Reports of the Death of the Movies Have Been Greatly Exaggerated

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For quite some time, the assumption has been that year in, year out, fewer and fewer people would bother seeing movies in the theater. Then a funny thing happened in 2012.

Against trend, consumers went back to the movies, in fairly large numbers. What’s more, a repeat performance is expected for 2013.

The rise of tablets, home theaters, Redbox, Netflix, and other forms of easy, affordable entertainment that doesn’t involve the cost or hassle of going to the movies has a lot to do with why movie theater attendance had been waning. The number of movie tickets sold annually in the U.S. has largely been on the decline since 2002; in 2011, for example, ticket sales dropped 4.5% compared to the year before. Total box office takes might have been rising during this time period, but that was only because ticket prices had gotten more expensive—thanks largely to surcharges tacked onto films shown in 3-D and IMAX formats.

Consumer surveys conducted in early 2012 showed that most Americans said they rarely or never go to the movies anymore. And after an especially bad year in movie ticket sales in 2011, many analysts and executives offered a solution that would surely wind up chasing away even more would-be moviegoers: raising ticket prices yet again.

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For the most part, studios and theaters didn’t follow that advice in 2012, and it wound up being a strong year in terms of total tickets sold and box office revenues alike. Despite a less-than-stellar summer season—compared to the Memorial Day-Labor Day period 10 years ago, 100 million fewer tickets were sold in 2012—the industry gets to brag that 2012 was its best ever. At least in terms of total dollars worth of tickets sold, that is.

As the Associated Press, Entertainment Weekly, and others have reported, domestic movie ticket sales reached an all-time high of $10.84 billion in 2012, surpassing the previous hit set in 2009 ($10.59 billion). What may be more important for the future of the movie theater business, however, is that not only did gross sales increase, but that after falling steadily for years, the total number of tickets sold finally rose in 2012. Some 1.365 billion admissions were purchased in North America, up 6.3% from 2011.

It appears as if in 2012 studios and theaters shied away from excessively hiking ticket prices, a strategy that had been relentlessly pushed over the prior decade. For a brief spell in 2011, the average movie ticket surpassed the $8 mark for the first time ever. For 2011 as a whole, however, the average was $7.93, and the 2012 average was basically the same ($7.94).

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Beyond mostly flat ticket pricing, what drove more consumers to the theaters was (duh) simply a selection of good movies they wanted to see. BoxOfficeMojo credited the year’s blockbuster franchise films (Batman, James Bond, Twilight, etc.) for drawing in the masses, while Hollywood Reporter pointed out the increasing importance of movies that attract Boomers, Latinos, and crowds overseas.

What’s more, Paul Dergarabedian, an analyst for Hollywood.com, told Bloomberg News that we can expect more of the same from the movies in 2013—in terms of more tickets sold, thanks again to blockbuster franchises like Iron Man, The Hobbit, and The Hunger Games, at prices on par with what we’ve been paying in 2011 and 2012.

Yet even as Dergarabedian is projecting a record-setting $11 billion (gross) year for 2013, with ticket sales perhaps nearing 1.4 billion, that’s still a long way off from 2002, when fans purchased 1.576 billion movie tickets domestically.

2 comments
AHick
AHick

"Experts" have been saying movies are finished since the 1950s.  Unlike modes of personal communications dependent on interaction with changing technology, like 8 track tapes, newspapers, VHS, copper landline telephony, etc., the death of movie theaters will never happen.  People go to movies (as they go to opera, live theater, cabaret, ballet, etc.) for a social outing, and the technology is irrelevant.  One of the most popular movies of 2011 was a black and white silent movie that could have been made during the 1920s (which is what is was about).

AdamSmith1
AdamSmith1

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