We have, in the past, actually sat in on meetings of theater owners, and listened to their gripes. It sounds almost like they are in an industry of their own, not one intimately associated with the movie business. They talk about footfall, argue constantly the merits and costs of digital screens and go on and on about merchandising and concessions, screen and theater size. They rarely, if ever, mention films or the contracts that bind them to those films. There is, above all other issues, the feeling that Cinema is here to stay. In perpetuity, Forever. Undiminished. We can’t agree.
However we can imagine the hubbub around the brand new CinemaCon, convention in Las Vegas last week, when news broke that no less than four of the major Hollywood studios had agreed with VoD and online providers, DirecTV, Comcast and Vudu, to allow a premium movie service.
The move comes from Warner Brothers, Fox, Sony Pictures and Universal Studios and it will allow major motion pictures to be made available just 60 days after theatrical release. Sure it is very premium at $30 a movie, but it will still have sent a tremor of indignation down the spines of everyone present.
Press reports talking about meetings between distributors and theater owners ending abruptly will not have been exaggerated. This threatens their very lifeblood. But you have to picture the environment around the show ‘ a show which started with a Golf Tournament hardly conjures a picture of businessmen at the end of their tether, their wealth in jeopardy.
We don’t think this particular experiment or any other that relies on the existing VoD services of US pay TV players, is going to send the Cinema business into rapid decline, but the collective might of all such experiments will, and in particular one that does the same through such an influential business as Facebook or even Netflix, may well make huge strides here. The simple truth is that theatrical release, while still universally seen as the ‘measure’ of a movie, has its days numbered. Sure the bigger a film’s opening weekend, the more distributor pull it has in other formats, but as a percentage of revenue it is undoubtedly falling.
Each year the percentage of revenue that a movie makes from theatrical release falls. The last percentage we can remember quoting someone was 45% in the early part of this decade, down from 55% a few years before. Today it is closer to 25%. DVD used to make up most of the rest, but even this is falling, and is now as low as 40%. TV (including pay per view, repeats and VoD) accounts for a lot more of a movie’s current income, but online delivery will more and more come into the frame.
Research dating back as far as 2007 shows that movie revenues would go up not down (by around 17%) if studios released DVDs at the same time as the theatrical releases, with more people buying the DVD, but around 40% less going to movie theaters. Eventually that type of change has to happen, and without these experiments, the Studios would be pulled down with their theatrical partners.
Over the past 5 years first weekends have been manipulated by the simple trick of releasing through more Cinemas, and entire Box office takes are inflated because parts of the world that once had zero cinemas, especially in the Far East, now have substantial movie viewings. But US and European seats per viewing have fallen radically for the past three years, and the simple expedient of cutting up Multiplexes into smaller and smaller slices and showing more films each day, has kept cinema revenues afloat. Well no more.
US movie attendance is down 20% in 2011 compared to 201, which itself was down 5% on 2009. The recession can be factored out and the tendency for theaters to reach for high ticket prices, is similarly only some of the story. The industry itself (studios) have had leading spokesmen saying that the current batch of movies are just weak, but on the back of widespread digitization of the industry, which has given way to 3D capability, and the biggest ever grossing film in the form of Avatar, it turns out that such success is unsustainable.
A poll carried out on the Entertainment Weekly website concluded that 45% of people think the slump is due to too many crappy movies, no more no less, but the movie industry isn’t the one dying here, it’s the movie theater industry.
Theater owners will blame the films, they will blame the studios for reaching for other routes to market in competition with them, they will blame the recession, but they won’t accept that movie Theaters, like drive-ins before them (there are just a few hundred left in the entire US) are dying, because the experience is just not good enough to repeat over and over, for its own sake, for the sake of the big screen experience.
In May the blockbuster season for 2011 kicks off with Thor, a Norse god, brought to fame through 40 years of Marvel comics. If this doesn’t fix the box office slump (and it won’t) then expect more theaters to close and less people to attend CinemaCon next year.