A year ago, Daniel Engber in Slate asked "Is 3D Dead in the Water". This week he returns to the subject and concludes 3D is dead.
To reach this conclusion, he uses the same tool to analyze the success or failure of 3D - the average gross per screen in 3D compared to the average gross per screen in 2D. He shows, quite convincingly, that the average gross per screen for 3D versions of movies is declining relative to the 2D gross. But is this comparison the right one to use? In my September column for Boxoffice magazine arguing against another popular flawed metric - percentage of box office in 3D - I suggest that a far simpler and more illuminating measure is whether movies are making more money in 3D than they were before:
Opening weekend 3D percentage of the gross (movies chosen by Greenfield to illustrate his point and listed in chronological order)
How to Train Your Dragon - 68%
Shrek Forever After - 61%
Thor - 60%
Pirates of the Caribbean 4 - 46%
Kung Fu Panda 2 - 45%
Green Lantern - 45%
Cars 2 - 40%
Transformers 3 - 59%
Harry Potter 7.2 - 43%
Noting the Harry Potter percentage in an investors note, Greenfield flatly states, "3D has collapsed in the United States." Has it?
Opening weekend 3D gross
How to Train Your Dragon - $29.7 mil
Shrek Forever After - $43.3 mil
Thor - $39.6 mil
Pirates of the Caribbean 4 - $42.6 mil
Kung Fu Panda 2 - $30.6 mil
Green Lantern - $23.7 mil
Cars 2 - $27.1 mil
Transformers 3 - $57.6 mil
Harry Potter 7.2 - $72.67 mil
Clearly, the percentage of a movie's gross coming from 3D does not tell us anything useful about whether or not there is "weakening demand" for 3D movies. The seven point slide from How to Train Your Dragon to Shrek Forever After might seem alarming; the 16 point dip from Transformers 3 to Harry Potter 7.2 even more so—audiences are losing interest in 3D! Yet Shrek's 3D box office was 45 percent higher than Dragon's; Potter's was 26 percent higher than Transformers' and 144 percent higher than Dragon's. Also note that Potter and Transformers opened on roughly the same number of 3D screens (4,250 and 4,146, respectively). Twenty-six percent more people going to a 3D movie on only 2.5 percent more screens seems to me to be a pretty strong indicator of increasing demand.
The per screen averages for 3D are also un-illuminating. We do not know, for instance, what size auditoriums were playing in 3D or 2D for any particular movie - in other words, a $15,000 weekend gross in a 350-seat auditorium is a different thing than the same gross in a 100-seater or a 700-seater.
We are also in a completely different environment than we were in a year ago. In August of 2010, there were 6,286 3D screens in North America at 2,558 locations; a year later, there were 12,738 3D screens at 3,015 locations. The number of locations offering 3D increased by 17.1% and the number of screens increased a staggering 102.6%. So what's going on?
A year and more ago, if you were interested in seeing a movie in 3D, you had to see it in a limited number of places, with a limited number of screens devoted to 3D. Consequently, those screens were far more likely to sell out. Today, there are far more screens available to watch a 3D movie - and there might even be more than one 3D movie available for you to watch. What you are seeing, in other words, is the logic of the multiplex.
There are a lot more screens available to show a 3D movie - most of them in locations that already had at least one 3D screen a year ago. What does this accomplish? The same thing that offering multiple auditoriums in a complex with multiple showtimes does with 2D movies - choice to consumers and the possibility of maximizing revenues by making that choice available.
The modern multiplex offers a range of sizes of auditorium, which allows theater owners greater flexibility and the opportunity to maximize each available seat. Consider a single screen with 1,000 seats. That auditorium can offer, say, 4 showings a night (for the sake of argument, 5:00, 7:30, 10:00 and 12:30) for a possible 4,000 ticket sales. In a multiplex, say, with 14 screens, the same movie might be scheduled in four auditoriums with seating 375, 275, 200 and 150, respectively (again, 1,000 seats). With staggered start times, those screens can show the movie sixteen times while offering the same 4,000 possible tickets. This increases the likelihood of selling the maximum number of tickets, because you are offering customers a broader range of choices that matches more precisely their scheduling needs. But you have a lower per screen average.
Exhibitors have drawn a line in the sand, steadfastly resisting the compression of release dates that they view as a threat to their livelihood. They get nervous when a studio attempts to release a movie on DVD less than 90 days after opening in theaters. Nonetheless, theater executives now are acknowledging they may need to adapt.
"We're going to protect our side of the business," said Amy Miles, chief executive of Regal Entertainment Group, the nation's largest theater circuit. But "we'd like to think that we'd work with the studios as business models evolved."
It's a delicate balancing act.
Theater operators want to be open to change without undercutting ticket sales, which have been remarkably strong. Above all, they hope the studios won't be oblivious to their concerns. "We want to know what's going to happen, and we want to have some input," said Tony Kerasotes, chief executive of Kerasotes Showplace Theatres and chairman of the National Assn. of Theatre Owners, a trade group.
For all their talk, however, studios say they're not ready to do away with windows entirely, fearing it could cannibalize their own business.
"People always say consumers want it all now, and Hollywood needs to change its business models," said Jim Gianopulos, co-chairman of Fox Filmed Entertainment. "But I've yet to see anyone show up with a simultaneous-release model that works.
"We need to experiment and allow consumers to take advantage of new technologies and ways to experience movies conveniently."
Following up this post, Variety reports that Paramount is widening the release window on The Goods: Live Hard Sell Hard.
In an effort to assuage exhib concerns, Paramount did agree to push back the DVD launch of Jeremy Piven laffer "The Goods: Live Hard, Sell Hard" from Nov. 11 to late November. Had the release date stayed the same, "Live Hard" would have come out only 12½ weeks after its Aug. 24 release.
Although, Paramount did not move the disputed G.I. Joe DVD release - a skinny 88 days - it did assert that the narrow window was an exception, not a policy.
Par, besieged with calls from angry theater owners, held a number of discussions with exhibs. Studio told exhibs that "G.I. Joe's" DVD launch was timed to the release of Hasbro's corresponding toy line for the holiday season, and that it was the best thing for the franchise.
Given that DVD revenues have been down the last two years and continue down an estimated 13.9% this year, while theatrical box office has set records the last two years and is on pace to set another record this year, it isn't surprising that distributors are sending movie theater owners some love.
"I think ultimately, Paramount remains committed to separate DVD and theatrical windows, and completely committed to protecting the moviegoing theatrical experience," Paramount vice chair Rob Moore said.
The L.A. Times has an article in today's paper speculating as to why some big budget films are failing at the box office this summer. Fine, as far as it goes.
Not so fine: the headline, "Summer movie season cooling off"; and the basic premise of the article.
The summer movie season is more than halfway over and a vacation season that started off hot -- "Star Trek," "The Hangover," "Up" -- has now cooled considerably. Despite the fast start to the year's ticket sales, seasonal returns are now up only 5% since May 1, compared with a year ago.
The current week should conclude with about $260 million total.
In other words, the Times article gets its facts wrong. It also gets its interpretation wrong and in the same paragraph. The fast start to 2009's box office came largely in comparison to a weak start to 2008 with box office up 9.4%. The seemingly smaller 5% advantage for summer 09 vs. summer 08 is purely a function of comparing this year's summer session to the second highest-grossing summer in hitory.
It would be like comparing a straight-set 6-0, 6-0, 6-0 victory over my 79 year-old mother to a five set win over Roger Federer that went to a tie-breaker and suggesting maybe I've lost a step.
And for those keeping score at home, summer 2009 is also ahead of the record summer of 2007 by roughly 1%. Brrrr.
NPR's Morning Edition aired a curious segment Monday morning. While audiences have been showing up in droves for the likes of Paul Blart: Mall Cop, they've apparently been immune to the aroma of freshly-popped popcorn as they head to the auditorium.
More than $4 billion has poured into the movie box office so far this year. That's up 12.5 percent from this time a year ago. Though the lagging economy has slowed sales some, Hollywood is still enjoying a good year. But that's not the case at concession stands.
Imagine my surprise. The story goes on to feature Jeff Bock from Exhibitor Relations, saying that, while box office was up strongly this year, concession sales were down as much as 10%. Now, as anyone who know theater owners can tell you, they are not exactly free and easy with revenue data on concessions, good year or bad. So, considering news this bad, I had to find out where Jeff had gotten his data. And it turns out he hadn't. Gotten data.
He did, however, have an anecdote. He had been told by an exhibitor at ShoWest that concessions were down by the amount he had cited. A couple of other people in the industry had told him concession revenues were flat. Where they got their data we don't know. Perhaps it was their own company's revenues. Maybe somebody had told someone who told them.
Here's where I get my data. There are five U.S. theater companies that are publicly traded, AMC, Carmike, Cinemark, Marcus and Regal (to be precise, AMC is not publicly traded, but some of its debt is) and must file quarterly statements with the SEC. There you will find, lo and behold, actual revenue figures for box office, concessions and other operations. They tell a very different story than the indifferently-sourced NPR report. The quarterly 10Q and annual 10K SEC filings can be found on the websites of each of the exhibitors named above.
For the first quarter of this year, the five companies show concession revenues up between 5.13% and 8%, which is higher than the box office increase for three of the companies. Those five companies comprise 17,000 of the 38,800 screens in the U.S. and operate in every region of the country, urban and rural. We can, I think, consider their concession numbers fairly representative of the industry as a whole.
The report also noted that box office is up 12.5% year-to-date over last year, which is also incorrect. Major news outlets have consistently gotten this number wrong all year. The real figure is 10.9%. If you account by an "iindustry year", as Nielsen EDI does, the revenue from the first four days of this year are not counted as 2009 revenue, which leaves us 6.9% ahead of 2008.
Interesting little quote from Blockbuster CEO Jim Keyes:
As if crushing debt, the recession, Netflix and Redbox weren't enough, Blockbuster Inc. has a new foe: the booming box office.
That's according to Jim Keyes, chief executive of the struggling but still massive DVD rental chain, who on Thursday blamed much of his company's weak performance last quarter on the growing number of people watching movies in theaters and not their living rooms.
"We estimate nearly 3 million more people are going to the movies each week in 2009 [than 2008]," he said on a conference call with analysts. "This has been pulling traffic from Blockbuster stores."
Even though box office and attendance are up over last year by double digits, the Gem Theatre in Kannapolis, North Carolina is trying to ease a little of the financial pressure on its patrons by offering free admissions every Wednesday. NBC Nightly News has the story.
Big media outlets are waking up to the phenomenal box office and admissions numbers being generated so far this year.
On Sunday, the New York Timesweighed in with the news that movie theaters are a bargain:
Helping feed the surge is the mix of movies, which have been more audience-friendly in recent months as the studios have tried to adjust after the lackluster sales of more somber and serious films.
As she stood in line at the 18-screen Bridge theater complex here on Thursday to buy weekend tickets for "Jonas Brothers: The 3D Concert Experience," Angel Hernandez was not thinking much about escaping reality. Instead, Ms. Hernandez, a Los Angeles parking lot attendant and mother of four young girls, was focused on one very specific reality: her wallet.
Even with the movie carrying a premium price of $15 because of its 3-D effects - children's tickets typically run $9 at the Bridge - Ms. Hernandez saw the experience as a bargain.
"Spending hundreds of dollars to take them to Disneyland is ridiculous right now," she said. "For $60 and some candy money I can still be a good mom and give them a little fun."
On Monday, it was NBC Nightly News, with Brian Williams waxing lyrical about the reasonably-priced comforts of settling in to a darkened movie theater, favorite snacks in hand.
There's a lot of emphasis on comedies and "feel good" films doing especially well. Is this your experience as well? What kinds of movies take you away during troubled times?
Box office is booming, and ABC News takes a look on the Friday before the Oscar telecast.
If you look closely, yours truly has apparently gotten a new job as spokesman for the previously unknown "National Association of Theatregoers". Aside from the really ugly acronym (NATg), they don't exist. We really like theatregoers, but we don't speak for them.
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