Rethinking the Box Office

As we move into the summer movie season, Hollywood is nervous. Sure, crowds have been camping outside theatres for weeks waiting for the premiere of Star Wars Episode III... but that's proving to be the exception. Last weekend saw the release of the first official summer "blockbuster" -- Kingdom of Heaven, starring Orlando Bloom -- and audience response was tepid. Kingdom brought in only $20 million in its opening weekend... hardly blockbuster numbers.

Indeed, last weekend's box office take was off 22% from the same time last year, and grosses are off 5.4% for the year, despite higher ticket prices. Movie audience levels have dropped steadily since 2002.

Higher prices, annoyances such as cell phones, and generally mediocre movies are all cited as reasons behind audience decline. Perhaps, but another reason may be that audiences are merely eschewing the "theatre experience" for at-home viewing via DVD, on-demand cable, satellite and Internet delivery. Why put up with the hassles and expense of the megaplex when you can enjoy the same movie in the comfort of your own home with a state-of-the-art (and increasingly inexpensive) home theatre system?

That, combined with the colossal distribution costs associated with films these days, is pushing Hollywood to experiment with new strategies for distribution. One is to accelerate the theatre-to-DVD track, debuting a film in a relatively small number of theatres just long enough to generate buzz, and then releasing it on DVD. Lions Gate Films tried this "hit and run" approach recently with the critically acclaimed movie Crash. If it pays off, expect to see a more rapid cycle of movies heading from theatres to the video stores.

One also suspects that part of the box office decline might be demographic. Many movies are driven by the teenage audience, whether they be out on dates or just looking to get out of the house. But as the pool of teenagers drops and the population grows older, theatres become a less appealing destination.

Despite this, it's too early to say whether the end of the movie theatre is nigh. But in the future, theatre runs may be reserved for heavily hyped, megabuck extravaganzas. "What sells nowadays is excitement," says Gitesh Pandya of BoxOfficeGuru.com. "A pretty good movie isn't good enough anymore." To hit at the box office, "a movie has got to be spectacular." To that end, the future of the Hollywood may well be determined by the performance of this summer's purported blockbusters.

UPDATE (6/17/05): An AP-AOL poll found an overwhelming majority (73%) saying they'd rather watch movies at home than go to a theatre... which would surely explain any box office slump. The availability of movies on DVD shortly after their theatrical release, the preponderance of sophisticated home theatre systems, babysitting issues for those with small children, the overall expense of a night out at the movies, and a general sense that recent movies aren't all that good all weighed in as factors. Plus, the survey detected what could be a backlash against bad behavior by Hollywood stars, such as Russell Crowe's recent phone-throwing incident for which he was arrested -- something that might have factored into poor box office for his recent movie Cinderalla Man.

Source: CNN/Money