2005 Was a Flop for the Local Cinema

I’ve written frequently over the past couple of years about the sea change that’s taking place in the movie industry. Fewer people are going to the cinema, and more people are watching movies at home. This ABC News article does a decent job of summarizing this trend:

The bad news is that audiences did not exactly go ape over the rest of 2005’s cinema offerings, making this the third straight year of decline in Hollywood ticket sales — the first such stretch of bad news in 40 years. Because of the continued falloff — sales are down 12.6 percent from 2002 — a growing number of analysts are wondering whether America’s movie habits are changing permanently.

In 2005, box office revenue was expected to reach about US $9 billion. Compare that with the more than $15 billion that DVD sales generated in 2004. Increasingly, movies at the cinema are just ads for the DVD. Here’s a similar article from the Washington Post, exploring the reasons behind the shifting dollars.

Believe it or not, I think this trend is great news for the art form. More distribution mediums (cinema, DVD, Web, and so forth) mean more people can make more movies–it enables a longer tail of movie-making and consumption. I expect that studios will have to re-examine their approach in a world with fewer blockbusters. They may come to apply a ‘mutual fund’ model of production, distributing their risk and return over more films.

This trend isn’t great news for your local multiplex. As you may have noticed, they’re already branching out into other forms of entertainment–hosting video gaming nights or screening pay-per-view sporting events. I’m not keen on quoting myself, but “I predict that our grandchildren will look at the cinema the way we look at opera and ballet.”