'06 b.o. on the up and up

MPAA: Receipts, admissions, prod'n costs rise

Domestically, boxoffice was up in 2006. Internationally, it was on a tear. But though marketing costs decreased slightly, production costs rose last year.

Delivering the MPAA's official report card on the state of the worldwide film business, chairman and CEO Dan Glickman said Tuesday: "I would state it was a bullish year for this business. Film audiences around the world reminded us that they love going to the movies, and we had a good slate of blockbusters, family movies, dramas and comedies."

The U.S. boxoffice recovered last year from its 2005 slump as it climbed to $9.49 billion in ticket sales — a 5.5% increase over the previous year's level of $8.99 billion.

The domestic boxoffice also rebounded from a three-year decline in admissions. For 2006, according to the MPAA, admissions grew to 1.45 billion, up 3.3% from 2005's 1.4 billion. The rise in admissions combined with a slight rise in the cost of individual tickets to produce the boost in boxoffice revenue.

The average cost of a ticket rose from $6.41 in 2005 to $6.55 in 2006, or 2.2%, which the MPAA noted remained lower than the consumer price index's increase of 3.2% during the same period.

For all the upbeat news, though, there remains plenty of room for growth.

The 2006 domestic boxoffice figure was overshadowed by 2004's record $9.54 billion, while admissions remained well below the modern-day high of 1.64 billion achieved in 2002.

Noting a lineup of big-name sequels on tap for 2007, Glickman said, "The last time this happened in my memory was 2002, when there were a lot of sequels, and that was a pretty big year from a boxoffice perspective." Although declining to offer a specific prediction about how 2007's boxoffice will fare, Glickman added, "My judgment is that 2007 will be bigger than 2006, but that's just an educated guess."

On the worldwide stage, movies fared even better. Spurred by the growth of international markets in such countries as Brazil, France, Germany, Russia and South Korea, worldwide boxoffice grew to an all-time high of $25.8 billion. That represented an 11% increase over 2005's $23.27 million and topped the previous record-setting year of 2004 when worldwide boxoffice hit $25.19 billion.

Overall, costs remained relatively steady — with a rise in production costs offset by a decline in marketing outlays.

The average cost of making and marketing a movie for the MPAA member companies stood at $100.3 million in 2006, up 0.6% from 2005, though somewhat lower than the 2003 high of $105.8 million.

Production costs rose from $63.6 million in 2005 to $65.8 million.

Two caveats, however: Negative costs, as reported by the MPAA, represent the amount each studio invests in a film but do not include investments from non-MPAA sources and therefore do not reflect the full costs of production for the average MPAA film, which actually would be higher if the rising stream of outside investment money were factored in.

Also, because MGM is no longer a member of the MPAA, the trade group readjusted its data from previous years, so that the previous-year figures represent the six studios that currently are MPAA members.

Last year, the MPAA reported avenge production costs of $60 million and marketing expenditures of $36.2 million per film. But eliminating MGM's contribution, it revised the 2005 figures so that they now reflect production costs of $63.6 million and marketing costs of $36.1 million.

Using the revised figure, the MPAA reported that marketing costs declined from $36.1 million in 2005 to $34.5 million last year.

In part, that was because MPAA companies spent more of their marketing dollars on nontraditional media, allocating almost as much for Internet advertising per film as they did on movie trailers.

In terms of marketing dollars, 2006 saw increases in spending for spot TV, online and other media. Spending for newspapers, network TV and trailers saw decreases.

Those figures include the major studios and their specialty divisions. Breaking out just the specialty division films, it was clear that even while studios held down costs on big-budget movies, the specialty divisions were spending more per film themselves.

The average negative costs on a film from the specialty divisions rose from $23.5 million in 2005 to $30.3 million in 2006. Marketing costs also rose from an average of $15.2 million in 2005 to $17.2 million in 2006.

At the same time, 11% more movies were competing for entertainment dollars.

In 2006, the MPAA companies released 203 new films, or 34% of the year's total of 599 new releases. That represented a jump from 190 films out of a total pool of 535 films in 2005. Last year also saw eight rereleases, with just one coming from an MPAA company.

At the boxoffice, 12.5% more movies grossed more than $50 million. Sixty-three films hit that mark in 2006, compared with 56 in 2005.

At the top of the heap, Buena Vista's "Pirates of the Caribbean: Dead Man's Chest" crossed the $400 million mark; no movie hit that rarefied level in 2005. But at the same time, more movies were clustered between $50 million-$99 million in 2006 than in 2005. Last year saw 45 films in that category, compared with 36 in 2005.

When it came to $100 million films, though, 2005 still had the edge. It saw 20 films climb above that milestone, compared with 18 last year.

Ratings-wise, the distribution of top-grossing films remained relatively stabile. In 2006, 85% of the 20 highest-grossing movies were rated PG or PG-13, just as they were in 2005. Both years also had one G-rated movie and two R-rated movies in the top 20.

To gauge moviegoers' attitudes, the MPAA turned to a Nielsen Entertainment/NPG survey, which found that 80% of moviegoers said their trip to the multiplex was time and money well spent. Only 16% reported they would have preferred to watch a DVD. Males and females younger than 25 were most enthusiastic about their preference for a movie theater over home viewing.

The survey also found that moviegoers who own or subscribe to four or more home technologies were actually more avid moviegoers, seeing an average of three more movies per year than the moviegoer who owned or subscribed to fewer than four.
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