B. Riley analyst Eric Wold says it will in a major look-forward report today for the film business. He predicts 4% growth in box office sales this year — the result of a 1% uptick in attendance and a 3% rise in average ticket prices. What makes him so confident, especially following the 3.9% drop in 2011? Wold says that more consumers would have gone to the movies last year if Hollywood hadn’t released so many dogs. He dismisses another theory: that tickets are becoming too expensive. If that were the case, he says, then we would have seen soft numbers throughout the year — instead box offices set records in Q2 and Q3. He’s also optimistic about 2012 because there’ll be at least 25 sequels of films that collectively generated $3.64B at box offices. Sequels typically deliver about 6% less in ticket sales than the originals. But even if 2012’s films slip 20%, consumers will spend 12% more than they did for sequels in 2010. That could “set up 2012 for a potential rebound,” Wold says. He’s also encouraged to see that there’ll be at least 40 wide-release 3D films this year, up from 36 last year and 22 in 2010. That leads him to believe that 3D will account for 20% of domestic box office revenues, up from 18.9% in 2011. If he’s right about all the cash that will be flowing into theaters, then it will provide large exhibition chains with the fuel they need to buy smaller companies. Wold says that firms that aren’t well capitalized may not be able to afford digital projectors and equipment before Hollywood studios stop distributing film reels — which could happen by the end of 2013. “Without a doubt, we expect all three [major publicly traded] exhibitor chains – Regal, Cinemark and Carmike – to complete acquisitions during 2012,” he says. Despite his bullish predictions, the analyst decided to play it safe with his financial forecasts following the disappointing box office sales at the end of 2011, He lowered his 2012 revenue estimates for the major publicly traded chains: He forecasts $510M for Carmike (-2%), $2.5B for Cinemark (-7.9%), and $629M for Regal (-4.7%).
Will Sequels And 3-D Films Propel A Box Office Rebound In 2012?
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