The Motion Picture Association of America (MPAA) assigns every movie in the U.S. one of five ratings: G (general), PG (parental guidance suggested) , PG-13 (parental guidance strongly suggested for those under 13), R (Restricted) and NC-17 (no one under 17 permitted). A film can also choose to be released unrated, but that restricts its distribution options.
Experts have noticed a "ratings creep" over the last few years. Films which used to get an R rating, for example, may now receive a PG-13, often allowing studios to market them more effectively to teenagers.
When the ratings system was established, there were no cable stations, video rental outlets or pay-per-view choices. The proliferation of outlets means that younger children can get to R- or NC-17-rated films much more easily.
Many experts have noticed that the ratings system punishes sex much more readily than violence. Violent movies like "Passion of the Christ" or "The Lord of the Rings" are given milder ratings, while a film like "The Dreamers"---which contains no violence, but graphic levels of sex---gets an NC-17.
The public often perceives NC-17 movies as "smut" and many theaters and retailers (such as Walmart) refuse to carry them, even though many are classy and dignified films. Outlets such as Walmart are quite happy to carry unrated films, however---many with content significantly worse than NC-17---which muddies the issue and renders it impossible to market good films meant only for grown-ups.