Cinema Surpassed DVD Sales in 2009.

Posted by truecreek on January 11, 2010 under Opinions. Everyone has them. | Be the First to Comment

By Sarah McBride.

Last year was the first since 2002 that U.S. consumers spent more money buying movie tickets than buying movies to watch at home, underscoring the changing economics of Hollywood.

According to new data from Adams Media Research, Americans spent $9.87 billion at the box office in 2009, 10% more than in 2008, according to a report Adams plans to release Tuesday.  At the same time, sales in the U.S. of feature films on DVD, long a cornerstone of movie studios’ business models, plunged 13% to $8.73 billion, including Blu-ray high-definition discs.  (Other companies that track box-office receipts include Canada in their North American figures, adding about 7% to the total and pushing the year’s gross above $10 billion.)

The figures indicate that studios will likely have to continue looking for ways to survive in a marketplace where they can’t count on hefty home-entertainment revenue to offset giant production costs. Those costs often more than eat up the studios’ half of the box-office receipts, which are split with theaters.

The ongoing decline in home-entertainment revenue has already fundamentally altered the way studios do business, forcing them to place big financial bets on hoped-for mass-market blockbusters at the expense of features that cost less to make but that also have smaller earnings potential.

Hit titles such as “Transformers: Revenge of the Fallen,” “Harry Potter and the Half Blood Prince” and “Up” were among those that lured large numbers of Americans to the cinema last year.

“Consumers are still in love with movies,” said Tom Adams, president of Adams Media.  “In this environment, however, they’re seeking the biggest bang for their bucks.”

For studios, which count on income from home entertainment to underwrite growing production costs, the trend represents a giant headache.  In the early 2000s, studios began counting on the cash bonanza generated by consumers’ building up libraries of DVDs.  Now, they will have to alter budgets to reflect the shrinking DVD income stream.

More about how Cinema Surpassed DVD Sales in 2009 here.

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