Friday, December 29, 2006

Hollywood Is Doing Just Fine, Thank You

Every time the box office doesn't hit a new high, someone yells out that the industry is doing and no one is ever going to go to the movies again. Then, when DVDs failed to maintain its explosive growth last year for the first time, instead of seeing this as a natural development in a maturing category, everyone screamed that the DVD market was dead. And when typical blockbusters now cost $150 mil to $200 mil (at least), everyone screamed that midrange movies were deader than dead. As you might have guessed, everyone was wrong. Movie attendance (and certainly the box office) are just under $10 billion. One of the big reasons were modestly budgeted midrange hits like "The Devil Wears Prada." All you needed to have a good year in DVDs were some solid hits and reissues like "The Little Mermaid." Always keep in mind that the main revenue from movies 25 years ago was the box office. Period. VHS was just growing (and nowhere near today's levels), VOD a dream and HBO and Showtime gave you a few bucks at the end. That was it. Now, with DVD bringing in TWICE as much as the box office, with the overseas market BIGGER than the domestic one (overseas was often an afterthough for a movie's profitability), and VOD and digital downloads and other sources of revenue multiplying, the total gross for movies in all these categories is massively bigger than it was in 1980. So what if the box office stays around $10 billion? Out of nowhere, you're getting $18 billion from DVD (and the overseas market for that is growing too), another $10 billion overseas from that box office and on and on. Movies are far more profitable than ever.

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