The Terrible Plight of the Film Industry

Last week the MPAA[1] released their “Theatrical Market Statistics” for 2010. The report shows the disturbing effect that piracy is having on the film production and distribution industries. According to the official figures, global box office takings in 2010 were a mere $31.8 billion (around £19.7bn). While this figure may look impressive, it was a mere 6% increase on 2009 (25% increase since 2006). This compares with estimated growth of around 1.7% in the UK and 2.9% in the US for 2010.[2]

Global Box Office Sales 2006-2010

It would seem that despite the ongoing financial crisis and the ever-increasing levels of piracy, the film industry (as a whole) is still doing remarkably well. Of course, it could be that what we are seeing here are the fruits of the MPAA’s aggressive anti-piracy campaigns in the US and Europe (encouraged by their colleagues in the RIAA, IFPI and so on). Unfortunately, the data would seem to disagree on this; the US/Canada box office remained constant in 2010 (at $10.6bn, compared with a 10% increase in 2009, but no change in 2008), and the figures for EMEA[3] increased by merely 5%. However, the picture is far better elsewhere; with a 21% increase in the “Asia Pacific” region, and 25% in Latin America. As far as I know, these regions are not bastions of respect for copyright. Could it be that piracy is not having a significant effect on box office sales after all?

Attendance and Cost

There are some other interesting statistics in the document. Around 11% of the population in the US/Canada account for 51% of tickets sold (those going at least once a month), with 68% of the population going to the cinema at least once a year.

Also, it is worth noting that cinema attendance (in the US/Canada) was down by 5% in 2010 (at the same level as 2008, though), but this was matched by a 5% increase in ticket prices.[4] This represents an impressive 33% increase since 2001 – it would be interesting to see if there was causation between the increasing prices and declining attendance – and if so, which way it goes.

Film Production

It is also interesting to see that the total number of films that opened in 2010 was up 1% on 2009, and 23% on 2001. However, this represented a 23% decrease (from 2009) in films from MPAA members, matched by a 55% increase from non-members. Perhaps the MPAA should be directing its efforts away from pointless anti-piracy actions and campaigns, and back to producing films?

3D

What is slightly worrying from the figures is that in 2010, the revenue from 2D screenings (in the US/Canada) was down 11%, which was countered by a 91% increase in 3D screenings (making up 21% of total revenue). It is worrying as 3D appears to be being treated as “the saviour” of the film industry (much like the CD was the saviour of the music industry in the 90s) – when, like the CD, it may turn out to be a temporary boost while 3D films are still “new and exciting”. Relying on a new “gimmicky” technology for long-term survival and profit seems to be a dangerous business model.

Final Thoughts

The official press release accompanying the statistics ends with some interesting comments from Bob Pisano (President of the MPAA) where he notes:

Though innovation and technology continue to be a positive force for the theatrical business, … the continued theft of movies online will have a sustained adverse impact on movie attendance in the coming years.

He then indicates that the MPAA will “vigilantly protect the creativity at the heart of [their] industry from theft.” I may be wrong, but creativity cannot be stolen, certainly not by copyright infringement (which at most leads to “lost sales”). Creativity may be at greater threat from investment being diverted to lobbying and litigation, than from piracy. Certainly it seems that the non-MPAA members (who are not forced into paying for such campaigns) are producing more and more films, unlike the MPAA members.

In the statement, Mr Pisano also repeats the common lie that “[i]t’s impossible to compete with free.” According to the meta-data, the press statement was writing in MS Office 2007 which, last time I checked, was competing quite successfully with several free alternatives. Feel free to draw your own conclusions from that.


[1] Motion Picture Association of America
[2] I am a mathematician, not an economist – these figures were merely taken from Wikipedia.
[3] Europe, the Middle East and Africa
[4] Average ticket price in the US was $7.89 (£4.90) – not quite the £13ish I paid the last time I went to the cinema; although that was 3D and in Leicester Square…
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