An increasing emphasis on wide-release blockbuster films, coupled with another few years of gangbuster DVD sales, should keep filmed entertainment consumption in the U.S. humming along for the next five years.
According to PricewaterhouseCoopers’ latest Entertainment & Media Outlook report, total consumption on theatrical motion picture product should grow from $31.7 billion in 2002 to just under $44 billion by 2007, a modest but steady 6.7% compound annual growth rate.
The new forecast, to be released Wednesday, notes that higher opening-weekend grosses have helped drive total B.O. spending up 37% since 1998, when only eight films opened on more than 3,000 screens. In 2002, some 32 films debuted on 3,000-plus screens, with the average wide-release title generating $17.3 million in its opening weekend, a 47% jump from 1998.
Overall, PWC notes that box office spending, having grown rapidly in four of the past five years, should slow somewhat through 2007, as the benefits of such wide releases “approach an upper limit.”
The accounting and consulting shop forecasts U.S. box office spending will increase 6.2% annually through 2007, reaching $12.9 billion, up from last year’s $9.5 billion tally.
In an effort to maximize ancillary revenue streams by amplifying opening-weekend hype, studios are rushing to slot films onto more screens, leveraging that marketing effort downstream to video/DVD and pay TV.
And, of course, along with the bigger emphasis on big-budget wide releases, studios are hedging their bets with more sequels than ever: 27 of them are scheduled for 2003 (up from 20 last year), representing 10%-15% of all major studio films.
Small films hurting
The obvious victim of this big pic juggernaut, the report said, are smaller films. With the exception of last year’s $230 million B.O. sleeper “My Big Fat Greek Wedding,” they have continued to lose their share of admissions as exhibs rush through films to make room for the next promo-powered wide release.
The faster cycling of movies also is leading to a shorter homevideo window, with many films now entering vid release as early as three months after their theatrical debuts, thus speeding up studio cash flows and maximizing marketing spend.
With video still the single fastest-growing filmed entertainment sector, PWC said sell-through will comprise nearly 70% of total homevid spending by 2007, thanks in part to double-digit growth in DVD penetration and increasing numbers of TV series released on the format.
This growth should offset the decline in rentals. Report posits that VHS rentals will all but disappear over the next five years, dropping to just $120 million in 2007 from $6.4 billion in 2002.