Call it a pre-emptive defensive pose: Last month, during a question-and-answer session with newspaper reporters, Walter Parkes, a producer of the big-budget blow-'em-up Michael Bay spectacular The Island suggested that gas prices might be a significant unseen contributor to the box-office slump affecting Hollywood this summer. "I think it's definitely part of it, and I don't think it's been reported," he said. Two weeks later, his estimated $130-million-plus (U.S.) movie endured an opening-weekend gross of only $12.4-million on its way to less than $40-million total box office. Recalling that moment, a reporter who had been present at the event later quipped, "I guess gas hit $10 a gallon."
The Island is this year's most embarrassing failure so far, but it has plenty of company among other flops that are collectively making 2005 the third straight year in which box office has fallen. But if the studios are crying poor because of another bad season at the theatres, they're still making out like bandits with all of the ancillary markets for their films, including DVD sales, which now bring in about three times the amount of cinema ticket sales.
The panic in the executive suites is understandable: The four-month period from the beginning of May to Labour Day is the biggest season of the year, a time when producers like to say that every night is a Saturday night because children are out of school and eager to spend money. Cinemas generally take in about 40 per cent of the year's total box office during the stretch. As of last weekend, however, box office for the year was only a hair over $6-billion, down 7.24 per cent from last year's $6.5-billion. Attendance had dropped from 1.047 billion to 942 million, down a whopping 9.99 per cent. (Higher ticket prices may help soften the drop in revenue - this year's average ticket price is $6.40, up 30.6 per cent from last year -- but analysts also believe they contribute to the lower attendance by increasingly turning off audiences.)
After a period of denial in which studio bosses tried to lay the blame for the slump variously on an expanding DVD market, competition for leisure time from the Internet and videogames, and those rising oil prices, they have begun to accept blame -- on behalf of their organizations, if not personally -- for the lacklustre year, admitting that the crop of films they fielded is generally unimpressive. There has been no unexpected monster hit on the scale of last year's Shrek 2, which pulled in $436-million, and Spider-Man 2 ($373-million) or Finding Nemo ($339-million) and Pirates of the Caribbean: Curse of the Black Pearl ($305-million) from 2003. Furthermore, this is the first year since the fall of 2001 that theatres have been empty of Lord of the Rings geeks.
Instead, one after another anticipated blockbuster has hit theatres and shrivelled on contact with audiences, and not just during the summer season: Cinderella Man, Bewitched, Kingdom of Heaven, Hostage, Be Cool, Stealth, XXX: State of the Union, Elektra.
By a number of measures, audiences simply didn't seem as excited about the offerings this summer as in previous years. Only two from the Class of 2005 so far have registered in the top 20 best opening weekends of all time: Star Wars Episode III ($108.4-million) and War of the Worlds ($77.1-million). Both took in about one-third of their total box office in that first weekend, indicating that neither had the sort of stamina and crossover appeal from their core audiences that would indicate they'd struck unusual nerves with moviegoers. By comparison, last year saw a record six movies land on the list of 20 best openings: Spider-Man 2, Shrek 2, Harry Potter and the Prisoner of Azkaban, The Day After Tomorrow, The Passion of the Christ and The Incredibles. Most enjoyed very long theatre runs amid great word-of-mouth.
The slump seems to be affecting much of the world, including a few territories that do not share some of the suggested reasons for the North American downturn, leading some to suggest the primary problem is the quality of the movies themselves. According to figures published in the industry magazine Variety, Australian box office is down 14 per cent from last year; Italy, 18 per cent; France, 15 per cent; Spain, 12 per cent; and Germany, 11 per cent.
But a closer look suggests it may not be time to hand out the cyanide tablets in Studio City just yet. Some analysts note that the total box office is off about $470-million (U.S.) from the same point last year, or roughly equivalent to the combined box office earnings of only two independent films from 2004 whose unprecedented performance caught the industry by surprise: Mel Gibson's The Passion of the Christ ($370-million) and Michael Moore's Fahrenheit 9/11 ($119-million.). Both of those films are widely believed to have benefited from the rush to theatres of audiences who don't frequent Hollywood fare: respectively, conservative Christians and politically engaged adults. Taking those two films out of the equation from last year make this year's performance seem quite reasonable.
In fact, with a number of anticipated movies still to come this fall, including the fourth Harry Potter instalment, The Wallace & Gromit Movie, Chicken Little, an adaptation of the Broadway musical Rent, and Tim Burton's Corpse Bride, 2005 may still improve enough to hold steady with 2001.
Though two major chains in the U.S. are merging operations to cut costs and competition, the recent purchase by Empire Theatres of 27 theatres with 202 screens from Cineplex Galaxy shows that at least that Halifax-based company is feeling bullish about the exhibition business.
And from the studios' perspective, there's one very big reason to cheer: Despite slower than expected sales for a few recent titles, revenue from DVDs is exploding. A recent study by the Manhattan private equity firm Veronis Suhler Stevenson suggests that cinema box office will hold steady for the next five years, reaching about $10.6-billion in 2009 from last year's $9.4-billion, while DVD sales will rocket from roughly $26.7-billion this year to an estimated $40.4-billion in 2009.
Jim Rutherfurd, executive vice-president of Veronis Suhler Stevenson, says his firm is not predicting a total paradigm shift away from out-of-home entertainment any time soon. Though studios are agitating for the ability to sell DVDs much earlier after a movie's theatrical release than they do now, they recognize that a theatrical marketing campaign and success at the cinema helps a film break through the clutter afterward. "Box office is still how you generate a fair amount of money, and a lot of legs that then can carry you through what used to be called the ancillaries," he said, using the common term for post-theatrical distribution markets, including DVDs, pay-per-view, video-on-demand, and other electronic delivery methods. In terms of contributions to the bottom line, Rutherfurd said, "the ancillaries have taken over the primary."
Still, he cautioned it is much too early to write the final scene in the story of the theatre industry. "No pun intended, but we've seen this movie before," he said, noting that observers suggested in the 1980s that the growing popularity of videocassette machines would kill off movies. "It's important to remember that the out-of-home experience is a completely different experience than the in-home experience.
"The in-home experience has gotten a lot better, with better home theatres, plasma screen TVs, DVDs, surround-sound, the whole nine yards -- but it is a different experience, just like going to a concert or a Broadway play is different than watching something on TV. And last I checked, Broadway was still having ripsnorting growth, in a medium that goes back to Shakespeare."