1. 3/4/2016 Why Theaters and the Moviegoing Experience Need an Overhaul (Guest Blog)
http://www.thewrap.com/box-office-trends-time-for-exhibitors-studios-to-reinvent-the-moviegoing-experience/ 1/12
Why Theaters and the Moviegoing Experience Need an Overhaul
(Guest Blog)
MOVIES | By Dan Schechter on March 3, 2016 @ 8:30 am
Home entertainment steadily improved as box office admissions declined 16 percent
from 2003 to 2015
Innovation in home entertainment over the past 50 years
has been tremendous. But despite all these innovations
– the introduction of video in the 1970s, DVDs in the
1990s, growing broadband penetration and DVRs –

2. 3/4/2016 Why Theaters and the Moviegoing Experience Need an Overhaul (Guest Blog)
http://www.thewrap.com/box-office-trends-time-for-exhibitors-studios-to-reinvent-the-moviegoing-experience/ 2/12
Americans go to the movies about as often today as
they did in 1965.
That’s not to imply that the film industry is a steady
business. While annual box office admissions have held
between four and five movies per person for 50 years, a
shift of even one movie admission per capita is
significant.
Also Read: Oscars' Real Best Picture Winner: Which Contender Delivered Biggest
Bang for the Buck?
Box office admissions are currently on a downswing; North American ticket sales have
dropped from the peak of 1.57 billion in 2003 to 1.32 billion in 2015, a cumulative decline of
approximately 16 percent in a little more than a decade (despite a recent uptick from 2014
to 2015). But box office revenue has increased, rising from 2000 to 2009 and remaining
stable from 2009 to 2015.
You probably know why box office is up – it’s higher ticket prices.

3. 3/4/2016 Why Theaters and the Moviegoing Experience Need an Overhaul (Guest Blog)
http://www.thewrap.com/box-office-trends-time-for-exhibitors-studios-to-reinvent-the-moviegoing-experience/ 3/12
Some have attributed the admissions decline to increasing prices, but a 3 percent price
increase per year is in line with other products. So what is really going on?
Also Read: Time Warner's Q4 HBO Growth Can't Offset Company's Box Office Sales
Drop
Despite recent declines in box office admissions, evidence shows that recessions don’t
really affect the cinema business. In the below chart, the yellow bars call out the
recessionary periods in the last 45 years. The steadily rising gray line is the GDP per
capita, showing a relatively steady increase of 1.8 percent per year since 1970. The erratic
blue line shows the number of movies attended per person in North America, clearly
indicating no correlation between admissions and GDP, or even admissions and
recessions. But the sobering final takeaway is the dotted green line that shows that admits
per capita is steadily declining at 2.7 percent per year for the last decade, in both good
times and bad.

4. 3/4/2016 Why Theaters and the Moviegoing Experience Need an Overhaul (Guest Blog)
http://www.thewrap.com/box-office-trends-time-for-exhibitors-studios-to-reinvent-the-moviegoing-experience/ 4/12
So, what is causing the recent decline?
Unfortunately, the cost of watching a movie in theaters continues to increase (growing at
about 4 percent CAGR from 2003 to 2014) while the price of the in-home alternatives like
Netflix and pay-per-view continue to fall (decreasing about 12 percent annually over the
same period).

5. 3/4/2016 Why Theaters and the Moviegoing Experience Need an Overhaul (Guest Blog)
http://www.thewrap.com/box-office-trends-time-for-exhibitors-studios-to-reinvent-the-moviegoing-experience/ 5/12
Home entertainment, for its part, has not only gotten less expensive but has also
dramatically increased its quality. In 2003, home entertainment primarily consisted of
broadcast dramas or DVDs on LCD TVs. Now, consumers can stream critically acclaimed
shows from Netflix and Amazon Prime or pop-in a Blu-Ray on their 4K curved TVs.
Also Read: Viacom Revenue Misses Mark as TV Ratings, Box Office, Home
Entertainment Sales Drop
In order to remain competitive, exhibitors will be forced to address this divergence in costs
in the near future. Consumer electronics companies are continually upping the ante on the
quality of home entertainment; exhibitors and studios will need to reinvent the theater
experience with new product, new pricing and other innovations that we will discuss in
future blog posts.

6. 3/4/2016 Why Theaters and the Moviegoing Experience Need an Overhaul (Guest Blog)
http://www.thewrap.com/box-office-trends-time-for-exhibitors-studios-to-reinvent-the-moviegoing-experience/ 6/12
1 o f 1 3
Our next blog post will continue to examine how the movie industry has adjusted its
behavior to try and mitigate some of these pressures.
This is Part 1 in a series by Dan Schechter, Gil Moran, and Michael Kaufman from L.E.K.
Consulting’s Media, Entertainment & Technology consulting practice.
9 Biggest, Baddest Box Office Showdowns of
2016 (Photos)
TheWrap takes a look at the most competitive faceoffs of the year, like “Alice
Through the Looking Glass” opening against “X-Men: Apocalypse”
View In Gallery
;

7. 3/4/2016 Why Theaters and the Moviegoing Experience Need an Overhaul (Guest Blog)
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BOX OFFICE BOX OFFICE ADMISSIONS BOX OFFICE REVENUES BOX OFFICE TRENDS CHANGING MOVIEGOING EXPERIENCE
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8. 3/4/2016 Why Theaters and the Moviegoing Experience Need an Overhaul (Guest Blog)
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L.E.K. CONSULTING MOVIEGOING EXPERIENCE US BOX OFFICE TRENDS
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• Reply •
gbonkers666 • 11 hours ago
That's because the studios produced pure, unadulterated crap.
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DAN SCHECHTER
Dan Schechter is a Managing Director and Partner at L.E.K. Consulting, and he leads the firm's
Global Media, Entertainment & Technology practice. He has broad experience within the media,
entertainment and technology sector, including TV, film, Internet content and commerce, radio, magazines,
theme parks, advertising and news. He also has experience working with retail, consumer products, travel and
industrial clients. Dan was awarded his MBA from Stanford University and his BA, cum laude, from Harvard
University.

9. 3/4/2016 Why Theaters and the Moviegoing Experience Need an Overhaul (Guest Blog)
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