Going to the movies has long been a staple American pastime, but this traditional night out has come under pressure in recent years. The number of moviegoers has been growing slowly, if at all, reflecting the rising popularity of alternatives such as DVDs (especially with the advent of
high definition formats), television, and on-demand
Internet services. While some of the larger chains of traditional cinemas have posted slightly increased sales over the past few years, the movie theater business is slow-growing at best.
The tale of a rodent chef,
Ratatouille is one of the biggest hits of 2007's summer movie season.
2007 has seen a slightly higher box office sales thus far; most of the revenue increases stem from higher ticket prices rather than increased attendance, highlighting the difficulties facing cinema chains.[1]
Film studios cite an rise in piracy as the reason for their increasing emphasis on non-theatrical distribution methods. Studios make much higher margins on DVD sales and royalties from pay-per-view providers, giving them an incentive to pursue these distribution vehicles more aggressively. Barry Meyer, the chairman and CEO of Warner Bros. Entertainment was quoted as saying that, in the future, "your premiere will be in Wal-Mart."[2] Some data suggest that the movie industry is heading in exactly this direction: away from the traditional release timeline and more toward a simultaneous release of movies in theaters, on DVD, and on cable television. Film studios would benefit from the higher margins of the alternate distribution channels, as well as save on advertising expenses. Movie theaters, however, are staunchly opposed to this movement, citing the irreplaceable experience of catching a matinée or going on a late-night movie date as reasons why theaters cannot be replaced by DVDs and movies on television. While this may be true, film studios, who provide cinemas with the movies they need to attract customers, have a growing reason to pursue higher-margin distribution methods.
[edit] Companies that benefit from increased movie attendance
Average movie attendance per capita
Movie theaters
Cinema equipment
- Dolby Laboratories (DLB) manufactures audio/video equipment used in movie theaters. Though Dolby is one of the largest names in this industry, sales of consumer electronics has grown to account for around half of its revenues. Theater equipment accounted for only around one fourth of its 2006 revenues.
Movie Theater Refreshments
- Tootsie Roll Industries (TR) had 10 of the top 50 theater and home video candies in 2007, including the top selling (Junior Mint) and second-highest selling (Dots).
[edit] Companies that benefit from decreased movie attendance
Counterintuitively, declining attendance at movie theatres can benefit movie studios, as studios make more money off of DVD sales than they do off of theatrical releases. Provided that declining movie attendance indicates viewers are watching movies at home, studios benefit.
Independent film studios
Major film studios
Since the major studios are all divisions within larger corporations, the impact of changing movie attendance would have a more modest impact on these companies' stock prices when compared with smaller independent film studios.
- Sony (SNE)
- Columbia Pictures, TriStar Pictures, Destination Films
- Sony owns 20% of MGM Holdings, which includes MGM Studios and United Artists Entertainment. Comcast (CMCSA) also holds a 20% stake in MGM. The remaining 60% is owned by several private equity firms.
- News Corporation (NWS)
- 20th Century Fox, Fox Searchlight, Fox Atomic
- Walt Disney Company (DIS)
- Buena Vista Motion Pictures Group, Walt Disney Pictures, Touchstone Pictures, Miramax Films, Hollywood Pictures
- Time Warner (TWX)
- Warner Bros. Pictures, New Line Cinema, HBO Films, Castle Rock Entertainment
- Viacom (VIA)
- Paramount Pictures, DreamWorks (separate from DreamWorks Animation)
- General Electric Company (GE)
- NBC Universal, Universal Studios, Focus Features
DVD rentals
- Netflix (NFLX) is a leading online movie rental service. Netflix offers movies on DVD, which are mailed to customers, and via an online viewing service.
- Blockbuster (BBI) operates both traditional brick-and-mortar movie rental stores and an online rental service.
- Movie Gallery (MOVI) also provides movie rentals, primarily through its retail stores. It acquired MovieBeam, Inc, an on-demand movie service, in March 2007, and also introduced its own online rental service. Despite these moves, MOVI has been facing financial difficulties, spawning rumors of a possible sale of the company's assets.
Home Entertainment
- Home entertainment companies will likely prosper from a decline in cinema viewership as families choose to watch movies in the comfort of their living rooms, on large high-definition televisions, with surround sound speakers rather than pay high prices for movie tickets and concessions.
[edit] References
- ↑ http://www.boxofficemojo.com/yearly/?view2=mpaa&chart=byyear&yr=2007&view=releasedate&p=.htm
- ↑ http://entertainmentcomplex.blognation.us/blog/_archives/2005/5/27/890972.html
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