The box office: Attend locally, think globally

In 2005 we all obsessed about the box office slump, and whether it meant the end of cinema-going as we know it. In 2006 we took a breather from obsession as the domestic box office rebounded (though not to record levels, so deep down we were still worried). In 2007 we were happy to see a bountiful release schedule, but started fretting about how the large number of big releases might cut short the box office runs of one another.

Maybe we wouldn't worry so much if we thought more globally. Check out the worldwide box office trends for the last seven years:

(Source: MPA)

OK, we still would have worried about 2005. But 2006 was a record-setting year globally, with box office growing in every region of the world.

This year? Through July, our assessment of global box office indicates it has grown another 5%. If this trend continues - and we are expecting continued growth through the summer (a good release slate plus the 2006 summer box office was impacted internationally by World Cup soccer) - 2007 will be another record year.

Motion pictures are a global business. Hollywood studio features made more money internationally than domestically in 2006, with 51% of their revenues coming from overseas (Source: Screen Digest & Adams Media Research). At the same time, locally-produced movies are gaining more of a share of the box office in international territories. The market share of local films has increased each year, from 23% in 2002 to 34% in 2006 (Source: Screen Digest).

Let's recap: Global box office is up, Hollywood film revenues are up, local film share of box office is up. Worldwide admissions are up too, so it's not just higher ticket prices and currency exchange rate effects:

(Source: MPA, Screen Digest)

When you look globally, motion pictures are anything but a business in decline.

But since we so often focus on domestic box office, let's at least do so with a historical perspective, adjusting for inflation:

(Source: EI Business Research)

Some observations, looking back as far as 1948:

• The high-water mark for domestic box office came in the late 1940's, when cinema-going had no significant competition (if you wanted to see a picture that moved).
• There was a real decline in cinema-going after 1956, with the advent of color television. Box office dropped 33% in two years (dwarfing the 6% loss in 2005).
• Despite the presence of TV (and - starting in the 1970's - the VCR), cinema-going did not die, with box office relatively stable from the late 1950's to the early 1990's.
• The 1990's saw a rapid rise in modern cinema screen building, including amenities like stadium seating. Box office started rising too.
• The years of our current box office era - from 1998 to the present - has been the most lucrative since 1956.

In other words, assuming the 2007 box office stays on track (through July domestic box office was up 3.5%), we can celebrate the New Year by saying the last 10 years were the 10 best box office years since Americans started watching TV. And that doesn't sound like a slump; it sounds like a call for champagne.