Movies and Money

Here’s a little something to think about in terms of the ‘old’ vs. ‘new’ media: the movie business is putting more bums in seats than ever.

If there was ever a case when an old medium was going to be decimated by the new, you might think that one that emerged in the 1890s would be a good candidate for extinction. However, as one of my mentors and teachers Janet Wasko once said, each new audio-visual medium has typically opened up a new market for the major Hollywood studios and other film distributors.

This was a lesson she’d drawn from her research in the 1970s and 1980s and which she told me and my classmates about in the early 1990s.  Hmm, maybe everything has changed since then because of digitization and the rise of the Internet?

Not really.  A couple of things illustrate the point.

First, take a look at the Motion Picture Association of America’s (MPAA), the trade group representing the ‘big six’ Hollywood majors and their affiliates:  Time Warner, Disney, Universal, Paramount, Fox and Sony. In its most recent report on the subject, the MPAA shows that worldwide box office revenues were at an all time high in 2010, at $31.8 billion (USD).

Source: MPAA (2011). Theatrical Market Statistics.

The fact that box office revenues climbed from $26.3 billion to just under $32 billion between 2007 and 2010 amidst the global financial crisis and ensuing economic downturn is also impressive, and shows the resilience of the movie business in the face of economic hard times.

And this is only half the matter, actually a little less than half the matter, when we open our eyes wider to look at all revenue sources for the film industry, including pay-per view tv, cable and satellite channels, video rentals, rapidly declining dvd sales, and fast rising new areas such as online subscriptions and digital downloads. Doing that, it is clear that the movie business is doing even better than the box office numbers suggest, rising sharply on worldwide basis from $46.5 billion in 1998 to $87.4 billion in 2010. Table 1 below shows the trend.

Table 1:  Worldwide Film Industry Revenues, 1998 – 2010 (US$ Millions)

	1998	2000	2004	2008	2009	2010*	Change %
Film	46,484	52,803	82,834	82,619	85,137	87,385	+ 88%

Sources: PriceWaterhouseCoopers (2010; 2009; 2003), Global Entertainment and Media Outlook.

The only thing declining is the number of films produced per year, as the majors go for big budget blockbusters backed by massive marketing campaigns to keep two of the scarce resources of the media economy — time and attention — concentrated on their wares. Table 2 below shows the following trends: a declining number of blockbusters produced by MPAA members, rising number of independent produced films, and a greater number of films overall.

Source: MPAA (2011). Theatrical Market Statistics.

So, the next time you hear about the movie industry (or any other media sector for that matter) falling on hard time because of digitization, the Internet, piracy, and so on and so forth, think about these trends. They are important because the same interests that would like us to think that the sky is falling are using these mistaken impressions to push for changes to copyright laws and a clamp down on Internet Service Providers that wouldn’t otherwise have a hope in hell of succeeding.