The theatrical film business still makes billions of dollars — even with some declines. But it continues to focus on the wrong metric. Here is the right one: attendance.
That is especially true in the key summer period. Just a few days before Labor Day, attendance is poised to hit its worst results in 25 years. For 2016, there were 1.31 billion movie tickets sold for 736 movies — at an average price of $8.43, according to boxofficemojo.com.
Then there is the revenue factor to consider. comScore says U.S. summer box-office revenue will drop a steep 15.7% to $3.78 billion from the prior year.
How do movie studios make up the difference? Higher ticket prices.
Four of the biggest U.S. theatrical movies this year all launched in the big summer period: Warner Bros.' “Wonder Woman,” $406.2 million; Walt Disney’s “Guardians of the Galaxy Vol. 2,” $389.4 million; Sony Pictures’ “Spider-Man: Homecoming,” $318.9 million; and “Despicable Me 3,” $254.6 million.
Summer box-office revenues were up and down over the last few years -- depending on movie studios' slates and development. Starting in 2007, summer box-office revenue rose every other year: 2009, 2011, 2013 and 2015 -- but not in 2017.
Movie studios do their best to ramp up action-adventure franchises in the summer: “Spider-Man,” “Transformers,” “Dark Knight,” “Iron Man” and “Jurassic World” were some of the top performers, starting in 2007. Many of these blockbusters are geared toward younger moviegoers, specifically young men.
This is why movie studios have been frantically attempting -- for the better part of a decade -- to get older, low-attendance moviegoers back to the theaters. If that doesn't work, studios want to encourage them to buy movie showings at home on their big TV screens.
Studios continue to release more movies -- 732 films in 2016, a new record. But the releases collide with other factors, such as slowly disappearing potential reach. Traditional TV networks, especially cable TV networks, have struggled with this reality for several years.
Cable TV networks find it difficult to raise advertising prices and wholesale carriage fees to pay TV providers. How much longer can studios continue to raise their prices, while witnessing a shrinking pool of potential consumers?