Flipping an established formula on its head, 2009 marked the first time in seven years that consumers spent more money at the box office than on movies to add to their home libraries. Adams Media Research is reporting that Americans spent $9.87 billion on movie tickets last year, while spending on movies on disc (DVDs and BDs) dropped to $8.73 billion.
This is bad news for Hollywood studios, who have become increasingly reliant on home entertainment sell-through to subsidize the escalating cost of producing and marketing films. While rentals are up for the year, they are not nearly as profitable for the studios as disc sales.
Says Tom Adams, president of Adams Media:
“Consumers are still in love with movies. . . In this environment, however, they’re seeking the biggest bang for their bucks.”
Hollywood has taken note of this alarming trend and is making efforts to supplement its box office income with alternative home entertainment revenue options. Blu-ray discs, which are more profitable for studios than DVDs, are being heavily promoted, along with rentals through internet-enabled TVs and set-top boxes, which are also more profitable than physical rentals. Several major studios have also famously tried to keep their new releases out of Redbox kiosks to encourage consumers to purchase the films instead.
Insiders, did you find yourself going to the movies more in 2009 than in years past? Do you think this trend of bigger box office takes and smaller disc sales is here to stay?
[via The Wall Street Journal]