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For those who love to follow the business of Hollywood -- count yours truly as one of the many -- the following Reuters article contains data of interest. It appears that 2007 was a banner year for Tinsel Town, according to numbers released by the Motion Picture Association of America. Revenues at multiplexes worldwide jumped 4.7% to $26.7 billion. In the United States, the growth was even better -- theaters at home took in $9.6 billion, good for an appreciation rate of over 5%.
But there's another side to the story. Ticket prices, you see, increased 5% in the U.S. This inflationary aspect is what essentially led to the domestic growth, for while approximately 1.4 billion tickets were sold, there was no rise in the number of tickets sold. That should be ultimately disappointing to studios at Disney (NYSE: DIS), News Corp. (NYSE: NWS), TWX (NYSE: TWX), Viacom (NYSE: VIA), Sony (NYSE: SNE), and General Electric's (NYSE: GE) NBC Universal. Oh, and here's another not-so-impressive item: the average cost to produce a film and then promote it came in at nearly $107 million. This statistic represented an increase of 6.3%.
Sure, the movie business is more than theatrical exhibition these days -- but don't discount the driving effect of large box-office grosses. So, the studios mentioned above must figure out how to increase the traffic flow to theaters, and get the raw number of tickets sold back on an upward trend. It isn't as simple as saying "make better movies" -- although this is a subjective call, I think the movies being made are, by and large, pretty good. But there's so much competition these days in terms of emerging media platforms, home theaters, etc., that more needs to be done. And in addition to the studios, theater chains such as AMC and Regal Entertainment (NYSE: RGC) also have to come up with action plans -- they bear responsibility as well.
Disclosure: Steven Mallas owns shares of Disney and General Electric; positions can change at any time.
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