News
Cinema Revenue Tops DVD in '09
Jan. 4, 2010 – U.S. consumers spent more on cinema tickets than DVDs in 2009 for the first time since 2002, according to a report in the Wall Street Journal that cites Adams Media Research (AMR) data.
According to AMR, movie ticket spending amounted to $9.87 billion last year, rising 10% from the prior year, while home video spending plunged 13% to $8.73 billion.
While the WSJ ascribed the opposing trends to a shift in consumer tastes, Marketing to Moviegoers: Second Edition suggests that it’s mainly from the standard DVD format peaking around 2004 and the new generation Blu-ray hi-def – which is a replacement format -- just catching stride. Blu-ray’s development was stifled by a hi-def war that ended when another format folded two years ago.
Regardless of how one parses the data, it is amazing that cinema box office is rising, given movies on the sliver screen are quickly available on downstream video and TV outlets. Giving a boost to cinema revenue is the 3-D projection; theaters typically charge $2 more per ticket for their 3-D showings.
“For studios, which count on income from home entertainment to underwrite growing production costs, the trend (of declining DVD spending) represents a giant headache,” notes the WSJ article by Sarah McBride. “In the early 2000s, studios began counting on the cash bonanza generated by consumers’ building up libraries of DVDs. Now, they will have to alter budgets to reflect the shrinking DVD income stream.”
Home video—meaning DVDs—represent over half of Hollywood studio revenue, while revenue from theaters is roughly one-fifth of studio take (cable and free TV is the balance). Those figures are what revenue studios book directly—excluding theater and video store cuts from sales. However, the consumer response from theaters carries sets the pace in other media, so theatrical run is crucial in setting any film’s earning power.
The WSJ continues, “Overall, consumers spent $28.38 billion on feature movies last year, Adams calculates, slightly lower than the $28.47 they spent in 2008. That includes $1.27 billion spent on rentals through cable and satellite services, and $361 million spent renting and buying movies online, both categories that grew considerably in 2009.”
The DVD spending figure always include a wad of TV programs, such as DVD sets offering full seasons of TV series. The box office figure is a pure movie metric.
Note that the author of Marketing to Moviegoers—Robert Marich—is an analyst at AMR.
For full text, click links below:
online.wsj.com/article/SB10001424052748704789404574636531903626624.html
www.videobusiness.com/article/CA6713272.html
www.marketingmovies.net/chapters/chapter-9-major-studios/