This Variety article discusses MPAA chairman-CEO Dan Glickman ongoing attempts to fine-tune the movie-ratings system. The issue is that many theaters and video stores will not carry NC-17 rated films (or the original rating "X" which fell into disuse after pornography began using "XXX"), but at the same time parents and other groups believe that the R category has become too vague with many films (especially horror) falling into what is unofficially called a "hard-R" category. The article states that studios are weary of altering the ratings as they "consider the R rating restrictive enough, with its marketing limitations (e.g., no TV ads before 9 p.m.) and a proviso that kids aren't allowed in without an adult." Studios--and presumably theaters--make the majority of their profit (over 50%) from PG-13 rated films. This is why many horror, sci-fi, and action films strive for the PG-13 rating in order to maximize theater audience and profits. The criteria of the rating system have major implications on the types of films that get made, their content, their distribution and their reception. This is particularly true of genres which tend to contain graphic depictions of sex and/or violence.
It has always been in Hollywood's best interest to self-regulate. As the article points out "the ultimate fear is that watchdog groups and Washington lawmakers could try to exert political pressure on the industry -- precisely the reason Valenti started the system in the 1960s."