A very large part of what we have learned in this class has to deal with the combination of profit maximizing prices and profit maximizing output. These categories are measured quantitatively. I want to vent for a moment on an output that is measured a bit more qualitatively. I have pondered for years on the reason production companies release R rated movies. It makes no economic sense to me. I looked into the top grossing films of all time and there are only two in the top 100 that are rated R. The highest on the list was number 66. The list is primarily PG-13 but there are also quite a few PG titles. I initially assumed that the top grossing films would also be the top profit producing films because of the incredibly high revenues. As I looked into this assumption further I found that I was on the right track but not 100% accurate. Different websites had different information of course, but according to the site the-numbers.com the top profit earning films are also PG-13 or PG. If you look at the best return on investment the story changes and many more R titles make the list.
From my quick analysis I have found that the income of a film being produced on a low budget favors R and PG-13 ratings, while high budget films are almost always better as PG-13 or PG. I admit that I have some personal bias on the subject because I choose not to watch R rated films and there are some that I would like to see if the ratings were different. Even with my bias I see no economic reason for a large production company to produce an R rated film. I know there are different markets for different products but are there really that many customers that would choose not to see a movie because it was only rated PG-13? I have heard of companies fighting to receive PG-13 status because they understand the financial benefits so why not just make it PG-13 worthy in the first place? There are many more arguments to the discussion than I have mentioned but shouldn’t stockholder return play the largest factor in the decision?