After four months of reporting declining attendance at the American box office, the New York Times made the case in August that Hollywood had lost touch with its adult audience by producing too many cartoonlike amusement-park movies for teenagers. "Hollywood's box office slump has hardened into a reality," the article grimly concluded, raising the prospect that, in order to improve ticket sales, Hollywood would produce more movies that appeal to adults.
Before shouting hallelujah, it's worth looking more closely at the "reality" behind the story: the 2005 box-office numbers. While it's true that overall box office receipts are down so far in 2005—theaters took in 8 percent less money in the first nine months of 2005 than they did in the same period in 2004—the box-office revenues for the major Hollywood studios—Fox, Sony, Warner Bros., Disney, Paramount, and Universal—are up. So is their share of the box office, and so is their revenue.
From January 2005 to September 2005, the movies of the six Hollywood studios earned $4.7 billion compared to $4.5 billion in the same period in 2004. Their share of the American box office rose from 68 percent in 2004 to 75 percent in 2005. (Click here for all the studio numbers for the past nine months.) The big losers were independent studios who specialize in more adult movies, such as Lions Gate and Newmarket Films, and the so-called "studioless" studios, DreamWorks and MGM, which suffered 40 percent box-office declines. (Studioless studios are verging on extinction as MGM is in the process of selling itself to Sony and DreamWorks is desperately attempting to sell itself to Universal or Paramount.)
Moreover, the reason that some studios did not do as well in 2005 is that they had too few, not too many, amusement-park films for juveniles. Sony, for example, had no Spider-Man 3 to match the $373 million U.S. box-office gross it had from Spider-Man 2 in 2004 (Spider-Man 3 is scheduled for 2007). DreamWorks had no Shrek 3 in 2005 to match the $476 million U.S. box-office gross it garnered from Shrek 2. On the other hand, the studios that scored the biggest box-office gains in 2005, Fox and Warner Bros., generated them through amusement-park movies such as Star Wars—Episode III: Revenge of the Sith (Fox) and Batman Begins (Warner Bros.).
With the overall audience for movies in decline, the lesson of 2005 is that the studios need youth-oriented franchises supported by massive advertising budgets to fill theaters. As a top Sony executive explained, "Franchises are the name of the game." He added that one reason Sony bought MGM was to get its James Bond franchise. Once established, a franchise that appeals to youth enables studios to acquire merchandising tie-ins from fast-food chains and licensing commitments from toy and game manufacturers—all of which help promote the film. The huge advertising budgets that merchandising partners contribute, which can exceed $100 million for a single movie, are especially important in an era of declining audiences.
The drop in the audience in 2005 is hardly a new phenomenon. Since the advent of television in 1948, the movie audience has declined in most years. Annual ticket sales have fallen from 4.6 billion tickets in 1948 to 1.6 billion last year, even though the U.S. population has doubled. The studios, recognizing that most of the former habitual moviegoing audience is at home watching television—and soon their iPods—create audiences for each of their movies through advertising on television, an enormously expensive—and risky—enterprise. To make it work, the studios look for a group of people that both regularly tune into TV programs on which the studios can afford to buy commercials and who can be motivated by a 30-second ad to leave the comfort of their houses to go to the multiplexes. And for better or worse, that means teenagers.
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