Hollywood.com Box-Office reports that movie receipts will hit lows this summer that will fall as far as the 1997 level. Attendance is expected to move down to 552 million.
“The movies just didn’t excite people the way they needed to,” said Paul Dergarabedian, president of Hollywood.com Box-Office. “When you raise prices and perceive that quality goes down, you have a major problem.” The statement is hollow. Movie producers did bring several blockbusters to theaters including “Toy Story 3” and “Inception .”
What the experts are not saying is that consumers may be staying away from theaters for two reasons. The first and most obvious is the economy.
The second reason is the rapid proliferation of alternatives to going to movie theaters. If this is indeed the trend and it continues, the theater business may be faced with forces it cannot overcome.
Ten years ago, DVDs were considered the major threat to box office receipts. Major producers offset ticket sales with sales of DVDs. Those DVD sales are now plunging as digital entertainment delivered over the internet grows. A number of companies including Netflix (NASDAQ: NFLX) offer access to movies over broadband at prices below $10 a month. Premium video site Hulu says it will offer a similar service. The same is true of YouTube, the most visited video site in the world.
Digital delivery continues to have a dark side. Piracy still robs a large portion of the revenue that the industry might have otherwise. File-sharing services that take advantage of broadband to move illegal copies of films around the web are frequently shut down, only to be replaced by new ones.
The theater business is not dropping off because of a lack or hit films. A weak economy cannot completely justify the fall either. New technology has begun what business school professors like to call “creative destruction.” The movie business has become unsettled and the means for content creators to make money have become befuddled.
Douglas A. McIntyre
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