Report: DVD, Games Trumping High Cost of Movies13 Oct, 2005 By: Holly J. Wagner
The cost of seeing a movie in a theater, combined with the ever-improving quality of the home entertainment experience, is a greater factor in the year's box office slump than movie quality, according to a new survey. But exhibitors may not be as bad off as reports seem to indicate, reported another.
DVDs and video games are sapping consumers' attention, especially among the key 13- to 24-year-old male demographic, according to findings by OTX (Online Testing eXchange). The research firm compared responses to similar questions in 2003 and again in August, looking for what has changed, and consumer attitudes about the quality of theatrical movies didn't make the list. The survey found that relative quality is the same, but it does not justify the higher costs.
“Consumers are saying that when they get to the theater, what they see there is as good as it's ever been,” said OTX CEO Shelley Zalis. “But the rising cost of tickets, gas and babysitters, combined with the improving nature of the in-home media experience, are major factors keeping consumers from leaving the living room.”
About 30 percent of respondents said it's not worth the money to go to the movies when they feel it will be out on DVD within a very short period of time. Interestingly, the hype about DVD persuaded about 40 percent of all respondents that movies reach DVD in less than two months. Close to 60 percent believe it's less than three months.
Home entertainment was most compelling in the young male segment. In 2003, 60 percent of that group said, “there was an excellent selection of films to choose from [in theaters].” That dropped to 35 percent in 2005. The 2003 group reported watching an average of 30 films on DVD or VHS; the number soared to 47 this year. Also dividing their attention, 62 percent now regularly surf the Web, 53 percent send instant messages, and 53 percent play console video games.
“This demographic, more acutely than any other, is weighing the value of the in-theater movie experience compared to many other lower-cost, more immediate and convenient entertainment options,” said Vincent Bruzzese, OTX SVP of entertainment research. “Increasingly, young males are deciding to grab a DVD or video game to watch or play at home.”
Meanwhile, forecasts from Kagan Research said that although domestic box office revenue is expected to shrink by 2.1 percent this year from last, theater owners actually are making more per patron. “Kagan estimates exhibitors pulled in $3.6 billion in concessions revenue in 2004, translating to $2.44 per patron,” said Kagan analyst Wade Holden. “Other revenue accounted for $1 billion, or 69 cents per patron. Add these to the average ticket price and exhibitors were bringing in $9.34 total revenue per patron. Apply the industrywide 17.9 percent cash flow margin and exhibitors had $2 in cash flow per patron. That is a dramatic difference from when they posted 85 cents in cash per patron in 1994.”