2009 Movie Studio Revenues & Box Office Share

The Big Six ranked: total box office revenues and market share

1. Warner Bros:  $2.13 billion ~ 20%
2. Paramount Pictures:  $1.46 billion ~ 13.8%
3. 20th Century-Fox:  $1.45 billion ~ 13.7%
4. Columbia Pictures (Sony):  $1.44 billion ~ 13.6%
5. Walt Disney Pictures:  $1.21 billion ~ 11.4%
6. Universal Studios:  $900 million ~ 8.5%

The Film Industry That Was 2009

Before we get too far into 2010, let’s take a look back at the film industry’s figures in 2009.

Total Film Industry Spending

• US consumers spent a total of $28.38 billion on feature movies in 2009 – slightly less than 2008’s $28.47 billion

2009 Box Office Numbers

• The domestic box office (including Canada) rang in a record high $10.6 billion
• The 2009 US box office generated $9.87 billion in revenues, up 8% over 2008
• Box office admissions for the year were up 4%

2009 Home Video Numbers

• Total physical media sales (DVD & Blu-ray) for movies declined 13% to $8.73 billion in 2009
• Blu-ray comprised $1.1 billion (12.6%) of movie disc sales
• Online rentals and purchases rang in $361 million in spending for 2009 (this figure is included in the $8.73 billion)
• On demand rentals  though cable and satellite services totaled $1.27 billion (also included in the $8.73 billion)
• The number of homes with Blu-ray players grew to 8 million, up over 260% from last year

Key Takeaways

• Cinema surpassed physical media (DVD & Blu-ray) sales of for the first time since 2002.
• Although rental transactions rose 5.5% during 2009, movie rental spending rose less than 1% to $8.15 billion.

The latter is obviously due to the proliferation of Redbox and Netflix.  It will be an interesting battle throughout 2009 between the studios and these companies.  Just this past Monday, Walmart put a cap on new release purchases, limiting customers to 5 DVD/Blu-ray’s at a time.  In a statement, Walmart says the rules are meant to be “consumer friendly, ensuring that more customers have access to new releases”.   But if you read between the lines what they are really saying is, “the studios keep pokin us with that damn stick… and it’s gettin pretty sharp”.  Adams Media Research estimates that Redbox gets about 40% of its new release DVD’s from big-box retailers like Walmart.  With Netflix recently agreeing to Warner Bros. 28-day new release window, it appears that Redbox in particular is being boxed in (what a cheap, cheap pun ).

Related Links:

• Movie rental kiosks – are they a long-term solution? (audio interview with NCR Corp.)
• Online video statistics revised and updated for 2009 and beyond
• Digging deeper into movie theater attendence

Avatar Numbers… So Far

Avatar is on track to take the crown from Titanic’s $1.842 billion box office record.  Perhaps most impressive is that Avatar has been in theater’s for less than six weeks, while Titanic was in theaters for 41 weeks.

BMO analyst Jeffrey Logsdom provided the following estimates for Avatar’s profitability:

• Avatar’s production budget was $300 million
• Global marketing and distribution costs are $175 million
• Avatar will gross $650 million at the US box office
• Avatar will gross $1.95 billion worldwide during its theatrical run
• After movie theaters get their take, Fox will get $942 million
• Home video sales will be worth another $420 million in revenue
• Game licensing and development will bring in an additional $70 million
• Fox Studio’s total revenues will exceed $1.56 billion
• James Cameron will get $320 million ~ 20% of studio revenues
• Fox Studios and its investors will generate a net profit of $700 million

 

Playability Trumping Marketability

One of the important emerging trends from 2009 is the marketability/playability power shift.  While marketing has traditionally held importance over playability, the two are far less mutually exclusive.  Though studio slates are lined with sequels and remakes for 2010, the shift in power from marketability to playability is occurring.  New web applications provide viewers with a louder voice than ever before – a voice that no marketing budget can contend with.

Broadening viewer generated dialogue is a game changer for movie marketers that results in two key points:

1. Loss of control
2. Increasing importance on story

As it becomes easier for viewers to express their opinion to an increasing number of people, filmmakers inherently lose some control.  Marketing’s focus shifts from portrayal to interaction.  Never before has it been so easy to cultivate an audience.  Never before has it been so easy to lose an audience.

While marketing will always remain a critical component of a film’s strategy, no longer can it overshadow a weak story.  Marketing in 2010 is far less a result of budget and far more a result of product.  Therein lies the core progression of playability against marketability.  The renewed focus on strength of story will result in better films, happier viewers and benefit the long-term health of the industry.

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.

Film Industry Articles You Should Read vol.3

The Twenty New Rules: What we all must try to do prior to shooting

Ted Hope lays out a very helpful to do list for filmmakers to take on prior to commencing principal photography.  The top 3 items include:

1. Recognize it is about audience aggregation: Collect 5000 fans prior to seeking financing. Act to gain 500 fans/month during prep, prod., post processes.
2. Determine how you will engage & collect audiences all throughout the process. Consider some portion to be crowd-funded — not so much for the money but for the engagement it will create.
3. Create enough additional content to keep your audience involved throughout the process and later to bridge them to your next work.

Predictions 2010: Media

CNBC’s Joolia Boorstin shares her insights on the movie industry’s top trends of 2010.  Here is what made the list:

1. Control over distribution will shift to consumers.
2. Social media will grow and be increasingly influential.
3. More content than ever will be produced, forcing media giants to distinguish themselves from unprofessional alternatives.

…Though I don’t believe these to be “predictions” (all have been occurring for the past 5 years), her thoughts on them merit reading.

Cinemark Could Be the Ticket

As the second largest U.S. theater owner, Cinemark provides a good barometer to measure the film industry’s health.  Cinemark recently beat on Q3 earnings and stated in their conference call that, “The fourth quarter box office is off to a good start, as patrons continue to enjoy the cinema as an exciting, low cost form of entertainment.”

The New Definition of Theatrical Release

Indie filmmaker John Reiss talks at DIY Days about changing the definition of “Theatrical Release”.  While Jon acknowledges alternative forms of distribution, he speaks candidly about the emotional importance of the theatrical release.

Reiss’ talking points include:

• Why theatrical is important
• Week long vs short runs
• Rethinking film festivals
• Alternative distribution models

Happy Turkey Day to all - I hope everyone ate 10 pounds and gained 20  !!

Is Smart Money Targeting Broadway?

During a difficult economy, the weak dollar and star talent has fueled a successful year on Broadway. Signs point to a bright year ahead.

Broadway:

• Contributes $5 billion a year to the New York economy
• Supports over 44,000 jobs
• Ticket sales for the first 6 months of this season are steady at $481 million
• Attendance is expected to surpass last year’s 12 million people

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