Sunday, January 03, 2010

The Box Office Boom That Isn't

You may have read articles crowing about the box office record set this year. For the first time, movies have grossed more than $10 billion at the North American box office (which includes the U.S. and Canada). However, a closer look at the numbers shows that while the box office gross set a record this year, attendance is not the reason. It has to do with the increase in ticket prices.

(Click to enlarge.)

A quick look at the chart above (lifted from Deadline Hollywood Daily), shows that ticket sales, while up for this year, fall in the average range. For the 11 years on the chart, 6 of them have higher ticket sales than 2009. Furthermore, except for the years 2002-2004, movie attendance has basically remained stable at fewer than 1.5 billion admissions a year during a decade when the population of the U.S. and Canada grew by approximately 33 million (See here and here).

Note that ticket prices have gone up 47% since 1999 while paid admissions have actually fallen from that year.

Furthermore, Dave Kehr reports that DVD sales have fallen $800 million in 2009. Standard DVD sales fell $1 billion with Blu-ray sales increasing by $200 million.

So while Hollywood is basking in its record year, it's an illusion. Attendance is relatively flat over the decade, DVD sales have fallen and only rising prices have led to increased revenue. They haven't grown the pie, only charged more for each slice. Should the audience tire of stereoscopic 3D (and its higher ticket prices), the box office gross may drop significantly next year.

6 comments:

Michael Sporn said...

They're also charging as much as $5 for 3D glasses. That makes the cost of seeing Avatar as much as $17 a ticket in NYC. That's added to the box office receipts reported. It's no wonder the studios are hyping 3D. (It's more to see IMAX.)

There are some live musicals you can see in NY for $18.

Rick Roberts said...

I really don't understand how these Hollywood people expect to make a profit for a film anymore. They spend millions upon millions on stunts, explosives, merchandising, and now the 3-D gimmick has returned. They really don't even depend on attendance anymore, it's mostly DVD sales but how long is that going to last ?

swtcurran said...

i don't underestand the $7.46 "average" - i've haven't seen a youth, a senior nor matinee price even close to price. and since i'm paying 12.50 at my lowest priced movie theater i can't see the average making it as low as 7.46

oeconomist.com said...

Well, in fairness one should note that the “pie” isn't the number of customers, but the amount of wealth extracted from those customers.

However, having said that, it appears from the figures that most of the growth of box office receipts is purely nominal, and that receipts have grown more slowly over the past decade than has the economy as a whole.

(And, of course, the DVD sales are just plain grim.)

network marketing said...

I am not able to understand & estimate these figures of profit & spend money. How Hollywood citizens people expect to make a profit for a film anymore.

animation clips said...

Hey, u don’t need to estimate this figure, just check out profit & spend money.