Probably because about half of the jokes, allusions are geared towards to people who have at least a cursory familiarity with Shakespeare. Ok, it's more than that. You have to have a cursory knowledge of all sorts of things. This was a movie full of inside jokes, if you want to call them that. The scene with the analyst, in order to get jokes like, "the proud tower of my genius has collapsed" you at least had to have a pop culture understanding of Freud and the idea that artistic creation is linked to sex in certain psychological theories. And the idea that artistic sterility might be tied to impotence.
I'm sure that plenty of people might have been puzzled at the suggestion this movie had jokes coming about 1 a second. Bascially, everybody gets WWII drama. For a lot of people, I'm sure Shakespeare in Love just flew right by their head.
I never saw this movie in a theater. But if I had, there would have been plenty of stuff that I laughed my ass off at, that just earned me strange looks from fellow audience members.
Little stuff like Shakespeare dipping his quill into a Globe theatre mug, while the plot warns of the danger of commercialism corrupting artistic purity would have just been missed by a whole swath of the audience.
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