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Piracy Destroying Hollywood Right To Yet Another Record Year At The Box Office… In A Recession

from the cry-me-a-river dept

We’ve been scratching our heads at the various claims from the movie industry that piracy is destroying the industry — especially as the trends over the past few years have been significantly more movies being made and significantly more money being made at the box office. And, once again, reports are coming out that 2009 will be another record year at the box office. And it’s even more impressive, considering that the country has been in a pretty bleak recession the whole year. You would think that such things, including greater than 10% unemployment would get people to hold back on increasingly expensive nights out at the movies, but people are still going and still paying. So, again, we have to ask where is this evidence that piracy is destroying Hollywood? Or is the same “evidence” like the study we recently saw that came with the headline that Redbox was going to take away revenue, while the actual study said the opposite?

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Comments on “Piracy Destroying Hollywood Right To Yet Another Record Year At The Box Office… In A Recession”

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44 Comments
senshikaze (profile) says:

Re: Re:

if all of the pirated movies had been paid for, yes it would have been larger, but you have to ask this:

how many people who pirated would have paid for it if they couldn’t pirate it?

i would actually bet that the studios made money off some of the “pirates”, either through theater sales or DVD sales after the movie was released. Yes, some pirated and never paid, but i doubt all.

Richard says:

Re: Re:

I’m guessing about the same?? If someone takes in a movie its and event, if someone downloads a move it’s an incident. As in, they may not even watch it, and if they do… well that doesn’t mean they would have went to see it.

See.. especially when you’re talking about movie theater, it’s really common for someone to download the move then they go see it in the theater. Well I guess if the movie sucks (as most tend to do these days) then I suppose you missed out on screwing a few thousand folks out of their hard earned money. Don’t fret the administration is working hard to get you the police powers you deserve. You’ll be throwing the book at those that want to avoid getting taken by a movie, as opposed to taking in a movie.

AC says:

tired

I’m getting pretty tired of the MPAA and associated parties. At least the recording industry is seeing a reduction in sales of recorded music (CDs). The movie industry hasn’t changed anything and they are still making money hand over fist. If they made $9 Billion in 2008 and stand to make $10 Billion in 2009, that’s > 10% growth. How many industries can claim that? In a recession no less. It’s infuriating. It would take a huge pair of brass to complain to your boss about not making enough money after he/she gives you a 10% raise for doing the same job you did the previous year.

Nicholas Moline (profile) says:

Movies in a recession

Actually studies show that during recessions attendance at movie theaters actually goes up. See when you can’t afford to make big purchases for entertainment (like go on vacation, or buy a new video game console or going to theme parks), most people compensate by enjoying more “simple” pleasures, top of that list, going out to the movies. They may end up spending less money on concessions, but attendances at the theaters actually goes up during a recession.

Here’s one of the many articles I found (in a google search just now saying that), note, I didn’t write the article and don’t necessarily agree with everything in it:

http://www.filmjournal.com/filmjournal/content_display/columns-and-blogs/in-focus/e3i81e87508e923955fb433337796dfeee9

Endless Source of Useless Information says:

Re: Re:

Agreed. Quit ripping people off and maybe pirates will start paying to see your movies. Grossing $9 billion in 2008 and a projected $10 billion in 2009, I think you could afford to charge a little less, No?

I love when DVD’s go on sale, or even Blu-Rays, it shows you a glimpse of how much mark-up is placed on them. I worked at(hate to say it) Circuit City for half a year and was always amazed to see how much mark-up was placed on various items, DVD’s, TV’s, and iPods especially.

Freedom is Freeloading says:

...

Domestic box office usually represents about a third of a films total revenue. The other 2/3 are the downstream markets which are atrophying faster than DBO is growing which is why this has also been a record year for Hollywood layoffs.

As for “more movies being made”, that’s a bit like judging the health of a star by the light you see today. The movies coming out now, were by and large, secured of financing some two or three years prior during a time when securing financing was much easier for a myriad of reasons. It would be more accurate to look at the production slate for the next twelve to twenty four months and in doing so it will immediately become apparent that production is NOT on the rise nor even holding steady. All the numbers show studio output will be declining dramatically in the next few years and indeed this is the exact strategy they’ve been outlining in their shareholder reports for at least the last twelve months.

Finally, cinema attendance has been about the same since the early eighties. Given that, it is easy to see how the waning reliability of downstream markets is having such a ripple effect throughout every corner of the industry.

It would take a huge pair of brass to complain to your boss about not making enough money after he/she gives you a 10% raise for doing the same job you did the previous year.

This is an oversimplification of such profound ignorance I would be amazed if Masnick didn’t immediately hire you on as a regular staff writer.

Damo says:

Hmm, I pirate…
Why?
Price?
Now drop the price of over priced content, to an affordable level…
I become a normal consumer and so do most the other pirates…
They have more money, we pay less is it so hard.
Another thought you buy Star Wars on DVD, you have bought the rights for that content, why should you have to buy it again on Blu Ray?
Why not send your proof of purchase and you only pay for the disc and freight as you already own the rights to view it?
VHS > DVD > Blueray. Could trebile the price of one product.

Lobo Santo's Ugly Cat says:

Actually, I have to laugh.

Not more than a month or so ago, Mike was getting all uppity because the number of movie releases had gone up so much. Now he is all uppity that they also made more money. Yet, basic math shows that they are making LESS money for every release on average. Hmmm.

So then you go looking for what is up. Well, with a significantly higher number of releases, and with movies often making the majority of their money in theaters in the first 10-14 days, perhaps they have done a better job at hitting the sweet spot, and the quickly changing list of movies at the local theater is giving people a reason to buy (new movies, short term, see it now or wait 6 months for the DVD).

In the end, it all doesn’t matter, the average release made much less money this year, but the costs aren’t dropping, so yeah, Hollywood is still facing a squeeze.

PaulT (profile) says:

Re: Re:

Judging by other threads recently, you must the most recent troll. Random attacks on Mike for being “uppity” (huh?) for pointing out that the industry’s claims of dropping revenues and lower production are both false. Some non sequitur conclusions based on shaky premises. Yeah…

“Well, with a significantly higher number of releases, and with movies often making the majority of their money in theaters in the first 10-14 days, perhaps they have done a better job at hitting the sweet spot, and the quickly changing list of movies at the local theater is giving people a reason to buy (new movies, short term, see it now or wait 6 months for the DVD).”

Erm, aren’t these all positives? Haven’t you just admitted Mike’s point that despite the rise in “piracy”, the studios have reaped rewards by giving people a reason to buy? In that case, what’s your problem with Mike’s article?

“the average release made much less money this year, but the costs aren’t dropping, “

Hmmm… actually you’re wrong from both ends. The signals are that costs are dropping – or at least should be. That is to say that while the most “successful” movies in terms of total revenue were those costing $200+ million (Transformers 2, Harry Potter), they weren’t the most profitable. The most profitable movies this year were movies like The Hangover, New Moon, Paranormal Activity and District 9 – all highly profitable and costing less than $50 million. They were vastly in profit before Michael Bay’s explosion bill was paid for.

As for “the average release made less money”, where are you getting those figures? If you reach that by simply dividing the total revenue by the total number of movies then, yeah, you will get a lower number due to the higher number of limited releases. But I’m seeing 27 movies that have broken the $100 million barrier this year – comparable to previous years, as well as a comparable drop off lower down the chart. In other words, despite there being more movies, the success/failure ratio is pretty much the same as previous years.

Lobo Santo's Ugly Cat says:

Re: Re: Re:

Haven’t you just admitted Mike’s point that despite the rise in “piracy”, the studios have reaped rewards by giving people a reason to buy?

Nope, you have to think past the end of your nose.

The movies aren’t making any long term money, it’s all short term. DVD piracy is at an all time high, retail sales are dropping off. So what happens? The movie makes an even high percentage of it’s total take at the box off, and the average movie is in the theaters for a shorter time (generating less income) which in turn doesn’t offset the increase in productions and production costs.

Double the product made, but only a slight increase in sales likely makes for a poorer bottom line. The pie is slightly larger, but there are twice as many slices, so your slice is much skinnier than it was before.

As for “the average release made less money”, where are you getting those figures? If you reach that by simply dividing the total revenue by the total number of movies then, yeah, you will get a lower number

Hence why we call it an AVERAGE! As for the number of movies breaking 100 million, if the number is similar to last year, but there are twice as many productions (Mike has been all over this number) then the reality is a much lower percentage of films are in fact “making it big” at the box office. Now add to that lower DVD sales, etc… you can figure it out.

The other thing too is this: With more movies on the docket, and with a limited number of channels for PPV movies, etc, the movie markers also lose out here. Either their movie runs less time in PPV, or a lower percentage of the movies get PPV time. So once again, while the revenue numbers here may be better or worse, the reality is that the same number divided over twice as many films means on AVERAGE (there is that word again) they made half as much here as well.

It’s all in the numbers, I am taking two items that Mike is swearing is true and drawing the only logical conclusion from them. I would love to see Mr Econ101 refute that.

Nicholas Moline (profile) says:

Re: Re: Re: Re:

An increase in the number of movies resulting in a decrease in the amount of time a movie is at the theater and a decrease in the amount of time the movie has to do well on PPV does not mean that piracy is the problem, in fact the problems you mention have absolutely nothing to do with piracy, but everything to do with an over-saturated marketplace.

It is true that there are far too many movies coming out, and competing for the same amount of screens, so they spend less time in theaters. Also IMAX is becoming a bigger and bigger fighting ground for movie placement as more and more movies are taking advantage of these larger formats.

This year there were two big fiascos that I can recall when it came to IMAX, “Star Trek” only having 2 weeks in IMAX despite huge demand for it to be on more screens, and Harry Potter and the Half Blood Prince not coming out on IMAX until weeks after it was out in normal theaters despite their special IMAX 3D offering, because of competition with Transformers already having leased the screens.

Almost Anonymous (profile) says:

Re: Re:

Dude, you’re not even up to Econ 101 yet, you still need to take remedial math.

We must assume that there is a finite “pool” of money. Further, there is a finite amount of money from that pool that people are willing to spend on movies. Thus, if you spread this pool (which is larger this year than ever) across every release (to get your average, which is really a fallacy), then yes, the average release might have made less money. However, as I noted, this is a logical fallacy, there really isn’t any such thing as an “average release”. As for costs not dropping, give me a break, who cares? It’s been pointed out OVER and OVER that high production cost does not equal a good movie (read “movie that people want to watch and spend lots of money on”).

The total industry is growing, they have absolutely nothing to complain about.

Corn Farmer says:

Please - stop killing Me and My family

My kids are starving because of you pirates, have you no mercy? Please pay the big hollywood fat cats so that I may make a meager living and put food on the table. This winter my kids are going to have to walk to school and they do not have boots to wear and they will have to jump from fence post to fence post for many miles up hill both ways.

Andrew D. Todd (user link) says:

Look Up The Statistics

If you look at the figures below, you will notice that theater admissions are essentially stagnant, and have been since the advent of the internet, well before many people had enough bandwidth to be torrent-ing movies. Box Office growth has come overwhelmingly from increases in ticket price. Significant numbers of theaters have gone out of business, even as the number of screens has increased. The average screen shows to something like a hundred people a day, or perhaps twenty people per screening.

I suggest that what this means is that the movie _exhibition_ industry is “involuting,” concentrating down around the multiplex at the shopping mall, prime thirteen-year-old-girl habitat, adjacent to the food court, catering to fewer, but steadier customers. This of course reflects itself in the trend to things like vampire movies. It has been noted that there is a certain sort of teenage girl who sees the current heart-throb movie, ten times running.

My view is that the movie exhibition market doesn’t have a whole lot to do with the movie– it has a lot to do with renting chairs in a darkened room. That, in turn, has more to do with people’s domestic circumstances than with anything else. People who attend really a lot of movies– fifty a year, or more– have something at home which they need to get away from fairly frequently.
=================================================================
2009 figures: Admissions, 1.4 billion; Ticket Price, $7.46; Box Office, $10.6 billion.

http://abcnews.go.com/Entertainment/wireStory?id=9303449
================================================================
Selected Statistings, National Association of Theater Owners

Year; Admissions; Ticket Price; Box Office
2008 1.363 bil., $7.18, $9.78 bil.
2000 1.383 bil., $5.39, $7.468 bil.
1987 1.09 bil., $3.91, $4.25 bil.

Year; U.S. Cinema Sites; Screens

2008; 5,786; 38, 834
2000; 6,992; 36,280
1995; 7,744; 27,843

http://www.natoonline.org/index.php
=========================================================

The Anti-Mike says:

Re: Look Up The Statistics

Year; Admissions; Ticket Price; Box Office
2008 1.363 bil., $7.18, $9.78 bil.
2000 1.383 bil., $5.39, $7.468 bil.
1987 1.09 bil., $3.91, $4.25 bil.

pretty much sums it up, it shows that over 8 years, the movie industry isn’t selling any more tickets, just selling them for more money. Considering it costs significantly more to make a movie in 2008 than it did in 2000, well… you can figure out the rest.

Once again, it would appear that Mike over jumped the deal without checking the numbers.

Brit (user link) says:

Once you adjust for inflation...

Things aren’t quite so clear cut as the article suggests. Once you include adjustments for inflation, things don’t look as bright for the movie industry. In inflation-adjusted dollars, 2002 was the peak year. Here’s my writeup on the box office numbers:
http://www.atomicboysoftware.com/blog/2009/12/hollywood-box-office-numbers-and-piracy/

Jamil (user link) says:

Timesheet software

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I hope this helps!
Jamil

Pacific Timesheet – Web Time Tracking Software

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