In PwC’s annual, far-reaching study of all nooks and crannies of the media business, its takeaways on the movie business are among the most noteworthy.
Domestic box office is expected to show modest growth, with rising ticket prices concealing the decline in admissions.
“The underlying stability of the sector hasn’t lessened the anxiety surrounding it,” PwC notes. “Thanks to the increasingly sophisticated analytic and social media tools at their disposal, US studios are able to track films, compare performances and target audiences in subsegments.”
Armed with a wealth of data, US studios have become much more attuned to the tiniest fluctuations. Studios can predict a film’s likely box office performance in advance of its release – and shift marketing spend away from a title that isn’t tracking strongly and toward those that are.
The number of releases in U.S. cinemas is continuing to increase. The major studios have pared their film slates (with the number wide releases declining 27% from 2006 to 2016), but the tech giants are filling in the gaps, with Netflix and Amazon investing heavily in production.
“In 2016, 736 films were released in US cinemas – more than double the number in 2000,” PwC notes.
PwC predicts that box office revenue will continue to rely on a small number of big-budget studio “tentpole” and franchise movies, with the most successful accounting for a huge portion of overall receipts. It only takes one or two of these blockbusters to (say, Star Wars: The Last Jedi or, more recently, Black Panther) to keep revenue stable.
“A slow summer and an autumn box office slump during 2017 had a marginal effect on overall profits once the end-of-year surge from The Last Jedi was factored in,” PwC notes.
The market is becoming increasingly polarized, the firm notes, and admissions are falling.
“While there are more films grossing more than $1 billion worldwide (including four in 2017 alone), the failures are becoming more noticeable too,” PwC observes. Call it the Solo effect.
Global marketing costs for big event movies remain sizable — despite the savings of targeting advertising though social media platforms. PcW reports that budgets are estimated to be at least $150 million, and often double that. Even though studios are embracing non-traditional channels, with the second trailer for Star Wars: The Force Awakens attracting more than 30 million views, that hasn’t cut overall marketing costs.
“In a digital, multichannel environment, the audience is fragmented and harder (and more expensive) to reach,” PwC notes.