The U.S. theatrical film business could have a rougher go of it following a record 2012.Box office revenue could be down 3% in 2013. Last year, the Motion Pictures Association of America said the U.S. and Canadian domestic business pulled in $10.8 billion versus 2011 -- a 6% rise, per Nomura Equity Research.
2013 is expected to be down because of tougher 2012 comparisons, especially including that of big blockbusters such as "The Avengers." That said, it still expects the second quarter -- home of typically big summer hits -- will be the best-performing period of the year for the business, up 4% to 5% against the same time period in 2012.
However, the first quarter of 2013 will take a major hit -- down 15% in domestic box office revenue versus the first quarter of 2012.
Overall theatrical revenues -- U.S., international, home entertainment -- of the companies Nomura follows, including big studios Time Warner's Warner Bros., News Corp.'s Fox Filmed Entertainment, Walt Disney, Viacom's Paramount Pictures, NBCUniversal's Universal Pictures, and Sony Pictures Entertainment, will witness a 1% decline this year to just under $29.5 billion.
In a five-year period -- 2007 to 2012 -- major companies dropped $3.7 billion in revenue. The good news: operating costs fell by $3.4 billion over this period. That means film margins exceeded 2007 levels and total profits are only down $300 million over this period.
All this says that the business has "reached stability." The reasons include that 2012 domestic office attendance rose for the first time since 2009, responding well to a strong release schedule; international box office revenues continue to expand -- now at 70% of worldwide box officer revenue; and that home entertainment (after some troubling years when it comes to DVD sell-through revenues) appears to be on the right track.