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Box Office Drops 5% in 2014: What’s Behind the Fall

Without Iron Man, Batman or James Bond to bolster ticket sales, the overall box office plunged 5.2% in 2014, topping out at $10.3 billion domestically. Audiences cooled to Hollywood offerings, voting with their feet as attendance dropped by an estimated 6% to 1.26 billion, the lowest figure in nearly two decades.

“This was the most flabbergasting year ever,” said Paul Dergarabedian, senior media analyst with Rentrak. “The good news is that the movie business had a great year in 2013. A record breaker. The bad news was that in 2014, it was measured against that success.”

Although there were some blockbusters such as “Guardians of the Galaxy,” “The LEGO Movie” and “Maleficent,” many of the big films and sequels didn’t give off as loud of a bang. Franchises such as “The Amazing Spider-Man” and “The Hunger Games” put up impressive global numbers, but showed some signs of age when they couldn’t match the domestic grosses of previous installments.

“The old standards didn’t live up to what was expected,” said Dan Fellman, domestic distribution chief at Warner Bros. “Maybe it was franchise fatigue, but when you look at hits like ‘Gone Girl’ and ‘LEGO Movie,’ they offered something new.”

Maybe it was too much of the same, but there are troubling signs that moviegoers, particularly younger ones, are more reticent about making the trek to multiplexes. Americans aged 12 to 24 saw 15% fewer films in theaters during the first three quarters of the year, according to Nielsen. And in 2013, according to a Motion Picture Association of America report, the number of frequent moviegoers between the ages of 18 to 24 fell by a record 17%.

“Movies are not the only game in town,” said Jeff Bock, a box office analyst with Exhibitor Relations. “It’s cell phones. It’s streaming. It’s instant entertainment, and the movies aren’t that. They’re playing catch-up here.”

It’s not just getting harder to pull audiences away from digital devices, there’s also the rise in quality television programming. Shows such as “True Detective” and “The Walking Dead” are equal to bigscreen entertainment and may be taking a bite out of the box office. The answer, studios say, remains fewer films, but bigger bets.

“Technology creates new alternatives and distractions, and that’s something that we as people who make content and show content have to be aware of,” said Dave Hollis, Disney’s distribution chief. “There has to be a clutter buster strategy of making events inside cinema where missing these events come at the expense of social currency and where people aren’t able to participate in water cooler conversation.”

It may also require altering the release and marketing plans for a film. Instead of simply running ads on major broadcast networks or trying to get in 4,000 locations, studios need to be more strategic. Data that studios now collect on the types of audiences they want to reach should inform decisions and keep a ceiling on costs.

“It’s not a shot in the dark,” said Nikki Rocco, president of domestic distribution at Universal Pictures. “You have to take time and study things.”

Just look at the year’s biggest film event — an 88-second trailer for “Star Wars: The Force Awakens.” The YouTube debut of the trailer was seen by more than 40 million users in less than 72 hours and dominated Twitter, Facebook and other social media platforms despite containing little more than a nifty new light saber and a fleeting glimpse of the Millennium Falcon. John Williams’ triumphal theme music did the rest.

“Doesn’t that tell you everything you need to know about the ways people are interacting with content is changing?” said Greg Foster, Imax Entertainment CEO. “When it comes to selling a movie or positioning a movie, the success or failure of that first image and that first teaser is more important than almost anything else.”

Television remains the most surefire way to reach the broadest audience, while radio and print promotions are being jettisoned. Instead, some studios have been delving more heavily into digital promotion, particularly with films geared at teenage crowds such as last summer’s “If I Stay.”

“You have to be where people are and make sure your materials are compelling and provocative,” said Sue Kroll, president of worldwide marketing and international distribution at Warner Bros. “We’re being much smarter about how we spend. You can’t be everywhere.”

Studios and exhibitors are quick to blame the films themselves for the recent downturn, not the art form itself. They also point out that 2015, which boasts new chapters in the Avengers, Jurassic Park and 007 sagas, to say nothing of “The Hunger Games” finale, should hit $11 billion for the first time in history.

“One thing we continue to see is that the box office is very product driven and it requires compelling movies to get people out of their houses,” said Rob Moore, vice chairman of Paramount Pictures.

Given that the summer box office was at a 17-year low when taking inflation into account, the picture could have been much more gloomy. Films such as “Gone Girl” and “Big Hero 6” helped reinvigorate ticket sales in the fall, and a strong slate of Christmas releases pushed receipts up nearly 7% from 2013.

The coming year should be a different story. Not only will the big-budget sequels appeal to children of all ages, but pictures such as “Fifty Shades of Grey” are positioned to draw specific demographics such as women that are too often ignored by major studios.

“There are enough films that should boost the box office and should send people to theaters throughout the year so that moviegoing stays part of their ritual and part of their routine,” said Moore.

Now the movie business has to hope that in 2015, audiences will get back in the habit of hitting up the multiplex.

“I remain very optimistic about our business and the future of our business, but everybody has to be smart and nimble and open to change,” said Kroll. “It’s definitely a different climate out there, but the movies are the movies, and there will always be a place for moviegoing.”

The success of recent films such as “The Hobbit: The Battle of the Five Armies” and “Unbroken” show that people still love going to the movies and helped close 2014 on an incongruous high note. Yet the fact remains that if the numbers don’t look very different by this time next year it may be time to panic.

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