5. THE BASICS 1: SO WHAT’S UP WITH TOTAL INDUSTRY BOX OFFICE?

This should probably have been my first post, because this is so basic: similar figures are probably on desktops all over Hollywood, but I wanted to create my own version of the box-office graph (will be complemented by my next post about the other significant segment of the film industry – home-entertainment):

Figure 1: Total Industry Domestic Box-office Grosses – 1990-2012 (Nominal and Real)

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The most obvious thing is the stagnation in growth of industry box-office grosses, starting around 2002 – this part of the industry is in the same place it was over a decade ago. This is not a good sign. Of course, the other side of the equation is film budgets, which are extremely hard to estimate, but it is a dying industry’s practice to rely on decreasing costs rather than revenue growth: even if technology reduces the costs of production (and many people are telling me it’s not – it only pushed costs towards the post production phase, rather than the physical production phase) – there will always be a lower threshold on that, whereas revenue growth, theoretically has no limit. When comparing this stagnation to the growing GDP in the US, the only conclusion is that people are shifting their budgets away from the cinematic experience.

That being said – the industry is not dying. Not yet. It’s in the same place the music industry was 15 years ago and the television industry was 5 years ago. It still has enough life and energy (and money) in it to find the new model for engaging the end user. For music that was direct single-track online sales, as well as the return of the live show as the tent-pole of an artist’s career. For TV that was direct TV on demand and the Netflix/Amazon model. At first, it looked like badass 3D cinemas with Dolby Surround and comfy seats would be enough. But apparently it did nothing more than buy the industry a few more years of watching it’s ugly TV sister grow into the healthier version of the business.

But what about the other part of the industry – home entertainment sales, you may ask? Surprising findings on that front – all  in the next post – THE BASICS 2: SO WHAT’S UP WITH DVD SALES?

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