2009 Box Office Review - North America - Part 1
It was a banner year for the North American box office as receipts totaled $10.6 billion, outpacing 2008’s previous record by almost 10%. Admission numbers were also the best of the past five years at 1.5 billion tickets sold, a 6% increase. Not since 2002-2003 when popular franchises like “Star Wars,” “Lord of the Rings,” “Spiderman,” “Shrek” and “Harry Potter” were all in release and admissions rose 11% has there been as dramatic an increase. According to Adams Media Research, spending on movie going exceeded the spending of movies on home entertainment for the first time in more than a decade. Premium pricing as a result of 3D, which is often as much as 25% higher, new luxury theaters and new marketing ideas like “Avatar’s’ road show fees helped to propel the grosses.
It was the second year in a row for declining film releases with a record high in 2007 of 631 titles compared to the 520 released this year. The reduction in the number of films produced, this year at 14% fewer, is working to the studios’ benefit as well as the lesson learned that big stars don’t necessarily mean big profits anymore. This year there was an unusually large number of films that played for weeks to more than $100 million, including "The Hangover," "The Proposal," "The Blind Side" and "Paranormal Activity."
None of the top seven earners for the year had box office star appeal but rather four of them used the familiarity of sequels as an enticement. In 2008, there were half as many franchise extensions that made it to the top 10. However, 60% second week drop-offs became more common, creating a bigger divide between those films that work and those that don’t.
Paramount had the top performer of the year with “Transformers 2” earning $402.1 million at the domestic box office. It is only the ninth movie in history to earn $400 million. It was also the widest release of the year on 4234 screens and earned a $109 million three-day opening.
Still in release and looking to break all kinds of worldwide box office records is James Cameron’s “Avatar” which at the end of 2009 had earned $352 million but whose audience is not declining much either. The epic has since crossed the $1 billion mark worldwide and is the only 2009 film to do so.
That said, 2009 demonstrated more hits that grossed between $150 million and $350 million, such as "Star Trek," "The Twilight Saga: New Moon" and "Fast and Furious" than in previous years when a few mega-blockbuster hits like 2008's No. 1 movie, "The Dark Knight," ($533.3 million) grossed record-setting numbers while the other top performers earned nowhere near that level of box office.
Warner’s sixth installment of profitable franchise “Harry Potter and the Half Blood Prince” earned $302 million and posted a third place top performance for the year.
Disney’s $175 million Pixar production of animated 3D “Up” grossed $293 million domestically to place fourth.
Also still in release, Summit Entertainment’s second installment of the golden franchise “Twilight New Moon” finished the year at $288 million and had the third best opening of all time for a three-day weekend at $143 million. The original film earned $191.5 million.
Todd Phillips’ comedy “The Hangover,” produced for a modest $35 million with no major stars, took in $277.4 million in box office for Warner Bros. and became the biggest R-rated comedy in history, catapulting its stars to become much in demand. The film finished sixth for the year.
J.J. Abrams’ fresh take for a rebooted “Star Trek” earned $258 million to come in seventh at the box office and helped Paramount to re-establish one of its own brands.
Sandra Bullock’s still in release starring vehicle, the $29 million Warner production of “Blind Side,” earned $247 million by the end of the year’s play period.
“Alvin and the Chipmunks: The Squeakquel” ($215.6 million) with a December 23 release date opened at number three for the weekend but finished ninth overall for the year.
Warner’s “Sherlock Holmes” rounded out the top ten earning $205.6 million.
The biggest surprise of the year, horror thriller hit “Paranormal Activity” which ultimately earned $108 million, had the smallest opening of the top 30 best performers with $78 thousand across 12 screens in late September to open at #47 for the week. It was the only film in the top thirty not to open in a top spot, exemplifying the curiosity factor that the marketing campaign was able to instill for the film.
There has also been little change in the demographics of moviegoers, 53% of whom are female and 64% of whom are younger than 35. The 2009 average ticket price had a 28¢ increase in price from the year before to an average $7.46, while 2008 rose 4.4% to $7.18 over 2007.
The United States and Canada account for about 35% of the global box office total, making it the largest film market in the world. North America is a mature film market, and given the difficult economic times of the recession, film going has proven to be a good entertainment value exemplified by this year’s outstanding numbers.
One of the most notable changes in the film business through the course of the last decade has been the importance of social networking websites and the role that they play in film marketing. Paramount Pictures used the power of Twitter to hype “Paranormal Activity” launching a word-of-mouth campaign in which anyone interested in the movie was asked to demand its release in their city. Twitter users went to work and told everyone they could about the film. Supported by positive reviews, the $15,000 film is now one of the most profitable films in history. However, negative word of mouth opinions distributed through social networking websites are also a very real possibility. Negative tweets like those posted for Sacha Baron Cohen’s “Bruno” most likely adversely affected the film too and “Bruno” consequently didn’t come close to the success he had with “Borat” ($128.5 million) just a few years earlier.
Another change in the business is that the concept for a film has become the new “star” rather than relying on talent to open and carry a film. Some of the biggest films of 2009 like “The Hangover,” “Star Trek,” “Precious,” “Paranormal Activity” and “District 9” had no big names in the cast but were top grossers for the year while established A-list actors like Julia Roberts or Adam Sandler or Will Smith’s participation in films like “Duplicity,” “Surrogates” or “Seven Pounds” failed to make their money back. Studios are relying more heavily on pre-existing properties whether it be literature, video games, television series, toys or songs to find remake, sequel and spin-off opportunities in an effort to rein in costs as star salaries spiraled out of control for those handful of actors.
Technological advances have made dramatic strides as well. Performance capture and 3D were the big stories for the year. “Avatar” took performance capture technology and improved on this art form in a way that created performances in the world like none other. Though we had seen earlier versions of the technology in films like “Polar Express” and “Beowulf,” James Cameron showed that putting an actor in a suit covered with dots and manipulating the final outcome to retain the performance but changing the actor's physical appearance creates something that is neither animation nor live action but can engage an audience beyond either.
3D has also vastly improved as nearly every major studio has increased their production of 3D films because the technology has expanded the audience rather than cannibalizing it. The rising quality of home theater systems and new technologies like video on demand has been a continual point of concern for the exhibition business. Distributors and exhibitors recognize that studios need to offer the audience a compelling reason to leave their home to see a film. 3D was probably one of the biggest reasons to do so and the reverse of the declining ticket sale trend this year supports that notion.
An increase in IMAX releases by the studios is another way that distributors can create an event experience that warrants premium pricing. With its unparalleled clarity and clear, crisp sound, the IMAX release of “The Dark Knight” was so successful in the format on just 94 screens that IMAX expanded its inventory of screens..
Between the worldwide success of 2008’s “Sex and the City” ($153 million) and “Mamma Mia” ($144 million) and the “Twilight” ($487 million) franchise, distributors are beginning to recognize the power of the female segment of the audience for the disposable income that they control. Teenage boys are still very important but women, too, will go to see movies they like over and over.
Independent film came of age in the 90s as leading independent distributors like New Line and Miramax were bought up by bigger media conglomerates like Time Warner and Disney. The other studios followed suit by either building their own divisions or hiring key talent to set up these ventures within the studio system to capture what became a sizeable market share. As the 90s turned to the new century the studio independent divisions were offsetting production costs against international sales as the appetite for film was increasing. But as the international sales market began to falter when independent international distributors were no long able to afford the increasingly expensive product and several ultimately shuttered or were bought, the studios found themselves spending more and more money on prestige projects that brought attention to a studio but didn’t necessarily bring bottom line profitability. Consequently by the end of the decade, most of these divisions are gone and independent film distribution has been left to the independents once again.
With the exception of Cameron’s efforts with other worldly “Avatar” and historic epic “Titanic,” or Lucas’ sci-fi adventure “Star Wars,” comic book characters and visionary adventurers were the heart of the biggest franchises of the decade. The characters became more complex and their flaws more subtly handled such that they ultimately provided stories that could sustain multi-film sagas. These characters account for eight of the thirteen all time domestic top-grossing films including “Batman (The Dark Knight $553.4 million),” “Spider-man” ($404 million), “Transformers” ($402 million) “Lord of the Rings” ($377 million) and the comic versions of these characters in films like “Shrek”($441 million) and “Pirates of the Caribbean” ($423 million).
Ellen Pittleman, http://hybridentus.com, is a veteran studio executive based in Los Angeles. Most recently, she served as SVP, International Co-Productions and Worldwide Acquisitions for Paramount Pictures. She also launched the DVD Premiere group there, with films including Jonathan Demme’s “Neil Young: Heart of Gold” and the sequel to the $100MM+ “Save the Last Dance.” Working from a marketing and distribution perspective, she consults on strategic planning, deal negotiation, acquisitions, film library valuation and feature development with clients from Rio to London to Beijing. She’s also currently developing a feature on George Foreman’s comeback years, among other projects.