Skip to main content

Film Exhibitors in U.S. Celebrate Flat Market

Experiencing flat U.S. unit sales since 1997 would be a disaster for most media sectors, although it's actually fine for a few. As an example, the music recording industry and broadcast TV networks would welcome a level business environment with no apparent decline.

In the movie theater business, Kagan Research estimates that the 2006 total of 1.4 billion U.S. admissions matches the industry's 1997 total. Yet it's still pretty good times for film exhibitors. But, is this grounds for a celebration? Yes, and no.

It's good considering that platforms for movies have mushroomed over the past decade because of booms in cable video-on-demand, Internet streaming and high definition DVDs. Also, holding steady comes despite a narrowing of the window between theatrical and home video release of the same film.

Of course, flatlining is really no reason for joy because it means no growth, and U.S. cinema admissions have fallen for four straight years in a row. "It's a matter of concern for exhibitors because they rely on their customers to buy high-margin junk food and beverages," notes Kagan analyst Wade Holden. "Every ticket sold means another person passes by the concession stand."

Still, flat admissions are not necessarily bad news at the box office. Admissions revenue -- which factors in ticket price hikes -- has increased at a compound annual growth rate of over 4 percent since 1997, estimates Motion Picture Investor. So movie theaters are scratching out some box office gains.

Movie theaters have also squeezed more revenue out of ancillary businesses, in particular on-screen advertising. National CineMedia, which sells movie ads for theaters with 13,000 screens and is one of the two giants in the field, just mounted an initial public offering giving it a stock market capitalization of $1.97 billion, according to Kagan.

"The industry has managed to not only survive, but thrive, during the last few years despite wobbly admissions," notes Holden. Some 13 large movie circuits filed for bankruptcy from 1999-2001, which was painful but led to a positive industry restructuring.

The major film studios have reason to smile, despite flat admissions for 2006. The majors and their indie-style affiliates released 20 fewer films in 2006 (when including their affiliates like Miramax and Fox Searchlight) -- which resulted in a higher average domestic box office gross per film.

But total release counts rose because independent film distributors -- such as Lionsgate and the Weinstein Company -- increased their output by 73 releases in 2006. The future of the U.S. film production and distribution industry continues to head in a independent, and more lower budget, direction.

Popular posts from this blog

Rise of Software-Defined LEO Satellites

From my vantage point, few areas are evolving as rapidly and with such profound implications as the space sector. For decades, satellites were essentially fixed hardware – powerful, expensive, but ultimately immutable once launched. That paradigm is undergoing a transition driven by Software-Defined Satellites (SDS). A recent market study by ABI Research underscores this transition, painting a picture of technological advancement and a fundamental reshaping of global connectivity, security, and national interests. LEO SDS Market Development The core concept behind SDS is deceptively simple yet revolutionary: decouple the satellite's capabilities from its physical hardware. Instead of launching a satellite designed for a single, fixed purpose (like broadcasting specific frequencies to a specific region), SDS allows operators to modify, upgrade, and reconfigure a satellite's functions after it's in orbit, primarily through software updates. The ABI Research report highlights ...