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Monday, January 04, 2010

And the data from 2009 says...

Here's a great chart published in the Wall Street Journal today about how Americans spent money on movies in 2008 and 2009:



A key passage from the related article, by Sarah McBride:

    For studios, which count on income from home entertainment to underwrite growing production costs, the trend represents a giant headache. In the early 2000s, studios began counting on the cash bonanza generated by consumers' building up libraries of DVDs. Now, they will have to alter budgets to reflect the shrinking DVD income stream.

    Hollywood is already offering more ways for consumers to watch movies at home while bolstering studio coffers, including digital delivery, but households aren't embracing them quickly enough to make up for eroding DVD sales.

    While Blu-ray disc sales are growing at a rapid rate, they too represent just a fraction of DVD sales. ...Instead, consumers are flocking to rentals, which represent considerably smaller profit for the studios, especially given the proliferation of $1-a-night rentals from kiosk operators such as Coinstar Inc.'s Redbox.


2009 was an amazing year for theatrical revenues -- perhaps a high water mark, thanks to the recession (movies offer an affordable night out) and an unusually strong and diverse release slate?

It seems clear from these trends that, for today, the bulk of revenues will still be from theatrical releases (if you can promote them and get butts in seats) and DVD sales and rentals. But indies need to have a smart strategy for digital, since that market is poised to grow -- and indies will be more flexible than the studios about pricing, free samples, and release windows, which could give them an edge. (Here's a New York Times story from this morning about how the studios are struggling to make their DRM-wrapped movie files more portable and flexible... without dropping the DRM, of course.)

What do you think 2009's revenue trends mean for indies?

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6 Comments:

  • Are these numbers adjusted for inflation between 2008 and 2009?

    Also - what were the number of actual patrons to movie theaters? Were ticket prices hiked last year and could that account for some of the difference?

    We (indies) need to learn we are mostly making movies for download/VOD - that's where our growing revenue stream is at. It's also the area of most opportunity in terms of controlling distribution and marketing. The brass ring of theatrical is tarnished when it's used as a front end distribution scheme. Theatrical screening should be live events for fans.

    By Blogger Cunningham, at 10:51 AM  

  • Given our current economic crisis I think these numbers are pretty good. I just read an article that people are traveling less and spending more money of things to do close to home (for example going to the movies), but cutting their spending overall (which might account for part of the drop in DVD purchases)

    By Blogger GBH, at 4:12 PM  

  • "What do you think 2009's revenue trends mean for indies?"

    If you look at the numbers you gave, the 'new' opportunities occupy less than 1/2 of 1% of the total revenue stream. This leads me to continue to focus on the traditional venues (theatrical, rental, DVD sales) but using the new forms (digital theaters, iTunes, and self distribution for DVDs).

    By Blogger GBH, at 4:16 PM  

  • Consumer spending on filmed/video content in mass market channels (eg, theaters, retail stores, video stores) is big, in the tens of billions of dollars (but Adams Media Research -- Tom Adams -- only deals in "consensus" numbers derived from the studios' best guesses, and the numbers were significantly larger based on original research for the 20 years that I did this work). Studio derived numbers tend to way underestimate consumer spending (in mass market channels) on non-studio product, however. Whether the number is n or some multiple of that, the point is still the same -- iTunes is a trivial channel in terms of dollars of consumer spending on filmed/video content; consumer spending on filmed/video content through YouTube is negligible (because YouTube is a zero revenue source). If indie filmmakers think they have a career that can support rent and groceries and schools for the kids and the gas bill, they have to compete for money, and the money is in the mass market channels. But how do you sell a specialty product through mass market channels? From an economic and business point of view, that's why indie film from the viewpoint of an indie filmmaker is so interesting. However, it is also why indie filmmakers are so easily exploited by technology driven, venture capital funded distribution initiatives -- they can get the indie product for free. Thanks for drawing attention to this chart. This is, has been, will be, where the struggle for the future of independent film lies.

    By Blogger bob in ny, at 8:20 AM  

  • DVD is still a great way to get your film out there, but marketing plays a huge roll. Getting your film noticed is not easy, and you need to find a niche which your product can exploit, otherwise it's an uphill struggle. There are more opportunities available for online distribution, since actual ownership of a film by film watchers is now no longer an issue. People want to watch a film, but less and less want to own the film. Budgets play a huge part in this equation though, and having a budget for this at the start will open up revenue streams.

    A film like Sherlock Holmes cost around $150 million or thereabouts, then the spend another $250 million marketing it. A film’s budget is relative to the marketing costs must be inherent in the final analysis. There is no magic formula which Hollywood has in its arsenal apart from incredibly big marketing teams and and massive marketing spend. Something which alludes the vast majority of indie filmmakers. And most likely why they will struggle to compete in the marketplace, he who shouts the loudest and all that.

    I’m embarking on my own feature film venture, and have managed to setup a small cast and crew and more importantly given marketing much consideration. Details of which can be follow via the link below
    http://pendulumdrift.blogspot.com/ or further details can be found on
    http://www.filmedup.com

    It’s a big ocean of indie films out there all awash of some distant shores, whilst Avatar and the likes always find the homing beacon and ready to open wallets (even in these tough times, funny that).

    By Blogger Shehzad Afzal, at 8:00 PM  

  • By Blogger baobao, at 1:14 AM  

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