The Wall Street Journal has an insightful (yet complicated) story about the new economics of Hollywood, and it doesn’t bode well.

The gist: Hollywood was flush with big money a few years ago, and started pumping out movies like crazy. 2006 and 2007 both saw some 600 films released theatrically. That’s insane.

The problem is no one wanted to go see 600 films, and even well-reviewed stuff like Son of Rambow failed dismally at the box office, lost in the shuffle among the blockbusters and dozens of competitors. Now having learned a lesson, Hollywood is dumping truckloads of movies into the direct-to-DVD market. (The Meg Ryan starrer My Mom’s New Boyfriend is the prime example in the piece.)

The upshot: Expect fewer theatrical releases over the next few years and way more DVDs.

Check out the full story if you want some insight into how Hollywood works. (Hint: Not very well.)