Top 10 Film Industry Stories of 2010: #7

Summer Bombs Pervade

By David Mumpower

January 27, 2011

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There are two periods on the box office calendar that matter more than all of the rest. One of the two is the end of December holiday phase when consumers have more cumulative free time than at any other point during the year. The other is the summer box office period that has evolved from being a dumping ground prior to Jaws to becoming an entity that starts in early May (or even late April) and doesn’t end until the second week of September. 40% of the industry’s overall box office revenue is ordinarily accrued during this time frame. Summer is not quite everything in the movie industry, but its overall importance is readily apparent.

The summer of 2010 is perceived to be a triumph or at the very least a win for studios and exhibitors. Ostensibly, revenue was up 2% from 2009; overall earnings for this period are around $4.35 billion. Alas, longtime readers of this site know that this is a parlor trick of sorts. The primary reason movie ticket revenue maintains consistency on an annual basis is that ticket prices are constantly on the rise. At the start of the 2000s, the average movie ticket cost $5.39. At the end of 2009, the average price was stated to be $7.50, and even that total was skewing low relative to our common sense. Due to the almost instant spike in ticket prices from IMAX and 3D movie goers, the cost of a single movie escalated dramatically over the past 18 months.




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Consider that from 2003 to 2007, the average ticket price rose from $6.03 to $6.88, an increase of 85 cents over a five-year period or roughly 17 cents annually. At the end of the first quarter of 2010, The National Organization of Theatre Owners confirmed that ticket cost averaged $7.95, an increase of $1.07 per ticket in just over two years. Isolating this to only a 15 month period, from the start of 2009 until the third month of 2010, the cost of attendance to a movie increased from $7.18 to $7.95. In 15 months, the industry experienced an average ticket cost increase of 77 cents, one that almost duplicated the total increase from 2003 through 2007. Clearly, stating that movie revenue was up in the summer of 2010 is quite misleading due to the historic spike in the cost of average movie attendance.

This behavior is nothing new, though. One of the dirty little secrets of the movie industry is that customer attendance is falling at a near constant rate. The reasons for this are myriad, but if you have recently watched a movie on Netflix or rented from Redbox, you have a basic understanding of the why of it. From a financial perspective, what matters is that summer movie attendance peaked in 2004 with 642 million tickets sold. In 2010, that number was an almost sickening 552 million (i.e. 90 million less than the 2004 peak), the lowest volume since 1997 (!). Given that declining movie going attendance is systemic, we should not be shocked by these totals. Still, this knowledge does allow us to place the ticket sales information into perspective.


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