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The Impact of 3D films on the motion picture industry The Impact of 3D films on the motion picture industry Document Transcript

  • ANALYSIS OF THE IMPACT OF 3D ON THE MOTION PICTURE INDUSTRY IN NORTH AMERICA MGMT 8503: ECONOMIC MANAGEMENT AND STRATEGY APRIL 8TH , 2011 PATRICK GALLAGHER 20805458 LA JOUNG HONG 20711745 MARIA PAULA VASQUEZ 20698639 JANIFER YAP 20841177 WORD COUNT: 3,130
  • The Impact of 3D on Motion Pictures MGMT 8503 Contents INTRODUCTION ................................................................................................................................ 3 Market Description ......................................................................................................................... 3 Demand Analysis............................................................................................................................ 4 Description.............................................................................................................................. 4 Drivers of Demand.................................................................................................................. 5 Elasticity of Demand............................................................................................................... 6 Supply Analysis .............................................................................................................................. 7 Description.............................................................................................................................. 7 Drivers of Supply.................................................................................................................... 7 The Shock Event – Implementation of 3d ...................................................................................... 8 Description.............................................................................................................................. 8 Short Run Impact On Film Industry ....................................................................................... 9 Long Run Impact On Film Industry...................................................................................... 10 Future Impact On Film Industry ........................................................................................... 10 Interconnected Markets – Home Entertainment ........................................................................... 11 Description............................................................................................................................ 11 Conclusion .................................................................................................................................... 12 References..................................................................................................................................... 13 Appendix....................................................................................................................................... 15
  • The Impact of 3D on Motion Pictures MGMT 8503 INTRODUCTION Other from being just an excuse to get out of the house, socialize or grab a box of popcorn, film is North America’s top entertainment activity of choice. When the industry was hurt by the proliferation of new alternative entertainment experiences in the home, by making it more challenging to entice and motivate customers to go to the cinema, the film studios and exhibitors responded with the re-emergence of 3D films. This provided an experience that still represents a social art form you cannot get on an iPhone, iPad or TV (Verrier 2011). This report will examine conditions of the motion picture industry from 2001 to 2010 in North America from a demand and supply perspective and the impact that 3D films had on the short run, long run and future. MARKET DESCRIPTION The motion picture industry specifically in North America is responsible for producing a significant portion of films globally. The top six major film studios are all located in Los Angeles and account for 82 % of the total gross profit (Appendix A). However, an increasing number of minor independent studios are starting to penetrate the market by controlling 84.7% of all film productions in 2010 but it has been difficult for them to gain market share. Furthermore, the opportunities from the growing demand of alternative entertainment channels such as cable television, the internet and digital video recording devices are providing additional revenue streams for these companies (BLS 2011). Nevertheless, films are still first released in cinemas before being offered on these alternative entertainment channels. The studios in order to maintain a competitive edge offer a large range of differentiated films to satisfy a variety of consumer tastes while also being able to influences prices somewhat. The strategic decisions and movements from the major studios are dictated as a result of monitoring the strategies and practices of their competitors with regards to technology and schedules (Currah 2006). Entry barriers to the motion picture industry are relatively high, because there is high brand recognition and loyalty to the major studios thus providing extremely difficult access and distribution channels for the new marketplace entrants (Frank 2007). Furthermore, as the studios also own the majority of distribution companies, these new minor studios are finding it impossible to compete with the major studios and penetrate the market except for rare occurrences, therefore representing an oligopolistic market. The supply of motion pictures is additionally influenced by film exhibitors who control admission price and availability. For instance, Regal Entertainment Group, AMC Entertainment and Cinemark own 40% of North America’s screens accounting for approximately 16,000 screens at 1200 cinemas. Thus they have the power to influence the price by deciding to show or
  • The Impact of 3D on Motion Pictures MGMT 8503 not a specific film in their cinemas or by engaging in price discounting and discrimination to drive sales (Puentes 2010). From the exhibitors perspective the industry has elements of a monopolistic competitive market, offering differentiated service in their theater for a large number of customers by a large number of firms (Smith and Smith, cited by Brewer et al. 2009). Thus cinemas engage in the practice of price setting. Consequently, because other competitors can easily copy the practice of other cinemas it makes entry and exit of market to be reasonably simple (Hall & Lieberman 2008). DEMAND ANALYSIS DESCRIPTION The demand for motion pictures is most accurately measured from the number of total admissions and average admission price (Figure 1). In the period of 2001 to 2010, there has been a steady decrease in total admissions of 6.29% (MPAA 2010) (Appendix B). Furthermore, admissions per capita in the same 10 year period, declined from a peak of 5.2 in 2002 to just 4.1 tickets per person in 2010 (MPAA 2010) (Appendix C). This has caused some concern for the future for the industry. The other major factor of demand is average admission price which increased 39.4% from $5.66 to $7.89 in the same 10 year period (Appendix D) and total box office revenue also increased 37% while reaching an all-time high of $10.6 billion in 2009 and 2010 (MPAA 2010) (Appendix E). However, increases in the price of film admissions has generated a loss of only a small proportion of its customers because most have remained due to consumer preferences (Hall & Lieberman 2008). Therefore, the price of film admissions is not directly influencing the purchase decisions of consumers because still 1.34 billion admissions were sold in 2010. Figure 1: Demand of the Film Market
  • The Impact of 3D on Motion Pictures MGMT 8503 DRIVERS OF DEMAND CONSUMER TASTES The quantity of film admissions are typically influenced by consumer tastes, satisfaction levels and from the available slate of films on offer. Thus, consumer preferences are dispersed over a range of the characteristics of films and depend on individual demographics such as gender, age range, education, social class, and size of municipality. Furthermore, promotional campaigns highlight movie features such as the genre, cast, plot, and country of origin thereby offering consumers purchase decision choices consisting of differentiated products to satisfy a variety of different individual taste (Watt 1994). Consequently, there will be an increase in the demand curve to the right as consumer taste increase. SUBSTITUTES The cost to watch a film in a cinema is affordable at just under $50 for a family of four compared to the cost of other entertainment options such as sporting events, theme parks, musical concerts and live cinema (MPAA 2010). However, with the increased availability of home entertainment access and a significant reduction in its cost, may lead to a shift to the left of the demand curve for film admissions. COMPLEMENTS The experience of watching a film at a cinema also is typically accompanied with food such as popcorn, candy and soda beverages in North America. When the price for these complementary food items increases, it may result on the reduction of ticket admissions sold. EXPECTATION Expectations of customers regarding the quality of the films affect the demand. Advertising, film review and awards such as Academy Awards (Oscars) and Golden Globes influence the customer desire to go to the theaters (Hennig-Thurau et al. 2006). Positive film expectations shift the demand curve to the right.
  • The Impact of 3D on Motion Pictures MGMT 8503 ELASTICITY OF DEMAND INCOME ELASTICITY The price of film admissions is considered an affordable entertainment activity but demand is dependent on a consumer’s real disposable income. In the period of 2001 to 2009, disposable income per capita increased 37% in North America (Appendix F). As a result of the changes in income, consumers will still prefer film as their entertainment activity of choice, however there will be more expensive entertainment alternatives to consider. Thus film is classified as a normal good because there is a minimal impact due to the increase of income. PRICE ELASTICITY The average ticket price increased 39.4% between 2001 and 2010, while the demand decrease only 6.29% in that period. For that reason, the price elasticity of the film market can be considered inelastic because an increase in the price of film tickets resulted in only a small reduction of ticket sales (Einav 2007) (Appendix G). However, the total box office revenues increased (figure 2) (Appendix E) Additionally, 68% of the population or 222.7 million people are considered moviegoers whom purchased an average of six tickets annually while frequent moviegoers are responsible for 50% of ticket sales (MPAA 2010). Therefore, even with price changes moviegoers will still favour viewing films as their main entertainment activity. Figure 2: Total Revenue of Box Office
  • The Impact of 3D on Motion Pictures MGMT 8503 SUPPLY ANALYSIS DESCRIPTION The supply of the motion picture industry is controlled by film producers and film distributors (Hui & Png 2002). As previously mentioned the industry is an oligopoly controlled by six major studios, with several independent studios attempting to gain market share. One of the key measures impacting supply is the number of films released annually by all film studios, which increased 23% from 2001 to 2010 with a peak of 634 films in 2008 but has seen an 11.2% decrease since then (MPAA 2010) (Appendix J). The second measure is the number of film cinemas with their allocated number of seats, screens and showings for films on a weekly basis (Hennig-Thurau et al. 2006). Typical new released films are shown for six to eight weeks at cinemas averaging 215 seats per screen on the three main screen types of Analog, Digital 3D and Digital Non-3D. The industry has also been shifting towards venues with more screens as the main growth area with seven screens per cinema accounting for a total of 1500 seats. For instance, in 2010, there were 5,853 venues representing more than 39,500 screens in North America with 79% of screens located at venues with more than 5 screens (MPAA 2010) (Appendix I). DRIVERS OF SUPPLY FACTOR PRICES The principal cost for key inputs for film studios and exhibitors include the cost of production and financing which are included in the average ticket price (Hennig-Thurau et.al 2006). Cost of production: Personnel and wages, location, marketing and advertising are the major inputs included in the cost of film production. These can be attributed to the number of employees and higher-profile cast members, the production and cinema locations and the cost to promote movies through media (Scott 2004). Increments of the cost of production would shift the supply curve to the left. Financing: Both the studios and cinemas need capital to be able to continue operations so when there are changes in the stock market or increases to corporate taxes, then less money is able to support these big budget films and large digital cinemas. Thus when financing declines, the supply would shift to the left while if it increases then the supply curve would shift to the right.
  • The Impact of 3D on Motion Pictures MGMT 8503 TECHNOLOGY The technology for motion pictures has been changing from the types of cameras to the film editing equipment, but the transformation from analog to digital has had the biggest impact (MPAA 2010). Studios have agreed to follow with this change because with the use of digital projectors, it has essentially eliminated film prints which cost $1,500 each and require studios to make 4,000 prints per film release (Schiffman 2008). However, the film owners must make an initial investment of at least $150,000 per screen including $90,000 for projectors to upgrade but these costs are now being offset by studio agreements. Consequently, changes to more efficient technology in the long-run will lead to production improvements shifting the supply curve to the right. SEASONALITY The time of the year has a significant impact on the film release schedule, promotional expenditures and availability. For instance, the biggest blockbuster films are typically released during the summer months and Christmas as well as on holidays such as Valentine’s Day, Easter, Memorial Day, The 4th of July and Thanksgiving. Additionally, greater than 75% of films are typically released on Fridays because almost 70% of their box office revenue is generated by the weekend audience (Einav 2007). COMPETITOR’S DECISION As part of an oligopoly market on game theory context, supply is influenced by the decisions of competitors with regards to setting the release date. Distributors and producers vary the date of release of films if similar or popular movies are already on theaters. Additionally they announce with anticipation the release of their films with the objective of preventing others producers and distributors to compete directly with similar movies (Einav 2007). THE SHOCK EVENT – IMPLEMENTATION OF 3D DESCRIPTION 3D films have a history dating back to the 1950s in the United States. However in 2003, 3D remerged back into the film market with its first major impact in 2008 as a result of the changes to the technology of 3D production cameras and to the user viewing experience from 3D glasses and viewing angles. The defining moment was the film Avatar in 2009, which transformed the industry as evident by the impact that 3D can have on ticket sales and box office revenue (Gary 2010). The 3D version of Avatar accounted for 81% of its’ total box office which led to the increase of 3D films releases. In 2008, there were eight 3D releases, which increased to 25 in
  • The Impact of 3D on Motion Pictures MGMT 8503 2010 and now in 2011, there is a projection of 40 3D films thus showing it’s a growing trend (Verrier 2011). 3D screen in 2010 accounted for 19.81% of the total market representing the largest growth area with more than 4,500 digital 3D screens added in the U.S. (Appendix M). In 2010, more than one in three people in U.S./Canada viewed at least one movie in 3D which accounted for 21% of the box office or $2.2 billion which was nearly double the 2009 figures showing 91% increase (Appendix N). Of the 222.7 million North American moviegoers, 52% viewed at least one movie in 3D (Appendix O). SHORT RUN IMPACT ON FILM INDUSTRY 3D technology has created an impact on the industry as it is an experience that attracts more consumers to the cinema resulting in consumers’ willing and able to pay more (Schuker & Smith 2010). Thus, many cinemas are raising prices to around 26% for 3D showings to capitalize on the demand by providing additional revenues and profits (Savage 2009). MOTION PICTURE INDUSTRY AND INDIVIDUAL FIRM ANALYSIS The impact of 3D technology and the experience of 3D of consumer have increased the demand of the motion picture industry. The demand curve will shift to the right thus directly increasing the price from P1 to P2. The individual firms have earned substantial economic profit when there are increases of film admission and average ticket price (Figure 3). Figure 3: Short run Motion Picture Industry and Individual Firm Analysis
  • The Impact of 3D on Motion Pictures MGMT 8503 LONG RUN IMPACT ON FILM INDUSTRY In the long run, 3D films will become an increasing trend in the film market as evident with 56 3D films projected to be released in 2012 (3D Movie dude 2011). As a result, film studios have adjusted their budgets to produce a greater percentage of 3D films in comparison to 2D films because with higher costs and longer production time in 3D films, 2D film productions will be reduced, leading to a slightly decrease in the total number of films releases. Film exhibitors are presented with an obstacle because of the additional investment requirement for the 3D equipment upgrade including screen and glasses which can cost up to $75,000(Maney 2008). MOTION PICTURE INDUSTRY AND INDIVIDUAL FIRM ANALYSIS 3D films incur a higher cost leading to an increase of the average cost to AC1 while further shifting the supply curve to the left from 3D film production and technology. This results in an increase of the price from P2 to P3, while the quantity supplied of films might reduce slightly. Therefore, the impact is that the economic profit of the individual firm being reduced as shown in Figure 4. Figure 4: Long Run Motion Picture Industry and Individual Firm Analysis FUTURE IMPACT ON FILM INDUSTRY The incentive for current economic profits for cinemas is an expected increase in the supply of 3D films in the future. This is due to the cost of technology that is anticipated to be economic viable. As a result, more cinemas will be able to offer 3D films and additional independent film producers will be able to release 3D films.
  • The Impact of 3D on Motion Pictures MGMT 8503 3D films will therefore become a typical entertainment option for consumers who will be less excited to go to cinema and will now be able to view 3D films at home due to technologies such as 3D TVs and 3D computer monitors. Furthermore, the motion picture industry will be expected to implement new entertainments alternatives such as 4D and user engaging film which will reduce the quantity of 3D demanded in future. INTERCONNECTED MARKETS – HOME ENTERTAINMENT DESCRIPTION The home entertainment market for cinema is categorized as home video, rental and digital distribution as alternatives to film cinema. The home video market is dominated by both Blu-Ray and DVD but since 2006 the purchase of personal DVDs has significantly declined. While Blu- Ray sales have doubled almost 85% in 2010, it was unable to sustain the DVD sales decline of 15%. (DigitalTrends 2011). The rental market includes both online and traditional ‘brick and mortar’ stores. The latter has seen a steady decline and in 2009 Blockbuster Video even filed for bankruptcy. However, the market is now being dominated by online rental and Netflix now has over 20 million active subscribers. Digital distribution includes streaming, digital downloads, and on-demand services and is responsible for the biggest growth area. In 2010, digital distribution contributed significantly with consumer spending on broadband electronic sell-through and video on demand was up a combined 19 percent to $2.5 billion (Appendix P). These services have been responsible for all but eliminating film rentals and therefore, Amazon, Disney, Hulu, iTunes, Facebook and Wal- Mart have jumped on board offering such services. Consequently, online rental companies Netflix and Redbox are moving primarily to digital services to serve consumers immediately. These three components of the home entertainment market are interconnected to motion pictures because improvements in the technology and quality has generated an increase on the supply curve of home entertainment, producing as a consequence an increase on the quantities demanded accompanied with a reduction on the price for consumers (Figure 5). Home entertainment is a substitution for cinema because of when the substitute goods incurred lower prices, consumers will demand more of the home entertainment than motion pictures (Corbett 2001). Digital technology could eventually offer everything a movie cinema can offer. Thus films will eventually be released simultaneously in cinemas and at home through satellites and the internet. With an increase demand for home entertainment alternatives, it has made more difficult for film producers and film exhibitors to entice consumers to go to cinemas. Therefore, cinemas must do more to persuade customers such as improve customer service and offer more alternative
  • The Impact of 3D on Motion Pictures MGMT 8503 content, such as live sporting events and concerts or dinner with a movie thus impact its demand (Verrier 2011). Figure 5: Interconnected Market CONCLUSION The analysis of the motion picture industry in North America has shown a decrease in demand from 2001 to 2010 due to the improvement in quality and accessibility of the interconnected market of home entertainment. 3D technology was introduced in the industry increasing effectively the demand of cinemas accompanied with an increase in the average ticket price. As a consequence, an excess of profit in the market has motivated the boost in the number of 3D films released as well as the number of theaters that offer 3D showings. However, this technology implies a higher cost and longer time of production, which will generate initially a reduction of the total supply of films in the market. In the future, it is expected that 3D films will be a common technology and improvements on interconnected markets will reduce the demand from consumers. Furthermore, in order to sustain long-term profitability, the motion picture industry will need to implement new entertainment options and experiences.
  • The Impact of 3D on Motion Pictures MGMT 8503 REFERENCES BLS 2011, ‘Motion picture and Film Industry 2010 – 2011 Edition’, Bureau of Labour Statistics, United State Department of Labour. Available form: <http://www.bls.gov/oco /cg/cgs038.htm#nature>. [15 March 2011]. Box Office Mojo 2011, Major Film Movies Studios 2010. Available from: <http://boxofficemojo.com/studio/chart/?studio=wb-newline.htm>. [15 March 2011]. Brewer, S, Kelley, J & Jozefowicz, J, 2009, ‘A blueprint for success in the US film industry’, Applied Economics, vol. 41, pp. 589 – 606. Available from: Business Source Complete. [15 March 2011]. Corbett, K.J, 2001, ‘The Big Picture: Theatrical moviegoing, digital television, and beyond the substitution effect’, Cinema Journal, vol. 40, no. 2, pp. 17-34. Available from: Academic Research Library. [23 March 2011]. Currah, A, 2006, ‘Hollywood versus the Internet: the media and entertainment industries in a digital and networked economy’, Journal of Economic Geography, vol. 6, no. 4, pp. 435- 439. Available from: Business Source Complete. [01 April 2011]. Einav, L, 2007, ‘Seasonality in the U.S Motion Picture Industry’, The RAND Journal of Economic, vol. 38, no. 1, pp. 127 – 145. Available from: Jstor. [22 March 2011]. Frank, R, 2007, Microeconomics and Behaviour Eighth Edition, McGraw Hill, Australia and New Zealand. Gray, B, 2010, ‘Avatar claims highest gross of all time’, The Box Office Mojo. Available from: < http://boxofficemojo.com/news/?id=2667>. [13 March 2011]. Hall, R & Lieberman, M, 2008, ‘Economic principles and applications, Fourth edition’, Thomson, South Western. Available from: < http://books.google.com.au/ books?id =whLWKYNy0UoC&pg=PA293&lpg= PA293&dq=film+market +monopolistic+ competition &source=bl&ots>. [15 March 2011]. Hennig-Thurau, T, Houston, M and Walsh, G 2006, ‘The Differing Roles of Success Drivers Across Sequential Channels: An Application to the Motion Picture’, Journal of the Academic Marketing Science, vol. 34, no. 4, pp. 559 – 575. Available from: Business Source Complete. [15 March 2011]. Hui, K.L and Png, I.P, 2002, ‘On the Supply of Creative Work: Evidence from the Movies’, The American Economic Review, vol. 92, no. 2, pp. 217 – 220. Available from: Jstor. [22 March 2011].
  • The Impact of 3D on Motion Pictures MGMT 8503 Klaaren, K.J., S.D. Hodges, and T.D. Wilson, 1994, ‘The Role of Affective Expectations in Subjective Experience and Decision-making’, Social Cognition, vol. 12, 77-101. [25 March 2011]. Maney. K., 2008, ‘The 3-D Dilemma’, Conde Nast Portfolio, vol. 2, pp. 90-90. Available from: Jstor. [15 March 2011]. MPAA - Motion Picture Association of America, 2010, Theatrical Market statistics 2010, Available from: <http://www.mpaa.org/Resources/653b11ee-ee84-4b56-8ef1- 3c17de30df1e.pdf>. [15 March 2011]. NATO 2010, National Association of Cinema Owners, Statistics. Available from: < http://www.natoonline.org/statisticscircuits.htm>.[01 March 2011]. Puentes, M, 2010, ‘Film cinemas are turning up the luxury with food’, USA today, Available from: < http://www.usatoday.com/life/films/news/2010-03-12-1Aluxtheaters12 _CV_N.htm>. [7 March 2011]. Savage, M., 2009, Cinema's third attempt at 3D. Available from: <http://news.bbc.co.uk/2/hi/7976385.stm>. [01 March 2011]. Schiffman, B, 2008, Film Industry Doubles Down on 3-D. Available online: <http://www.wired.com/techbiz/media/news/2008/04/3d_films>. [01 Mach 2011] Schuker, L.A.E. and Smith, E, 2010, ‘Higher Prices Make Box-Office Debut Tickets Get Costlier as Film Chains Seek to Capitalize on Consumers', Willingness to Pay More for 3-D. Available from: <http://online.wsj.com/article/SB10001424052748703312504575142143922186532.html?m od=googlenews_wsj>. [01 March 2011]. Scott, A, 2004, ‘Hollywood and the world: the geography of motion-picture distribution and marketing’, Review of International Political economy, vol. 11, no. 1, pp. 33 – 61. Available from: Business Source Complete. [15 March 2011]. 3D Movie dude 2011, A great year for 3D films. Available from: <http://3dfilmdude.com/?p=183>. [13 March 2011]. Verrier, R, 2011, Top Filmakers offer feverent endorsements of the movie theater. Available from: <http://www.latimes.com/business/la-fi-ct-cameron-lucas-20110331,0,6473128.story>. [31 March 2011]. Watt, J, 1997, High Concept: Movies and Marketing in Hollywood, University of Texas Print, Austin.
  • The Impact of 3D on Motion Pictures MGMT 8503 APPENDIX APPENDIX A: MAJOR FILM MOVIE STUDIO 2006 – 2010 Source: Box Office Mojo (2011) APPENDIX B: TOTAL ADMISSIONS 2001-2010 Source: MPAA Theatrical Market Statistics Report (2010) Major Film Movie Studios 2010 2009 2008 2007 2006 Market Market Market Market Market Share * Movies** Share * Movies** Share * Movies** Share * Movies** Share * Movies** Warner Bros 18.20% 27 19.80% 28 18.40% 20 14.70% 24 11.60% 21 Paramount 16.20% 15 13.90% 13 16.40% 14 15.50% 16 10.30% 16 20th Century Fox 14.00% 17 13.10% 16 10.50% 20 10.50% 16 15.20% 24 Buena Vista 13.80% 14 11.60% 18 10.50% 13 14.00% 13 16.20% 19 Sony / Columbia 12.10% 18 13.70% 21 13.20% 20 12.90% 25 18.60% 27 Universal 8.30% 15 8.40% 17 11.00% 18 11.40% 18 8.90% 17 Overall Gross $10.567 billion $10.619 billion $9.631 billion $9.664 billion $9.210 billion * Market share in relationship with Total Gross ** # of total movies tracked that were released. Distributor 1.30 1.35 1.40 1.45 1.50 1.55 1.60 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 US and Canada Total Admissions (Billions) 1.43 1.57 1.52 1.50 1.38 1.40 1.40 1.34 1.42 1.34
  • The Impact of 3D on Motion Pictures MGMT 8503 APPENDIX C: TOTAL ADMISSIONS PER CAPITA (AGED 2+) 2001-2010 Source: MPAA Theatrical Market Statistics Report (2010) APPENDIX D: AVERAGE FILM TICKET PRICE 2001-2010 Source: MPAA Theatrical Market Statistics Report (2010) 3.0 3.5 4.0 4.5 5.0 5.5 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 US Admissions Per Capita (Aged 2+) 4.8 5.2 4.9 4.8 4.4 4.2 4.3 4.1 $5.50 $6.00 $6.50 $7.00 $7.50 $8.00 $8.50 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 AverageMovieTicketPrice $5.66 $5.81 $6.03 $6.21 $6.41 $6.55 $6.88 $7.18 $7.50 $7.89
  • The Impact of 3D on Motion Pictures MGMT 8503 APPENDIX E: TOTAL BOX OFFICE REVENUES 2001-2010 Source: MPAA Theatrical Market Statistics Report (2010) APPENDIX F: DISPOSABLE PERSONAL INCOME PER CAPITAL IN US/CANADA 2001- 2010 Source: Bureau of Economic Analysis (2011) $8.0 $8.5 $9.0 $9.5 $10.0 $10.5 $11.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 TotalBoxOffice US and Canada Box Office ($Billions) $8.1 $9.1 $9.2 $9.3 $8.8 $9.2 $9.6 $9.6 $10.6 0 5000 10000 15000 20000 25000 30000 35000 40000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Disposable Personal Income per Capita in US/Canada
  • The Impact of 3D on Motion Pictures MGMT 8503 APPENDIX G: PRICE ELASTICITY 2001 – 2010 Source: Motion Picture Association of America (2010) APPENDIX H: TOTAL ADMISSION, AVERAGE PRICE AND TOTAL BOX OFFCIE 2001 – 2010 Year Total Admission Average Price Total Box Office 2001 1.43 $5.66 8.1 2002 1.57 $5.81 9.1 2003 1.52 $6.03 9.2 2004 1.5 $6.21 9.3 2005 1.38 $6.41 8.8 2006 1.4 $6.55 9.2 2007 1.4 $6.88 9.6 2008 1.34 $7.18 9.6 2009 1.42 $7.5 10.7 2010 1.34 $7.89 10.6 Source: MPAA Theatrical Market Statistics Report (2010) Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 U.S. & Canada Admissions (Billions) U.S./Canada Admissions (Blns) 1.43 1.57 1.52 1.5 1.38 1.4 1.4 1.34 1.42 1.34 % Change vs. Prior Year 9.79% -3.18% -1.32% -8.00% 1.45% 0.00% -4.29% 5.97% -5.63% % Change vs. 2010 -6.29% -14.65% -11.84% -10.67% -2.90% -4.29% -4.29% 0.00% -5.63% Average Annual Cinema Ticket Price (US$) Average Ticket Prices $5.66 $5.81 $6.03 $6.21 $6.41 $6.55 $6.88 $7.18 $7.50 $7.89 % Change vs. Previous Year 2.65% 3.79% 2.99% 3.22% 2.18% 5.04% 4.36% 4.46% 5.20% % Change vs. 2010 39.40% 35.80% 30.85% 27.05% 23.09% 20.46% 14.68% 9.89% 5.20% Price Elasticity vs 2010 -0.160 -0.409 -0.384 -0.394 -0.126 -0.209 -0.292 0.000 -1.083 Price Elasticity
  • The Impact of 3D on Motion Pictures MGMT 8503 APPENDIX I: US SCREENS BY VENUE 2006 – 2010 US 2006 2007 2008 2009 2010 1-4 screen venues 9,888 9,804 9,091 8,673 8,345 5+ screen venues 28,527 29,170 29,743 30,560 31,202 Total 38,415 38,947 38,834 39,233 39,547 Source: MPAA Theatrical Market Statistics Report (2010) APPENDIX J: TOTAL FILMS RELEASED 2000 – 2010 Source: MPAA Theatrical Market Statistics Report (2010) Year Films Released 3D 2001 454 0 2002 475 0 2003 455 2 2004 489 2 2005 507 6 2006 594 8 2007 609 6 2008 634 8 2009 555 20 2010 560 25 -100 0 100 200 300 400 500 600 700 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Films Released 3D
  • The Impact of 3D on Motion Pictures MGMT 8503 APPENDIX K: USA CINEMA SITES 2001 - 2010 Source: National Association of Cinema Owners (2010) APPENDIX L: TOP 10 CIRCUITS Source: National Association of Cinema Owners (2010) USA Cinema Sites Year Indoor Drive-In Total 2001 5813 440 6253 2002 5712 432 6144 2003 5700 400 6100 2004 5629 402 6031 2005 5713 401 6114 2006 5543 396 5939 2007 5545 383 5928 2008 5403 383 5786 2009 5561 381 5942 2010 5478 375 5853 0 1000 2000 3000 4000 5000 6000 7000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Indoor Drive-In Top 10 Circuits Circuit Headquarters Screens Sites Average Screens per Site Regal Entertainment Group Knoxville,TN 6777 548 12.4 AMC Entertainment. Inc. Kansas City, MO 5336 378 14.1 Cinemark USA, Inc. Plano, TX 3825 293 13.1 Carmike Cinemas, Inc. Columbus, GA 2268 242 9.4 Cineplex Entertainment LP Toronto, ON 1347 130 10.4 Rave Motion Pictures Dallas, TX 936 62 15.1 Marcus Theatres Corp. Milwaukee, WI 668 54 12.4 Hollywood Theaters Portland, OR 546 49 11.1 National Amusements Dedham, MA 450 34 13.2 Harkins Theatres Phoenix, AZ 429 30 14.3
  • The Impact of 3D on Motion Pictures MGMT 8503 APPENDIX M: WORLDWIDE DIGITAL 3D SCEENS 2006 – 2010 2006 2007 2008 2009 2010 % of Digital U.S./Canada 206 994 1,514 3,548 8,459 51% EMEA 12 211 594 3,485 7,909 76% Asia Pacific 35 80 344 1,584 4,498 56% Latin America 5 14 91 362 1,070 91% Total 258 1,299 2,543 8,979 21,936 61% % change vs previous year 207% 403% 96% 253% 144% Source: MPAA Theatrical Market Statistics Report (2010) APPENDIX N: US/CANADA 3D FILM RELEASES 2006 – 2010 Source: MPAA Theatrical Market Statistics Report (2010)
  • The Impact of 3D on Motion Pictures MGMT 8503 APPENDIX O: US/CANADA PERCENT OF MOVIEGOERS AND POPULATION VIEWING 3D IN 2010 Source: MPAA Theatrical Market Statistics Report (2010) APPENDIX P: US CONSUMER HOME ENTERTAINMENT RENTAL AND SELL THROUGH SPENDING 1999 -2010 Source: Digital Entertainment Group