5 Box Office Predictions For 2010

1. 2010 will be the highest grossing year in box office history.

With 2009 walking away as the highest grossing year in box office history, there are few signs that 2010 will stop the record-setting trend.  Thanksgiving weekend 2009 exemplified the box office’s health, up 15% over the same period last year.  With year over year total consumer spending flat during the holiday weekend, the box office’s growth proves that consumers continue to value movies as an affordable form of entertainment.

2. The Average ticket price will increase at twice its historical growth rate, around 4-6% in 2010.

Over a dozen 3D films came to the market in 2009 and there was not enough 3D equipped theaters to meet viewer demand.  The prolonged credit crunch has reduced the rollout of both digital and 3D theaters in 2009.  However, increasing liquidity and the high success rate of 3D films will prompt theater owners to accelerate the rollout of 3D screens in 2010.  As the number of 3D productions increases along with 3D theaters through 2010 and beyond, theater owners will enjoy increasing ticket prices – 3D fetches a $3-6 ticket premium on average.  With only 6,500 – 7,500 of the 38,990 domestic screens boasting 3D capability, there is certainly room to grow.  Regal CEO Amy Miles affirmed my prediction in Regal’s Q3 earnings call.

3. Big budget films will dominate the production spend, but independents will show the highest aggregate return on investment.

There is an increasing budget disparity between studio films and independent films.  This is the result of a decline in the number of studio films produced, combined with increases in marketing spend for those properties.  This creates a void in the market, exposing the opportunity for independent filmmakers to position their films as viable investment vehicles, while studios strive to recoup astronomical budgets.

4. The movie marketing revolution will accelerate throughout 2010, rendering marketing spend far less important than marketing strategy.

From Paranormal Activity to District 9, 2009 proved that creating buzz around your film is far less a product of budget and far more a product of strategy.  Each of these films had no A-list talent.  Each of these films had no mass-marketing budget.  Each of these films was a massive financial success.  Today’s low-cost inbound marketing methods allow savvy filmmakers to find the audience that is actively seeking their films.

5. Animation will remain the golden ticket – pun intended .

No film investment has shown more consistent positive returns than one made in a computer animated films, period.

Below is a clip from KCRW’s recent interview with Up director Pete Docter.

 
21 seconds – Listen to the full interview

RE: Execs Say DVD Decline Exaggerated

Yesterday Variety posted a panel discussion recap from the Future of Film Summit. The panel was hosted by a group of media execs who reported that physical media declines have been “greatly exaggerated”.  Frankly, their optimism scares me.

While Black Friday weekend’s 220% spike in year over year Blu-ray sales provides a nice morale boost,  it is only temporary.  The $69 million in Blu-ray sales is directly attributed to price reductions in Blu-ray players.  Furthermore, Blu-ray sales come nowhere close to significantly offsetting the continuing decline in DVD sales.

Yes, continued price cuts on Blu-ray players and media will sustain sales for a period of time.  However, the industry needs to realize that the viewer is not the problem, we are the problem.  The film industry needs to take a look in the mirror and stop cannibalizing itself.  Execs need to realize that physical media cannot complete on a basis of price or convenience.

Time Warner CEO Jeff Bewkes recently spoke about the physical media’s consumption by new distribution channels like movie kiosks and video on demand.  He said, “People will pay for quality and convenience, but it has to be a fair deal.”  I completely agree on an ideological level.  However, the reality is that “fair” is irrelevant.  The fact is that these channels do exist, and they will continue to consume traditional and more profitable physical media sales.  The future of film has to be realized through innovation.

His Name is Brian Roberts…

Brian Roberts has long flown under the Hollywood radar, but today’s deal put’s him right in the spotlight.  With Comcast soon to own 51% of NBC Universal, the quiet CEO who prefers to lead by example is now the central focus of the entire motion picture industry.  Since 22, Brian Roberts has been a part of Comcast.  He now sits in the driver’s seat of the most powerful cable company in the United States, and arguably the most powerful broadcast network.

Why Comcast Bought NBC Universal

The acquisition of NBC Universal completes the Comcast ecosystem.  Already the country’s largest cable company, Comcast is also one of the largest internet service providers.  From an infrastructure standpoint, Comcast is easily the most powerful distributor of media.  The acquisition of a content network is a natural progression for the business.  What was a massive concern for NBC Universal prior to the acquisition: the secular downturn in television advertising, hardly registers considering those ad dollars are shifting to the Web, Comcast’s Web.  The synergies that Comcast has with NBC Universal’s film and television networks are wildly obvious.  As cliche as it is, content is king.

Yet, In the spirit of being fair and balanced, some analysts have criticized the deal.  Collins Stewart analyst Thomas Eagan said, “We’re still very unsure about the value created from this deal.“  Is this even worth addressing?  Other critics of the deal say there is too little overlap between the businesses to draw out meaningful savings. …I’m pretty sure this move is about growth, not savings.  However, Variety did post a list of relevant questions that are right on point.

More details on the Comcast/NBC Universal Deal from The Hollywood Reporter.

So, where does the media giant go from here?  How does Comcast solidify complete control across all media channels?  Though the digestion of NBC Universal may take a few years, I would not be surprised to see Comcast make a play in the wireless market.