2015 was the best of times, it was the worst of times.
2015 was a record-shattering year for theatrical films at the box office with over $11 billion in ticket sales. The first time that has happened!!!
And, it was also the worst year since 2004 and 2007 for the number of new theatrical releases that grossed in excess of $25 million. Go back a dozen years, or more, and you’ll find that 2015 churned out just 93 movies that reached this golden circle (and that includes films that opened at the end of the year and are either just getting to that threshold or will certainly arrive at that level before long). 2004 delivered 95 such films and 2007 went one better with 96.
Last year, there were 102 films of that caliber, which is the average for the past 11 years … 2015, however, was a year of feast or famine with films such as Star Wars: The Force Awakens and Jurassic World pulling in record-setting receipts while other films failed to find an audience — any audience.
There’s a battle between technology and the movies, with more and more theatre-goers becoming very selective in what they shell out for when it comes to heading over to the local multiplex for a movie. In ever growing numbers, they (collectively speaking) wait for other viewing options, especially digital which has become the tail that wags the dog. They know that it will be there soon, so why pay the premium!
So why is it so important that a film achieve at least $25 million in ticket sales? To get to even that number (which may or may not yield a profit), a new theatrical release needs three things — enough screens (places to put bodies), a PR and marketing budget that drives customers and enough of those customers to keep the film playing on as many screens as long as possible. When any of these three elements fall apart — especially in these times — that film production is doomed.
These are the films, those that gross in excess of $25 million, that consumers become aware of. That had a wide break and a PR and marketing to drive awareness. That is the winning combination.
When only 93 such films reach that level, gaps are created in the flow of product from theatrical venues to the home entertainment market place. So just 93 is a problem.
Compounding this even further, the window between when a film opens theatrically and it subsequently arrives on either DVD or Blu-ray is being squeezed.
In 2004, for example, it took on average 145.8 days to make the cycle. In 2015 this window was squeezed down to 114 days. Fewer films to work with and tighter windows … simply put, that’s not healthy.
For the past four years — 2012, 2013, 2014 and 2015 — the window from a film’s theatrical debut to its arrival in the home entertainment arena has been fairly consistent at 114.7 days (2012), 115.1 days (2013), 115.5 days (2014) and 114.0 days (2015).
As 2016 gets under way there are some pretty important issues that have to be resolved. Will the world of digital continue to erode theatrical attendance to the point that we see only a few big, big winners and an ever-growing circle of under-performers? Does that benefit anyone?
Will the distribution windows be squeezed even further? Does theatrical exhibition get to keep the window opened long enough to make any money — remember, the split on box office revenues are front-loaded with 90/10 – 70 percent deals during the first weeks of a film’s run. Only if a film has “legs” does an exhibitor begin to see share tip over to their favor.
And, at what point does the current equilibrium between theatrical exhibition and home entertainment come unglued?
As Bette Davis once famously observed, “Fasten your seatbelts, it’s going to be a bumpy night.” That could be 2016 in spades.