a good movie strikes, people go to the theatres," said Dergarabedian.
The last in the "Star Wars" series raked in a whopping US$380 million in North American box office, "War of the Worlds," starring Tom Cruise took US$234 million, the comedy "Wedding Crashers" notched up US$208 million in ticket receipts and Tim Burton's "Charlie and the Chocolate Factory" took US$206 million.
But the successes were few and far between in 2005.
Ron Howard's 88-million-dollar biopic "Cinderella Man," starring Oscar winners Russell Crowe and Renee Zellweger, took only US$61 million, while Ridley Scott's crusade epic "Kingdom of Heaven," which cost US$130 million to make, reaped only US$47 million at the all-important domestic the box office.
Other fizzlers that did not recoup their budgets included the much-touted sci-fi flop "The Island," which hauled in only US$35 million, while Jamie Foxx's military drama "Stealth" bombed with a U.S. and Canadian haul of US$31 million. It quickly disappeared from screens.
"Movie goers are very picky and they want the price of the ticket to be worthwhile, the studios had to offer more," said Gitesh Pandya of movie industry tracker Box Office Guru.
"There should be more creativity and new ideas, not just sequels and remakes. Let's hope Hollywood listens to the audiences," he added.