Oscar is golden, but film business shows some tarnish

Wed Feb 23, 2011 5:09pm EST
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By Alex Dobuzinskis

LOS ANGELES (Reuters) - Oscar week is upon Hollywood and the champagne is flowing freely at numerous parties celebrating the world's top movie honors, but when the film industry wakes up with a hangover from Sunday's awards, it faces a cold reality.

Digital technologies are rapidly changing the way movies are delivered to consumers. DVD sales are continuing their multi-year decline with no end in sight. Theater attendance is off a whopping 23 percent so far in 2011 compared to the same point one year ago. And not even 3D is saving it, anymore.

Financial and analysts say movie makers and distributors need to keep up with rapidly changing consumer behavior in an era when entertainment is cheap and readily available on the Internet. Many in Hollywood agree, and are working to change. But profitable new ways of doing business have been slow to come, and the consequence could be an industry on the decline in much the same way as music industry was in the 2000s.

"The trends that we see today are similar in many ways, although I don't think we're the same as the music industry," said Mitch Singer, chief technology officer for Sony Pictures Entertainment, a division of Sony Corp. "Revenues are declining, people are finding other ways to access our content," he said.

Attendance at U.S. and Canada theaters so far this year is down to 173 million tickets sold compared to 225 million for the same time period in 2010 -- a decrease of 23 percent, according to tracking firm Hollywood.com Box Office.

There are bright spots for the movie industry, especially internationally. The Motion Picture Association of America on Wednesday said global box office receipts in 2010 hit $31.8 billion, an increase of 8 percent from the year before.

The Asia Pacific region saw the most growth with a 21 percent uptick. But the trade group acknowledged U.S. and Canada box office results were flat in 2010, at $10.6 billion.

Worse, consumers bought only $10 billion in home video entertainment products in 2010, compared to $14 billion in 2004 when the DVD market was booming, reports IHS Screen Digest.   Continued...