Wednesday, July 06, 2005

It's not as bad a slump as it appears...'s worse. The Vanishing Box Office: A terminal condition

Slate columnist Edward Jay Epstein has more comments related to the 19th straight weekend of declining box office receipts (year over year). And this is during a stretch when you had the final Star Wars release, the reemergence of the Batman franchise, and Steven Spielberg and Tom Cruise pairing up for a remake of War of the Worlds. Those are big time summer blockbusters, yet the industry is in a historically long slide.

Or maybe not. Epstein points out at least two interesting facts in this article, one positive and one negative for Hollywood. First, the big boys are doing fine:
Despite the weekly chorus of doom about the decline of the Hollywood box office, the six major studios—Paramount, Warner Bros., 20th Century Fox, Disney, Universal, and Sony—actually took in more money from their movies in the first half of 2005 than they did in the same period in 2004. These studios (and their subsidiaries) earned $3.2 billion at the box office from Jan. 1 to June 30 in 2005 as opposed to $2.7 billion the previous year (click here for a table). To be sure, there as a 7 percent decline in overall U.S. ticket receipts, but the loss came mainly at the expense of independent distributors and studioless studios, which account for more than half of the films released in the United States. So, even though fewer Americans went to the movies in 2005, the big studios did not lose out.

Interesting - the majors are making their money, so the dips are hurting the independents more. I would not have thought that...if anything I would have assumed the opposite. But, that does not mean that all is well - the long-term decline is precipitous:
In 1948, when home TV was still a rarity, theaters sold 4.6 billion tickets. By 1958, TV had penetrated most American homes, and theaters sold only 2 billion tickets. The Hollywood studios tried to counter television with widescreen (CinemaScope), noisier (surround sound), and more visually exciting (special effects) movies, but technology did nothing to stem the mass defections. ... Even the much-heralded fantasy bonanzas of Spielberg and Lucas could not halt the decline. By 1988, ticket sales hovered at 1 billion.

So the long-term trend still seems to be away from the "theatre experience" and toward the "home-theatre experience." (Although we have seen some empirical evidence suggesting that those investing in the home-theatre experience are also spending more money at the box office than those who don't.) There can be no doubt that there are many variables that are affecting the declining numbers, but two that simply cannot be ignored are more variety of entertainment options (this article alludes to the correlation between the mass spread of television and the decline of movie-going) and also simply a lower quality of entertainment in the theatres. In any event, the studio's themselves will continue to do fine, because they are still the conduit into the home-theatres as well as the stadium theatres...the question in my mind becomes what happens to the large movie theatre chain corporations?

For more perspective from the Houston Chronicle click here - Rude people, high prices costing movie theaters.

Also, see my previous posts on the movie business:
Home Movies...
Post-Easy Riders and Raging Bulls...
Dumb Money...
Gross Misunderstanding

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