Studio revenue set for a surge

Expected to hit $42 billion by 2011, report says

Major studios' revenue will climb 19% to almost $42 billion by 2011, according to a new research report.

Studio profits have been pinched by higher costs and recent consumer constraint, but a big revenue surge should help Hollywood manage nicely, the Adams Media Research report found. The forecasted revenue rise is tied in part to the spread of the Blu-ray Disc high-def format, DVD rental kiosks and various electronic distribution schemes.

"When DVD hit the scene in 1997, it changed the way studios made their money," said Tom Adams, president of Carmel, Calif.-based AMR. "Blu-ray won't have the same impact. But this time around, studios and those invested in them have a greatly expanded universe from which to draw revenue."

Revenue expansion in the home-entertainment market won't be as robust as in the glory days of the DVD rollout, he cautioned. "So it's crucial that studios pare down expanding costs and wisely manage upcoming film slates to maximize their profitability," Adams said.

Total worldwide feature film revenue for major U.S. studios is expected to soar from $34.9 billion in 2007 to $41.6 billion by the end of 2011, with the U.S. contributing $20 billion of the global total, or 48%.

The AMR report found that sales of physical media will account for half of all film revenue of the span.

Motion Picture Assn. data show worldwide revenue from major studio films dipped almost 5% between 2004 and 2007 to $34.9 billion. So the forecasted revenue rise would represented a welcome turnaround to the recent trend.

AMR projects that electronic sales and rental will grow at almost 15% annually through 2001, while Hollywood's total worldwide revenue will increase 6% per year.