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Global Box Office Hits Record $38.6 Billion in 2016 Even as China Slows Down

Movie-going hit record levels in 2016, setting a new high-water mark for the film industry, but only reaching the new pinnacle by a hair. Global box office revenue was essentially flat, rising a percentage point to end the year with $38.6 billion in revenues, according to a report by the Motion Picture Association of America. The year had its fair share of planet-spanning hits such as “Rogue One: A Star Wars Story” and “Finding Dory,” but the film business also had to grapple with a slowdown in China. After years of explosive growth, Chinese box office fell 1% in US dollar terms to $6.6 billion, though it grew 4% in local currency. That’s a disappointing result for an industry that has looked to the Middle Kingdom as an unstinting source of ticket sales and investment. In 2015, for instance, the Chinese box office rose nearly 49%.

The picture was brighter in the United States and Canada, where revenues hit a record $11.4 billion, a 2% increase from 2015. Domestic admissions were essentially flat at 1.32 billion. The revenue increases are attributable to higher ticket prices, as audiences shelled out an average of $8.65 a ticket, a nearly $3% hike over the previous year.

Avid moviegoers helped to keep seats filled. Eleven percent of the population were deemed frequent cinemagoers, which the MPAA described as people who attend the movies once a month or more. They were responsible for 48 percent of all tickets sold. Some 246 million people, more than two-thirds the two country’s population, attended at least one movie last year, an increase of 2%.

“Despite the explosions of entertainment choices, that grow almost by the hour it seems, the global film industry is vibrant, strong, and growing,” Chris Dodd, the MPAA’s CEO, told media in a Wednesday conference call. But Dodd, a former Democratic senator from Connecticut, also noted that the business is not for the faint-hearted. Making movies requires a lot of capital, and the risk of losing a lot of money in the bargain. Only four out of every ten pictures make a profit, he said.

“It’s a tough business,” said Dodd.

Audiences in the U.S. and Canada also got a little younger, a good sign for an industry that is worried that millennials are turning away from the big screen in favor of gaming, streaming services, and other digital forms of entertainment. In 2016, 18-24 year olds went to the movies an average of 6.5 times over the year, up 0.6% from 2015 and the largest increase of any age group. The only age brackets that saw declines were those between the ages of 40 to 49 year old and those over 60.

Dodd was joined on the call by John Fithian, the head of the National Association of Theater Owners, an exhibition industry trade group. Fithian called fears that young people have stopped going to movies “a myth,” and argued that the movie business is well positioned to weather the technological tumult that has upended the music and print media industries.

“Yes there’s disruption and new technology, but people are still coming to the cinemas in strong numbers,” said Fithian. He noted that most industry analysts predicted that ticket sales would drop in 2016, because major franchises such as James Bond and the Avengers weren’t releasing new installments. In that climate, coming in on par with 2015 was a victory, he argued, maintaining that the results would have been even better were it not for unfavorable currency exchanges.

The MPAA is the major studios’ lobbying arm in Washington, D.C., where it primarily is focused on the issue of piracy and in overseeing ratings guidelines for new releases. It also compiles a global and domestic snapshot of the moviegoing consumer. The group’s research found that the Stateside crowds for films were growing more diverse. Caucasians continued to make up the majority of moviegoers (59%), but per capita attendance increased for African-Americans and for audiences in the Asian/other category compared to 2015. After years of being one of the most reliable populations of moviegoers, Hispanic audiences weren’t hitting up he box office as frequently. Frequent Hispanic moviegoers clocked in at 4.6 million in 2016, a drop off from 5.2 million in 2015.

Ticket sales were nearly evenly split between the genders, with women comprising 52% of buyers. Three of the top five grossing films in 2016 attracted majority female audiences, including the year’s biggest hit, “Finding Dory.” The animated sequel received 55 percent of its box office from women. As for the rest of the top five, “The Jungle Book” and “Sing” also received a greater share of their revenue from women, while “Rogue One: A Star Wars Story” and “Captain America:Civil War” attracted majority male audiences.

There were more films released in 2016, with the number of features topping out at 718, up a percentage point. However, that was largely due to independent players. The six major studios that make up the membership of the MPAA only released 133 films, a drop of 5% from 2015. Studios are making fewer films, while spending big money on blockbuster hopefuls they believe can play well overseas.

Foreign revenues are increasingly important to Hollywood’s bottom line. The international box office in U.S. dollars racked up $27.2 billion, accounting for 71 percent of total box office in 2016. There were troubling signs, however. The foreign box office fell for the first time in a decade, as China proved to be a drag on results. It wasn’t the only area of constriction. Revenue in Europe, the Middle East and Africa dropped 2.1% to $9.5 billion, and Latin America was hit even harder, falling 17% to $2.8 billion.

The 3D renaissance some predicted would kick off with the success of 2009’s “Avatar” now seems like a distant dream. There were more movies made in 3D, but the ones that hit theaters in 2016 were less popular. Grosses for films made in the format fell 8% to $1.6 billion.

The MPAA report was unveiled as tensions rise between sections of the entertainment business and Donald Trump. Meryl Streep, Robert Redford, Chelsea Handler and other stars have publicly rebuked the president, who has made his disdain for Hollywood known. It’s not clear if that divide is manifesting itself in the relationship between the movie business’ lobbying arm and the new administration. Dodd said he had met with Commerce Secretary Wilbur Ross, but noted that key positions, such as that of U.S. Trade Representative to China, have yet to be filled. He predicted that Robert Lighthizer, Trump’s pick for the post, will be confirmed soon, praising the choice.

Dodd didn’t criticize Trump by name, but he did take issue with the protectionist policies that helped fuel his rise to the White House. On the campaign trail, Trump slammed China for currency manipulation, while raising the possibility of implementing restrictive trade policies. At the same time, Beltway players have raised concerns in recent months about the level of Chinese investment in the entertainment sector. Dalian Wanda, Huayi Bros., and other Chinese conglomerates have bought or invested in such companies as AMC, STX, and Legendary.

“Historically we’ve welcomed foreign investment in the United States,” said Dodd, adding, “We have to be careful about not branding nation states who want to come and invest in our country as evil.”

 Charts courtesy MPAA

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