It appears so according to an intriguing report out today from Cowen & Co analyst Doug Creutz. His conclusion comes from a 12-year comparison he’s been making of the total number of tickets sold domestically each year vs the average scores that voters on Rotten Tomatoes give to the 50 most widely released films. He has found a consistent correlation — attendance was high in years when Rotten Tomatoes scores were high — for every year except 2011 and, now, 2012. The two years had the highest average Rotten Tomatoes scores in the period he studied, but below-average ticket sales. Although Creutz recognizes that’s not conclusive evidence of a trend, it leads him to suspect that “the domestic demand curve for movies has meaningfully shifted down since 2010.” That’s worrisome: In a year of less popular films “ticket sales could drop well below any level we have seen in the last 12 years….This would certainly represent a bit of a catastrophe for the industry (including exhibitors) and would certainly get the attention of Hollywood executives.” He estimates that theaters sold 1.38B tickets in 2012, down from 1.44B in 2009 and 1.41B in 2000. Although box office revenues have increased over the decade, to $10.8B last year, that “has been made possible entirely through increasing ticket prices.” What accounts for the apparent disconnect between movie quality and attendance? Creutz says it could reflect consumer resistance to rising ticket prices, and improvements in home entertainment including home theater systems and video games. He also notes that last year the average film was available for home viewing about 123 days after it first appeared in theaters, down from 221 days in 2000.
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