Every year you hear new stats and claims about a movie being the “Largest Grossing” movie of all time, or “Most Profitable” movie ever. However, at the same time you hear claims about how the movie industry is struggling like never before due to piracy or competition from other entertainment such as TV, sports, video games, etc. How can this be?
The issue here is that movie ticket prices continue to creep up, while the number of people actually going to movies is going the opposite direction. The dollar number disguises trouble stats about actual tickets sold. Check out these lists for indicators of this:
“All Time Worldwide Box Office Grosses” (How much money a movie brings in):
Impressive. But look how recent all those movies are! Let’s see what happens when you adjust for inflation, so movies in the past are adjusted to match today’s prices.
“Box Office Adjusted for Ticket Price Inflation“
Other than Avatar and Titanic (good for you, James Cameron) the most recent movie is from 1983!
This is a fact – people have more options for entertainment. There are simply less people going to the theater to watch movies. Perhaps they prefer waiting for films to come out on Home Video, or they like Video Games or other entertainment better. Undoubtably, this is also affected by online piracy.
According to preliminary estimates, 533.5 million tickets were sold this summer, down 4 percent from last year and the worst turnout since 1993. The lowest attendance before now came in summer 2010, when there were 534.4 tickets sold. – Hollywood Reporter
So, how do content companies like movie studios still make movies profitable? They have to charge the people who do continue to go more money to make up for those who are choosing to stay home. But, I’d argue there is a ceiling. Like gas, eventually the price gets prohibitively high and behavior starts to change. Just like fewer road trips, people stop going to the movies as much.
Instead, there has to be a focus on value additions. This is the real reason you see more emphasis on 3D and IMAX. Because it is markedly different from traditional theater experiences, you can charge audiences more. This is the same reason you see a big push for 3D in Televisions. You really don’t need to replace your TV very often. But if a new technology comes out that is desirable, you will buy a new set to get that feature.
The issue is that there is a ceiling to this as well. People don’t want to pay too much more for 3D. It is also expensive to build real IMAX experience theaters for a fickle movie going audience. That can be a gamble for theater owners. So, how would you solve smaller theater audiences? I really like the dining experience where some theaters sit you at a table and serve you dinner during your movie. I also appreciate the premium experience where you can reserve certain seats and have nice leather individual reclining chairs. But, again that is upping the price of going out to a film.
