Posts Tagged 'Disney'

Asia and Latin America steam ahead at the Box Office while more US films chase fewer US dollars

The just released MPAA (Motion Picture Association of America) theatrical statistics for 2011 show a continuing rise in global box office with an overall rise of 3% but that figure masks where the real growth is occurring – which is in China (up 35%) and Latin America (up 24%). The US and Canada, by way of contrast, experienced a 4% drop in box office year on year.  Behind the box office figure, boosted both by inflation and the premium cost of 3D tickets (sales of which dropped, ominously, by 18% from 2010 to 2011) the long-term US decline in admissions is also clear – down from 1.57 bn to 1.28 bn between 2002 and 2011, or per person an average of 5.2 dropping to 3.9.

Taking a longer (five-year) view the report confirms that the US ‘domestic’ market, having grown by just 6% between 2007 and 2011,  continues to decline as a proportion of the global box office as ‘International’ (i.e. non US) box office grew by 35% over the same period.

The ‘regional’ figures show just how fast box office is growing south, west and east of North America:

Territory Percentage change  in box office 2007-11
Europe, Middle East & Africa

+ 24%

Asia Pacific

+38%

Latin America

+86%

TOTAL          

+35%

More low budget and independent films, fewer studio films.

Undaunted by falling ticket sales, US filmmakers are turning out movies in ever greater numbers but more and more of them are low to micro budget while the studios have trimmed their production slates.  MPAA members (the established end of the business) produced 97 films in 2011 compared to 137 in 2007.  By comparison in 2011 non-members made over 400 films (at an estimated $1m or higher budget), up from 360 in 2007.  And at the under$1m budget level production rose to 319 in 2011 from 290 in 2007.

All in all over 800 films were produced in 2011 hoping to get a theatrical release of which around 610 made it onto a big screen, just under a quarter of which (141) were from MPAA members and the balance (469) from non-members.  Which sounds like there is plenty of box office to go round until you consider the way it splits across those releases.

According to box office mojo the top 200 titles of 2011 collected just over $10.02 of the $10.2bn in domestic box office, which left $180m for the remaining 400 odd titles, an average (and as regular readers of this blog will know there are no average films!)  of $450k per film.  Since the 80/20 rule tends to apply all the way down (see previous posts ad nauseum) you can readily see that the majority must have tanked.  Once you get down to no. 300, a film called October Baby, its $199,442 from 14 theatres is far from the worst performance in the charts.

Whose to say if it or any of those languishing further down the charts might still have a life on DVD/VOD but the chances of making a buck are pretty remote.  Those are the breaks at the roulette table of cinema, after all not even Disney get it right every time!

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Gone for a Burton – alice through the release windows

The widely reported spat between Odeon/UCI cinema and Disney which has resulted in the former boycotting the latter’s Tim Burton-helmed Alice in Wonderland reveals just how topsy turvy film business models are becoming.  Disney want to release the movie on DVD five weeks earlier than the normal window of 17 weeks which they hope will increase their take from DVD sales and limit the loss to pirates, while the cinemas’ view is that reducing their exclusive window by a third will seriously erode their revenues – hence the boycott.

What this dispute reminds us is that the film value chain (from producer to distributor to exhibitor, TV and retailers) is composed of a number of discrete players who, although they usually operate in reasonable harmony, from time to time have divergent interests.  This often happens around the introduction of new technology and so, from the wiring of cinemas for sound in the 30s to the installation of 3D projectors and screens today,  issues about who bears which costs or how premium ticket prices or revenue from sale of 3D glasses  are split can break out, as in this example, into open conflict.

The bigger threat to cinemas’ place in the once rigorously enforced release window chain is simultaneous/non-exclusive release across multiple distribution platforms – cinema, DVD, TV, VOD etc. which some in the industry consider the only way to counter the threat of file-sharing etc.  Echoing the ‘freemium’ model in other entertainment media, music in particular, this way of pricing films is premised on the idea that you pay for the added value of the experience context (big screen, going with your mates, 450 varieties of confectionary in the case of the cinema;  the DVD packaging and extras;  the Wii tie-in version and so on) as control of physical copies becomes harder.  (That said one of the big attractions of 3D to the studios is that is is, for the time being, much harder to pirate).

However no-one really knows how destabilising this will be to the still pivotal role of theatrical release in establishing the perceived value of the movie in other media, with few exceptions box office correlates to the (larger) revenue from DVD etc and remains the key opinion former after the opening weekend.  So we can expect more conflicts like the Disney/UCI standoff if Pay-TV/VOD operators no longer get their exclusive window and their customers can get the same content cheaper somewhere else. 

 Some  say the music industry has already shown that these more complex business models work but the big difference is that music comes in handy bite sized 3 minute chunks and you can afford to give away some chunks (tracks) if it gets people sampling then buying bigger chunks (box set albums with nicely designed lyric sheets) and ancillary merchandise and paying over the odds to see the act live and checking the fansite everyday and thus generate click through advertising revenue and…well you get the point.   Movies dont easily fit this model – there’s very little repeat business  (franchise movies like SAW etc. being the exception that proves the rule) and customer loyalty is practically non-existent.  About the only people making money out of new movie business models are the people running courses on…how to make money out of the new business models.   Of course that in itself is a business model.


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