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An Overview of the Modern Motion Picture Industry

Figure 12.1 Ratings of Top Twenty Grossing Films Durina 2008

blockbuster a film that brings in more than $200 million at the box office

multiplex a modern, air- conditioned building that houses between eight and fifteen screens and has the capacity to exhibit a number of different films at the same time

megaplex a modern, air- conditioned building that houses sixteen or more screens and has the capacity to exhibit a number of different films at the same time

The most appropriate name for the enterprise that we're dealing with in this chapter is the theatrical motion picture industry, so called because the business is set up in such a way that much of its output (movies) initially goes to theaters. Virtually all theatrical films (sometimes called feature films) now made commercially in the United States appear in nontheatrical locations after they have completed their runs in movie theaters in the United States and abroad. These movies are typically turned into videos for rental or sale; shown in hotels, airplanes, and homes on pay-per-view systems; shown on cable, satellite, and broadcast TV; downloaded from the inter­net to computers, TV sets, and mobile phones; and more. Still, “the movie industry” continues to mean the industry that produces films that will first be exhibited (“featured”) in theaters.

In 2008, Americans purchased about 1.4 billion tickets to see theatrical films, spending $9.8 billion (the box office receipts, or the sum of money taken in for admission) at an average price of a little over $7.00 per ticket (see Tables 12.1 and 12.2). That $7.00 may seem low in view of what you pay to see a film, but keep in mind that this price includes discounts for senior citizens and children. Moreover, prices in some parts of the country are a good deal lower than those in other areas. In New York City, for example, moviegoers in Manhattan typically pay $12.50 per person or more to see a new movie. Across the river in some parts of Brooklyn, the price might be a couple of dollars lower.

Going to the movies continues to be most common among young people. Around 34 percent of all tickets for movies in the United States are purchased by people aged 12-24 years, even though these people make up only 19 percent of the nation's population. People aged from 25 to 39 years represent 23 percent of the ticket holders, which is very close to their percentage in the population, whereas Americans 60 years of age and older, who make up about 18 percent of the population, account for 10 percent of the admissions (see Figure 12.2).

During the 2000s, between 500 and 600 movies a year made it to around 40,000 U.S. movie screens. Industry executives tend to pay most attention to the movies that bring in more than $200 million at the U.S. box office; they call such films blockbusters (see Table 12.3). There aren't very many blockbusters each year, but they tend to bring in a high percentage of the money that theatrical films as a whole make at the box office. For instance, one of the most recent and one of the biggest blockbusters, released in 2008, exceeded $500 million at the box office. The movie was The Dark Knight, which, at $533.2 million, stands as the third highest ever theatrical revenue in initial release, next to Avatar and Titanic. In 2008, three movies made more than $300 million, three films made between $200 and $300 million, and thirteen films brought in between $110 and $200 million. Together, the top ten movies of 2008 brought in $2.5 billion, which comprised about 26 percent of total domestic box office spending.

Movie executives pay attention to more than just U.S. theaters, however. What movie executives call the “international” (that is, non-U.S.) marketplace has been expanding rapidly. Around the world, moviegoing has been encouraged by the building of modern, air-conditioned multiplexes—theaters with eight to fifteen screens, and megaplexes—theaters with more than sixteen screens. As a result, box office receipts in the international sector grew substantially faster than U.S. box office revenues. In fact, from 2001 to 2008, the percentage of international receipts from outside the United States moved consistently upward, from 50 percent in 2001 to 54 percent in 2003 to 65 percent in 2008.

Source: National Association of Theater Owners (NATO), http://www.natoonline.org/ statisticstickets.htm (accessed March 10, 2010).

The decisions and activities made in Hollywood radiate outward, influencing the films that people around the world see in their neighborhood theaters and on DVDs and TV sets. Consequently, a large part of the movie business focuses on getting films and people together in theaters. What does the “Hollywood” way of doing business look like? Let's start with production.

Age Group Proportion of Total Population, Moviegoers, and Tickets Sold

Figure 12.2 Admissions by Age Group