Friday, December 30, 2011

Boxing Out the Box Office

Last night I went to a local movie theater for the first time in ages.  I had to rely on my daughter to find the theater and where to park at Del Amo mall in Torrance.  That area has certainly changed in recent years including the closing of the large Borders store where we spent many weekends for entertainment when our children were young.  Another "disruption" because of the internet.

I remembered why I do not like seeing movies in the theater anymore.  The place was packed, which is good given that the movie we saw was made by my studio.  But, even though the movie was adult fare,  teenagers still were there, being their teenage selves.  One couple talked out loud throughout the movie and laughed at  two violent scenes where laughter was particularly inappropriate.  And at one of the more dramatic parts of the movie near the end, the house lights came up making it very difficult to see what was happening on the screen.  The air was filled with the odor of popcorn and chemicals meant to simulate "butter flavor".  The previews were embarrassingly violent and silly.

In contrast, I watched another recent movie, a Golden Globe contender, on my HD home flat screen the other night.  That experience was much more enjoyable.  I do not watch as many movies as I once did because strangely I do not have the patience to sit through most of them anymore.  This movie at home however started slow but captured my interest as it went on.  Perhaps I will watch more movies on demand now.

Box office receipts are down this year after a few years of rebound.  However, in the past 10 years, as reported by Ben Fritz and Amy Kaufman in the LA Times today, box office attendance has been regularly dropping,  now about 20% lower than its high point in 2003 and lower than anytime since 1995. See also here and here at page 6, both of which suggest the high point was in 2002. Ticket prices are certainly higher than they were ten years ago but still very reasonable in light of inflation and particularly when compared to other forms of entertainment.  See here at page 12.

Compared to other industries, the entertainment industry is not a high profit margin industry.  In Fortune 500's most recent ranking of industries in 2009, the entertainment industry ranked 51 out of 53 in return on revenues.  In contrast, the internet industry (e.g. Google, Amazon, eBay) was second and pharmaceuticals was third.  This low profitability ranking of the entertainment industry occurred at the same time internet industry supporters were complaining about record box office receipts and the "obvious" lack of impact on the industry by piracy.

The La Times article cited above offers that video on demand is the cause of the decline in theatrical attendance. I like video on demand and I am willing to pay legitimately for it.  Unauthorized downloads and streams of motion pictures that solely profit the pirate sites are another form of video on demand, either for free to the consumer or at a lower price than legitimate video on demand.  If video on demand is indeed driving people away from the theaters, let's not ignore the impact of pirate videos which are another form of video on demand.   To say piracy has had no impact on my industry and the average people who work in it is just dumb.


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