US Box Office Revenue Finally Drops; But Not Because Of Infringement (original) (raw)

from the make-better-movies dept

Every year for the past few years, we’ve been noting that, even as the MPAA whine and cries about “piracy,” it’s been doing record business at the box office. It’s been up, up, up. Until this year. It appears that there’s been a rather slight downturn in box office take, though it still exceeded $10 billion. A lot of people are focused on fewer tickets being sold, but the number of tickets is a pretty meaningless measure. What matters is revenue, and that’s still strong, if slightly off from its previous highs. But, of course, no business always sets a record.

And what’s good here is that it seems most folks involved in the movie business seem to recognize that online infringement has nothing to do with the dropoff in box office revenue this year. Reports are chalking it up to “a combination of a weak economy and expanding home entertainment options.” The most thoughtful explanation I’ve seen comes from Roger Ebert, who puts forth a series of compelling reasons why box office revenue is down, starting with the lack of good quality movies that are “must sees.”

The key thing about the reasons he gives? Almost every one is something that the industry could have fixed if it only was smart enough to have a long term strategy.

1. Obviously, the absence of a must-see mass-market movie. When moviegoers hear about “Avatar” or “The Dark Knight,” they blast off from home base and land in a theater seat as quickly as they can

Definitely a huge and important point. If you don’t make quality films that people want to see, the box office is going to suffer. It seems that the industry has become so risk averse these days, that it keeps churning out rather formulaic pieces — sequels and reboots, mainly. Sometimes you can do those kinds of movies in amazing ways (“The Dark Knight” is certainly one example), but too frequently these movies seem to rely on their “built in” audience, rather than working to find an audience. So the ticket sales decline.

2. Ticket prices are too high. People have always made that complaint, but historically the movies have been cheap compared to concerts, major league sports and restaurants. Not so much any longer. No matter what your opinion is about 3D, the charm of paying a hefty surcharge has worn off for the hypothetical family of four.

This was bound to happen and there are two reasons for it. The first is that the industry was experimenting with different price points, and when that happens, sooner or later you’re going to find the ceiling. That finally happened. I don’t think it’s wrong that there were experiments with price points, but the industry needs to be careful to avoid continually pushing those boundaries.

The 3D issue is a bigger one. As I’ve noted in the past, it’s good that the industry looked to add value to give people more of a reason to buy. Doing things like 3D films and IMAX films give people good reasons to go to the theaters, rather than watching at home… but in typical Hollywood fashion, they understood the superficial aspect (“ooh, with 3D we can charge more”) and ignored the real underlying reasons why it worked (“we have to add real value”). So they just rushed out a bunch of crappy 3D movies where the 3D added no value, and people started rejecting it. As they should. If the industry had focused on real value, rather than just assuming “3D = more money” perhaps this wouldn’t be an issue.

3. The theater experience. Moviegoers above 30 are weary of noisy fanboys and girls. The annoyance of talkers has been joined by the plague of cell-phone users, whose bright screens are a distraction. Worse, some texting addicts get mad when told they can’t use their cell phones. A theater is reportedly opening which will allow and even bless cell phone usage, although that may be an apocryphal story.

Preaching to the converted here. Some of us have been arguing this point for a decade and are still amazed that the theater owners and the Hollywood studios just don’t seem to get it. People go out to the movies because it’s a social experience — with part of the key point being the experience. You can cook your own dinner at home, but people like to eat out at restaurants. What’s amazing is just how bad the experience has become, and how little effort most in the industry (with a few notable exceptions!) have made in trying to improve the overall experience. If the theaters and Hollywood actually focused on improving the overall experience, they’d be having much better performance.

4. Refreshment prices. It’s an open secret that the actual cost of soft drinks and popcorn is very low. To justify their inflated prices, theaters serve portions that are grotesquely oversized, and no longer offer what used to be a “small popcorn.” Today’s bucket of popcorn would feed a thoroughbred.

This goes back to number 3, really. The food is a part of the experience. Making it ridiculously overpriced doesn’t contribute to the overall experience at all. You can price it reasonably, make a good profit and use that to attract more people to the theater. Or you can do what the theaters do and seek to gouge.

5. Competition from other forms of delivery. Movies streaming over the internet are no longer a sci-fi fantasy. TV screens are growing larger and cheaper. Consumers are finding devices that easily play internet movies through TV sets. Netflix alone accounts for 30% of all internet traffic in the evening. That represents millions of moviegoers. They’re simply not in a theater. This could be seen as an argument about why newspapers and their readers need movie critics more than ever; the number of choices can be baffling.

I’d argue it goes beyond just other forms of delivery, to competition from other forms of entertainment. The wider internet has grown quite a bit over the past few years, and video games, in particular, have become a much, much, much bigger industry. Plenty of people who might have wanted to go out to see a movie in the past, might prefer to just stay home and play video games online instead.

6. Lack of choice. Box-office tracking shows that the bright spot in 2011 was the performance of indie, foreign or documentary films. On many weekends, one or more of those titles captures first-place in per-screen average receipts. Yet most moviegoers outside large urban centers can’t find those titles in their local gigantiplex. Instead, all the shopping center compounds seem to be showing the same few over-hyped disappointments. Those films open with big ad campaigns, play a couple of weeks, and disappear.

This is also a big one that gets very little attention, unfortunately. It’s typical Hollywood thinking though. They’re driven solely by the hits, and have never understood the value of solid movies that can make a profit without being a blockbuster. We’re not even talking about the full long tail here, but anything beyond the “short head.” If Hollywood would stop thinking in terms of finding only the “big hits,” and actually looked at how to make profitable movies, they’d do things pretty differently. Unfortunately, that’s just not how they think.

All in all, I believe the movie industry will eventually figure this out, though it may take some outsiders and fresh thinking, rather than today’s studio bosses. Unfortunately, in the short term, we’re likely to hear the MPAA and others pretend that the decline has something to do with “piracy,” when there’s little (if any) evidence to support that.

Filed Under: box office, movies, roger ebert