From 12 years ago:

Until recently, studios could afford to churn out movies with heart-pumping action scenes featuring pricey special effects and high-salary actors. Although many of those movies cost more than they garnered in ticket sales, Hollywood could count on overall strong sales of DVDs to make up for excessive expenses.

“The DVD buying boom covered up a lot of sins in the middle part of the last decade,” said Tom Adams, principal analyst and director of U.S. media for IHS Screen Digest.

But the curtain is falling on the DVD era. IHS said U.S. video disc sales fell from $10.3 billion in 2004 to $7 billion last year.

The popularity of low-cost rental options, such as Netflix and Redbox, along with the ease of piracy, has cut into DVD sales, making it tougher to profit from the movie business. Blu-ray disc sales and gains in digital purchases haven’t made up for the shortfall.

Hollywood economics have been strained by movie budgets that have been rising steadily over the past couple of decades. To cut costs, some studios have dropped smaller budget movies with big-name, expensive actors, but kept making summer blockbusters based on franchises such as superheroes.

That trend has increased the average cost of major studio movies to $78 million in 2011 from about $42 million in 1995, according to Bruce Nash, the founder and president of Nash Information Services LLC, which operates The-Numbers.com

Fewer small movies means that each big-budget project has more pressure to deliver. Nash believes Hollywood will rely on tried-and-true material — sequels and reboots — rather than take a chance on untested pricey projects that follow in the footsteps of “Avatar.”

“Studios are willing to spend money for well-established franchises,” Nash said. “There’s not that much enthusiasm in completely new franchises built from scratch.”

The average cost of a movie from the major studios is now $100M or more. Although that might plateau a bit - I suspect it’ll be a while before we see someone throwing $400-500M at a film (as they did for the Star Wars prequels or, bizarrely Jurassic World: Fallen Kingdom and PotC: On Stranger Tides) with Avatar leading the big budget blockbusters for now (although the sequel wasn’t great, the franchise is popular enough to get bums on seats).