Home vid, theatrical sales in global slump

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It's official. Home video and theatrical sales were the main culprits for the industry's 2005 slump.

The worldwide video sector declined $844 million, the biggest dollar slide in 2005, while the worldwide theatrical market, down 10%, represented the largest percentage drop. Worldwide TV revenue fell 5% and worldwide pay TV dropped 3%.

These figures are cited in a business summary sent by the MPA to executives of the six major studios. According to the summary, worldwide all-media revenue -- combined income from theatrical, television, home video and pay TV -- tapered off 5% during the Year of the Slump and brought an end to a steady growth period that went from $31.6 billion in 2001 to a record $44.8 billion in 2004. Last year's all-media revenue dipped to $42.5 billion.

Many believe that the MPA's worldwide market analysis played a part in triggering wholesale retrenchments in personnel and production this year at many divisions of the major studios. Coincidentally, a copy of the 2005 business summary was obtained by The Hollywood Reporter just as the MPAA's foreign watchdog told international distribution honchos that the overseas theatrical market was making a significant comeback this year -- the January-September boxoffice at offshore theaters already is ahead of the 2005 mark by 12%, to $6.4 billion from $5.7 billion (HR 10/17).

The 2005 business summary, part of a voluminous annual survey, discloses that worldwide home video represents 60% of total feature film revenue, which fell 5% to $33.7 billion in 2005. It is noted that a 4% growth in DVD could not compensate for the 75% drop in VHS sales.

Foreign theatrical take, which soared 9% in 2004's record year, skidded 17% in 2005, returning top market share to the U.S., at 52% compared with international's 48%. The $6.7 billion in 2005 setback worldwide theatrical revenue to its 2002 level, the report found.

The report covers the top 25 international markets, which represent 43% of total worldwide all-media revenue. The U.K. ranked as the No. 1 importer of U.S. product and Portugal rounded out the list in the 25th spot.

Of the total $42.5 million worldwide all-media revenue in 2005, the U.S. accounted for $24.1 million ($25.5 million in '04), with the total international market contributing $18.4 billion ($19.4 billion in '04).

No. 1 all-media buyer the U.K. paid out $3.7 billion in 2005 ($3.9 billion in '04), followed by Germany, which rose to $1.9 billion after 2004's $1.8 billion; France, $1.8 billion compared with 2004's $1.9 billion; Japan, $1.8 billion vs. 2004's $2.1 billion; and Canada, which rose from $1.57 billion to $1.67 billion.

Data for executive eyes only mentions a $500 million all-media 2005 decline in Europe, one that was primarily driven by a 20% tumble in the theatrical sector; an 11% downturn in the Asia Pacific region; a 27% drop in TV revenue and 18% in theatrical for the Middle East and Africa; and a relatively slight 3% dip in Latin America, with a 3% hike in home video unable to offset drops of 19% for pay TV and 4% for theatrical.

Turning to individual media results, the MPA summary notes that TV revenue for Europe slid a modest 3% thanks to a 30% growth in Germany; Asia/Pacific was down 4%; Latin America was flat despite slight growth in Brazil and Mexico; and Middle East/Africa plunged 27%, mainly attributed to double-digit declines in South Africa (20%), Israel (46%) and Turkey (47%). At the same time, television revenue in North America fell 6% from 2004 despite an 11% increase in Canada.

On the theatrical side, Europe fell 20% in 2005, Asia/Pacific was down 22%, Latin America slid 4% and Middle East/Africa declined 19%.

Worldwide home video was down 4% in 2005, with a 4% climb in DVD unable to offset a 75% loss in VHS sales. Home video slipped 5% in Europe in 2005; Asia/Pacific was down 7%, mainly because of a 12% loss in Japan; Latin America increased 3% compared with 2004 thanks to a 26% rise in DVD revenue; and DVD drove a 12% increase for Middle East/Africa.

Worldwide pay TV returns ebbed 3% in 2005 in the face of a 6% jump in the foreign market, where pay-per-view grew 26% but is still considered a small share (15%) of the overseas market. European pay TV grew 14% in 2005, mainly because of the contributions of the U.K. (up 3%), France (up 11%) and Spain (up 25%). Asia/Pacific was down 15%; Latin America plummeted 29%, hitting a five-year low; and the Middle East/Africa was fairly flat, falling only 2%.

Not all of 2005 was bleak. Despite the overall decline in all-media sales, two countries showed growth as U.S. customers -- Germany, up 6% in 2005, and Canada, up 8%. Canada grew 3% in theatrical revenue and South Korea went up 13% in 2005, the most of any top 25 market, according to the MPA. Three of the top five theatrical markets in Latin America advanced in 2005 despite the 4% overall decline propelled by the smaller markets.
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