International Box Office Flatlines in 2016, MPAA Report Says

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MPAA chairman-CEO Chris Dodd

The slowdown is due to China and unfavorable exchange rates; thanks to a record showing in North America, worldwide revenue still narrowly achieved a new mark with $38.6 billion.

After several years of notable growth — thanks in large part to China — the international box office flatlined in 2016, according to the Motion Picture Association of America's annual report.

While worldwide revenue hit an all-time high of $38.6 billion last year, international revenue of $27.2 billion was static for the first time in years because of China, where an explosion in moviegoing eased, and unfavorable exchange rates in many countries. That put year-over-year global growth at 1 percent, compared to an uptick 5 percent from 2014 to 2015. The slight gain of 1 percent was thanks to North America, where was revenue was up 2 percent at a record $11.4 billion.

MPAA chairman-CEO Dodd said the slowdown is due to unfavorable exchange rates and that even in China, box-office revenue grew in terms of local currency and that there is no reason for alarm. "It depends upon which compass you use," he said Wednesday during a press call he hosted alongside National Association of Theatre Owners president-CEO John Fithian.

Dodd also downplayed concerns that money from China flowing into Hollywood is ebbing amid tighter regulatory scrutiny in China and rising protectionism in the U.S. under the Trump administration. "We have to be careful about branding people who want to invest in our country as evil," said the former U.S. senator. Dodd added that his dealings so far with the Trump regime have been amiable and that he is confident the new U.S. trade representative will be Hollywood's ally, particularly regarding China's film quota system.

Fithian and Dodd said there are plenty of reasons to celebrate the 2016 box office, noting a more diverse audience in the U.S. and a surge in moviegoing among millennials. Fithian said there is a "myth in the business" that younger consumers don't care about the theatrical experience with an explosion of digital devices. "Yes, there is disruption and new technology, but they are coming to the cinema in very strong numbers," said the exec.

Generally, the annual theatrical statistics report is released by the MPAA and NATO at CinemaCon, the yearly gathering of theater owners and Hollywood studios in Las Vegas that is set to run March 27-30. However, in an unprecedented break from tradition, Dodd won't be in attendance this year to give his state-of-the-industry speech alongside Fithian due to a family commitment.

On Wednesday's call, Dodd and Fithian also took questions about theatrical windows. Hollywood studios and theater owners began making their first real gains last year in terms of exhibitors allowing film companies to shorten the traditional window and provide a premium VOD service just weeks after a movie is released in theaters. For years, cinema chains have balked at such a notion, saying they would refuse to carry any title that would be offered so soon in the home.

"The MPAA does not get involved in this issue," said Dodd. "That is up to each of our companies. Having said that, I know these talks are ongoing. I don’t have information to share about that. I’m confident they are trying to come up with a model that makes sense."

There are several proposals being discussed, although any deal is said to be months away. As first reported by The Hollywood Reporter, Warner Bros. would like to make a title available 17 days after its opens in theaters for $50. Fox has come up with an alternative proposal suggesting 45 days at a $30 price point, while Universal would like something in the middle. (Windows are once again sure to be hot topic at CinemaCon.)

There is an important sticking point. At least one of the three major theater circuits wants a guarantee in writing that a studio won’t try to shorten the existing home entertainment window for the next five to 10 years, according to insiders. (Generally, a movie is released on DVD 90 to 120 days after it opens in theaters.) And one studio not expected to take part in any discussion is Disney, which is enjoying a banner run at the box office and doesn’t want to change course.

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