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Friday, December 31, 2010


Going into the holiday season the U.S. cinema boxoffice gross was up slightly over 1% vs '09; however, the holiday movies proved to be a major Christ-miss and the B.O. slid into negative territory ending the year 4% behind as the holiday B.O. ended 44% below 2009's take. Worse still, admissions were down a whopping 6% for the year. Obviously no one in the industry wants this trend to continue, especially in light of grosses being bolstered by premium 3D pricing (for 2010 average ticket prices were up 6%).

The global B.O. mirrored the U.S. results with the only bright spot - you guessed it - China, where the B.O. grew by 60% (addendum below).

What this dismal 2010 performance tell us is that people believe that going to the cinema is becoming too expensive, particularly for films they have no burning desire to view. They believe admission and concession prices are too high and that the movie going experience doesn't provide the entertainment value it once did.

The cinema may be pricing itself out of business irregardless of admonitions from many in the industry that contend going to the movies is still inexpensive as compared to other forms of entertainment. The point they miss is that one shouldn't compare going to the cinema vs. attending a football game but against viewing that same movie via on-demand HDTV - at a much lower cost.

Prognosticating is never absoulte but by analyzing trends you can get a sense of which events will shape the future and prepare for them:

- The conversion of film to digital projection at cinemas will slow. Not required to exhibit 3D, as there are on-film systems available for that. And the quick obsolescence of the rather expensive equipment makes conversion much less attractive for exhibitors.

- Alternative content at cinemas is at best a peripheral revenue generator and will remain so.

- The biggest threat for cinemas in the future will be on-line streaming which will continue to take its toll on B.O. attendance unless Hollywood can contain its greed for ever faster returns on content delivery.

- People still enjoy going to the cinema but more and more it will be because they want to view a movie at a venue that provides them a special out-of-home experience.

- With 30-40 releases scheduled for 2011, the 3D craze could easily turn into 3D fatigue. I believe people will begin to assess each 3D movie as to whether or not it's the type of movie that benefits from the 3D effect and merits their payment of the 3D up-charge.

It's going to be rough sailing for the movie industry going forward. So, every exhibitor must be on their best game and take advantage of every opportunity and anticipate and react quickly to every adversity.

China addendum:

Representing only 6% of worldwide cinema gross B.O., China's share can be expected to increase significantly in 2011 and beyond. It will be lifting its ban on allowing only 20-30 foreign films into the Chinese market each year (part of its deal for admission into the WTO). With only 8,000 screens China has a lot of room for growth (the U.S. has 38,000) and it wants and is starting to develop its own cinema industry.

Best and Happy New Year!

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