Studio Income Hits A Record $31 Billion27 Jun, 2002 By: Hy Hollinger
Income for the major U.S. studios from the worldwide release of feature films to all media increased by nearly $1.3 billion last year, to a record $31 billion for the seven members of the Motion Picture Association of America (MPAA).
Home video, spurred by the continued rise of DVD sales, was again the biggest contributor to the overall growth, accounting for 40 percent of all-media revenue, according to a summary of annual global results submitted by the Motion Picture Association (the export arm of the MPAA) to executives of member companies.
The MPAA member companies are MGM, Paramount Pictures, Sony Pictures Entertainment, 20th Century Fox, Universal Studios, Walt Disney Co. and Warner Bros.
All-media revenue, which includes theatrical, home video, television and pay TV, has grown more than 18 percent since 1997, with each media sector except TV sales experiencing growth, according to the MPA summary. In 2001, home video brought in $12.4 billion; television, $9.7 billion; theatrical, $5.7 billion; and pay TV, $3.2 billion. Revenue from all-media is said to have increased 6 percent in the United States and 1.6 percent in overseas markets.
Following are some of the highlights found in the full report's executive summary, which was obtained by The Hollywood Reporter. The MPAA has a long-standing policy of not releasing any sections of the report.
Exploding Home Video
Aided substantially by the rapid growth of DVD, revenue accruing from worldwide home video sales rose 9 percent last year, but it appears, at the same time, to have caused an overall decrease of 17 percent in earnings from rental and sellthrough VHS. Last year, the United States and Canada saw increases in home video revenue, with Canada up 12 percent over 2000 and the United States showing a 10 percent increase.
The MPA says the home video revenue from Europe, at $2.91 billion (a 13 percent increase over last year), is “inching towards the $3 billion mark.”
Revenue dropped 4 percent in the Asia Pacific region, but the returns from that sector remain above the $1 billion level. The great liftoff of the DVD format in Latin America, pinpointed as being up 185 percent, brought an 8 percent increase in home video earnings from the region. The Middle East/Africa returns dropped 23 percent from the previous year.
Up and Down Theatrical
Offshore theatrical rentals -- the money studios actually get from various licensing agreements, not overall box office results -- declined 5 percent last year, to about $2.44 billion, but was offset by a 13 percent increase in U.S. theatrical takings of $3.27 billion, resulting in a hike of 4 percent in worldwide theatrical revenue.
MPA statisticians consider Canada an export market and include its earnings as part of offshore revenue. These circumstances make Canada, whose theatrical revenue increased 17 percent last year and accounts for 9 percent of international theatrical revenue, a leading overseas performer at a time that shows a noticeable slump in theatrical earnings from abroad.
Of the countries that finished in the top 15, 11 showed declines in theatrical film rentals last year.
Germany, a troubled market that once vied with Japan for top honors, showed signs of recovery by landing with Canada among the four that came up with gains. Germany scored more than 8 percent growth and was the only one of the top five European markets to see an increase in theatrical revenue last year. Other countries on the plus side were Mexico (6 percent) and Holland (2 percent).
Japan, the consistent leader, was off only 1.1 percent, and the United Kingdom again finished in second place, declining only 1.7 percent. Argentina fell off an eye-opening 32 percent, and serious drops were recorded by Australia (down 22 percent), Brazil (down 28 percent) and Taiwan (down 24 percent).
Theatrical revenue in Europe decreased 5 percent, to $1.178 billion, bringing it down to 1997 levels. The Asia Pacific region continued a four-year decline, off about 10 percent from last year, to finish at $646 million, and Latin America's theatrical revenue dropped 6 percent, or about $17 million.
“The driving force in the decline of revenue from abroad has been the exchange rates,” a key international executive at a major studio said. “We're repatriating a lot less money. But with the strength of the U.S. dollar easing off a bit, we expect bonanza revenues from abroad for 2002 based on the great returns recorded so far by the blockbusters in the market.”
Films that have been chalking up record business this year are Harry Potter and the Sorcerer's Stone; The Lord of the Rings: The Fellowship of the Ring; Monsters, Inc.; Spider-Man; and Star Wars: Episode II — Attack of the Clones.