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Summer box office hits record $4.4 billion, but...

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The 2011 domestic summer box office earned a record $4.4 billion in the period between May 6 and Labor Day, improving by one percent on the $4.33 billion earned last year. Theoretically, this should be seen as a major victory for Hollywood — of course, they’re celebrating it as such — but savvy box office junkies know better than to simply believe the hype. The box office is not quite as healthy as that figure might suggest. 

The summer box office record (which, for the record, has been broken every year since 2007, rendering it somewhat less prestigious) was driven by inflated ticket prices. Attendance was actually down over the course of the season. According to the New York Times, an estimated 543 million tickets were sold during the summer, down from the estimated 552 million sold in summer 2010. (UPDATE: The National Association of Theater Owners claims that Times got these figures wrong and that 2011’s admissions of 546 million marked a one percent gain over last summer, when 540 million tickets were sold.) That marks the lowest number of tickets sold since 1997, when just 540 million tickets were bought by moviegoers, and the fourth summer in a row in which box office attendance has dipped. For the year so far, attendance is lagging behind 2010 by about four percent.

So why did the overall revenue go up this summer? Two words: expensive tickets. Thanks to a whopping 18 movies released in 3-D (up from seven in 2010), and another 12 movies that played in IMAX theaters, audiences shelled out a lot more dough for fewer tickets this summer. The average price of a movie ticket in 2010 was $7.89, but in the second quarter of 2011, the average price of a movie ticket reached $8.06 — that’s some very fast price inflation. (Still, I would totally pay for some $8 tickets if I could find them!)

Ticket prices have been increasing for decades, but technological advancements in theaters are sending them skyrocketing. Prices for 3-D movies are typically at least $3.00 higher than the regular ticket price, but some theaters are charging as much as $4.50 extra for the 3-D illusion. These higher prices, when combined with the ever-increasing number of digital and 3-D-equipped screens in America (just over 50 percent of movie screens in the U.S. are now digital), gave grosses a solid bump. Additionally, an impressive 10 percent of opening weekend grosses this summer came from IMAX screens, and that figure is still on the rise. It appears that Americans have fully embraced the IMAX format as a worthy cinematic experience, and they don’t mind paying the steep ticket price to see true event films on the giant screen.

Plain old 3-D, however, has been much more of a mixed bag, as it seems that the novelty which originally attracted ticket buyers is quickly wearing off. While Thor and Transformers: Dark of the Moon, real visual-effects spectacles, both earned a solid 60 percent of their opening weekend grosses from 3-D screens (notably, both films were also exhibited in IMAX 3D), for other films, like Captain America: The First Avenger and Cars 2, 3-D only accounted for 40 percent of the opening weekend gross. Still, the simple ratio isn’t always the best gauge of success: Shark Night 3D earned a big 86 percent of its opening weekend gross from 3-D, but that gross was an anemic $8.4 million — not exactly impressive. Glee: The 3D Concert Movie played exclusively in 3-D theaters, yet it only grossed $6 million in its first three days. In short, 3-D box office results are still a substantial piece of the puzzle, but the business coming from 3-D is clearly waning. And despite the fact that more and more theaters are making the format available, traditional 2-D films like Fast Five prove that audiences don’t demand it. Paul Dergarabedian at Hollywood.com sums up the 3-D debate well: “3-D is not a panacea, but rather a technology that should be used judiciously and only with the right kind of movie and at a price point that makes sense to the consumer.”

All this is not  to say that there weren’t major box office hits this summer — there absolutely were. Warner Bros.’ smash Harry Potter and the Deathly Hallows – Part 2 earned $375.8 million, and Paramount’s Transformers: Dark of the Moon found $350.5 million. Other sequels, like The Hangover Part II ($254.4 million), Pirates of the Caribbean: On Stranger Tides ($240.8 million), Fast Five ($209.8 million), and Cars 2 ($189.3 million), also raked in money. R-rated comedies Bridesmaids ($168.5 million), Horrible Bosses ($115.1 million) and Bad Teacher ($98.9 million) joined The Hangover Part II as major successes (though, later summer R-rated comedies Friends With Benefits, The Change-Up, 30 Minutes or Less, and Our Idiot Brother proved much less viable). And a pair of August releases, Rise of the Planet of the Apes ($163.1 million) and The Help ($125.8 million), both earned impressive totals. Of course, there were more than a few bombs (Cowboys and Aliens, Green Lantern, Larry Crowne), but all told, the domestic box office provided a standard number of hits.

But it wasn’t exploding like the international box office! Fueled by emerging markets like China, Russia, and Brazil, movies took in $8.2 billion dollars internationally this summer, up a gargantuan 41 percent from summer 2010, when movies earned $5.8 billion abroad. Part of the success here is due to 3-D as well, as the format is proving hugely popular with international audiences, but the main factor is simply that moviegoing has become much more popular internationally in recent years. America is now just another market in the worldwide box office. That’s why Disney didn’t need to worry that Pirates of the Caribbean: On Stranger Tides only earned $240.8 million domestically — it earned $798.5 million overseas!

International receipts don’t pay the bills for American theater owners, though, and I have to wonder how they are faring in this consistently more-expensive but less-attended industry. You see, most of the upcharge on a 3-D ticket goes to the distributing studio and the 3-D projection company, and theaters have to spend exorbitant amounts to convert and maintain 3-D screens (it costs a theater about $75,000 to convert a single screen to 3-D). So even if more revenue is getting earned at the box office, much of that money isn’t going straight to the theater. Furthermore, if fewer people are actually attending the movies, that means that fewer people are buying concessions — a major piece of theater profit. I have to wonder, are theater owners really earning more profit with 3-D technology, or is it scaring away more potential spenders than it’s bringing in?

According to a study released earlier this year, an 11 percent segment of the population accounts for half of all tickets sold at the North American box office. My fear is that if tickets continue to become more expensive (as theaters remain dirty, loud, and dim), casual moviegoers will give up on the cinematic experience all together. Then Hollywood might really be in trouble.

What do you think? Are the movies destined to get more expensive, as fewer people attend? Will we ever see a decrease in ticket price? Will 3-D’s pervasiveness diminish in 2012? Sound off in the comments.

Follow Grady on Twitter: @BoxOfficeJunkie