Box office, admissions rise in 2006

1.45 billion tickets sold in U.S. last year

Box office was up last year — and so were admissions after a down 2005 — but Hollywood’s aim to slash production costs weren’t realized as the biz saw its first annual rise in the cost of film production in three years.

Hollywood also rolled out more movies than ever, hitting an all-time high of 607 last year.

The Motion Picture Assn. of America unveiled its annual state-of-the-biz stats Tuesday, disclosing that U.S. box office rebounded in 2006, up 5.5%, to finish the year with revenues of $9.49 billion vs. $8.99 billion in 2005.

Admissions were also up, per MPAA data, with 1.45 billion tickets sold in the U.S. in 2006 — ending a three-year downward trend.

Ticket prices rose 2.2%, with the average American ducat going for $6.55 last year. MPAA brass pointed out that the increase was less than that of the consumer price index.

Foreign coin was also a boon for Hollywood last year. In a conference call Tuesday morning, MPAA chairman-CEO Dan Glickman said growing territories, including Brazil, Russia and South Korea — as well as rebounding Western European markets such as France and Germany — were key.

Those territories helped boost worldwide B.O. to an all-time high of $25.8 billion, up 11% on 2005’s $23.3 billion. That hike was driven mostly by gains on the foreign front, where international box office set a record of $16.33 billion as it jumped 14% from the 2005 total.

Last year’s domestic B.O., however, couldn’t match the $9.52 billion taken in 2002, when pics in the “Spider-Man,” “Lord of the Rings,” “Star Wars” and “Harry Potter” franchises dominated the charts. That year also saw a record number of admissions: 1.64 billion.

Despite Hollywood’s pledge to slash production costs, MPAA data showed that its members spent $65.8 million on the average pic last year, up vs. 2005’s $63.6 million, a 3.4% increase.

The average cost of marketing movies, however, dropped in 2006 by 4.4% as studios spent an average of $34.5 million on marketing vs. $36.1 million in ’05.

Rise in production costs may be a result of the rivers of private equity flowing into Hollywood over the past year as investors and hedge funds showed up with bushels of money to underwrite studio pictures.

Hollywood is also pouring more of its money into what have been nontraditional means of marketing movies, including online advertising.

Internet advertising dollars jumped to an average of 3.7% of a film’s marketing budget, up from 2.6% in 2005 and just 0.9% in 2002.

The combined average cost of making and marketing a studio pic last year was $100.3 million. In the boom year of 2002, that number was just $78.2 million.

Hollywood also is putting out more product.

The number of new movies released in 2006 marked another all- time high, with 607 compared to 549 in 2005, an 11% increase.

The 2006 bounce came after a down year that saw the major studios, as well as exhibition chains, contentiously sniping over issues ranging from the impact of DVD releases on theatrical biz to the quality of pics flowing from Hollywood.

Nevertheless, last year’s rebound — spearheaded by Disney’s “Pirates of the Caribbean: Dead Man’s Chest,” which grossed more than $1 billion worldwide — saw 63 films gross more than $50 million at the domestic box office, a 12.5% increase from the previous year.

“Pirates” was a big factor in buoying B.O. at the upper echelon of the charts as just six pics grossed more than $200 million domestically last year, vs. eight in 2005.

In 2006, mid-level pics like “The Devil Wears Prada” were the real winners.

Last year was bullish for this business, said Glickman from Washington, D.C. “It brought moviegoers back to the theaters after the decline of 2005.”

B.O. pros are predicting that this year — with scads of sequels in proven franchises, including “Pirates,” “Potter,” “Spider-Man” and “Shrek” — could set all-time world and U.S. records.

“Given (the film lineup) of 2007, my educated guess is that it will be bigger than 2006,” Glickman said. “Last time we had so many sequels, in 2002, it was a pretty big year.”

Just two years ago, when B.O. sank in ’05, theater owners were panicked as Hollywood searched for ways to boost its bottom line, exploring, among other things, the release of pics on DVD ever closer to their theatrical releases. That issue subsequently subsided, and the up year seemed to calm both sides.

Consistent with 2005 figures, films rated PG-13 comprised the majority of top-grossing films for the industry. PG and PG-13 films accounted for 85% of the top 20 films of 2006.

Just 10% of last year’s top 20 films were rated R, and 5% were G-rated.

On the foreign side, the 2006 total also represented a 5% hike from the previous all-time high of $15.65 billion in 2004 — still a landmark year because foreign moviegoing surged 44% from $10.9 billion in 2003. 

The five Hollywood studio distribs — BVI, Fox, Sony, UIP, Warner — accounted for about 53% of the $16.33 billion total in 2006, although the MPAA didn’t break out details on the international number.

Four tentpoles — “Dead Man’s Chest,” “The Da Vinci Code, “Ice Age: The Meltdown” and “Casino Royale” — accounted for $2 billion in overseas grosses last year. Local films also kept the international market humming, with top performers including South Korea’s “The King and the Clown” with $83 million, France’s “Les Bronzes 3” with $83 million, Spain’s “Volver” with $66 million and Japan’s “Umizaru 2” with $61 million.

Jay Sands, senior VP at Sony Pictures Releasing Intl., said the increase in foreign biz has been spurred by tentpole pics with international traction, massive improvements in multiplexes and the emergence of new markets such as China and India.

The MPAA also released on Tuesday, via Nielsen Entertainment/NRG, various demographic studies about the makeup of the American moviegoing public.

African-Americans, according to the study, see the most films per year, averaging nine annually.

Hispanic moviegoers, who had been of keen interest to Hollywood after taking in an average of 9.8 movies in 2005, curbed their attendance habits, hitting an average of eight pics in 2006.

And males under 25 enjoy going to the theater most, according to MPAA data, with 78% of those polled saying they’d rather see a pic in theaters than at home. Among the four demographic quadrants, females over 25 were most likely to prefer home viewing, with 45% of those participating in the study saying they’d rather watch a pic on DVD than in theaters.

Somewhat surprisingly, the same study revealed that the more home entertainment technology an American owns, the higher his rate of theater attendance outside the home.

People with households containing four or more high-tech components or entertainment delivery systems — from DVD players to Netflix subscriptions, digital cable, videogame systems or high-def TV — see an average of three more films per year in theaters than people with less technology available in their homes.

(Dave McNary in Hollywood contributed to this report.)