Business at the box office hasn't been firing on all cylinders for a while now. Many observers have criticized the multiplex experience, pointing out that people are getting better value for their entertainment dollar by staying at home with their snazzy, high-end theater systems. But that doesn't mean the theater experience is altogether dead.
The latest data shows that life still exists at movie auditoriums. According to The Hollywood Reporter, box-office sales jumped by impressive double digits, rising 13% to $1.44 billion for the springtime season. In addition, the Reporter states that the number of actual ticket stubs sold increased 10% to more than 219 million. That's an important point, since the true health of the industry will be determined by the specific amount of people who consume films. Increased sales aren't necessarily everything if they are only due to price inflation.
Films like News Corp.'s digital cartoon Ice Age: The Meltdown, Sony's (NYSE: SNE ) The Da Vinci Code, and Viacom's (NYSE: VIA ) third Mission: Impossible feature were cited as drivers for the upswing. I understand if you're scratching your head at the inclusion of the Tom Cruise debacle. But even though it didn't meet the expectations set by previous entries in the series, it nevertheless has taken in more than $100 million, and that's still a significant amount of money.
The really cool thing about this spring surge is that it erased the movie business's previous decline; gross-dollar sales and ticket-stub sales are now up 5% and 1%, respectively, for the year so far. Investors in studio companies such as Time Warner (NYSE: TWX ) and Disney (NYSE: DIS ) should look at this spring as a harbinger of things to come for the summer; the season was kicked off by a mutant explosion over the Memorial Day weekend. News Corp.'s and Marvel Entertainment's (NYSE: MVL ) X-Men sequel has already grossed $130 million.
Why should investors care about a thriving box office? After all, we're in a new age, where it seems a different distributional paradigm is being tested every other week (day-and-date DVD releases, various broadband schemes, and such). Each one seems to depend on the continued shrinkage of the window between a film's theatrical debut and its availability to the home, based on the theory that people don't want to pay $10 a stub to sit in a crowded, noisy theater.
No matter what, an electric box office will always be the driver of all other ancillary channels. Movie theaters will always offer a communal experience that consumers can't get at home. Thus, they will never go completely the way of the dinosaur, and media companies will always try to program for this platform. I therefore want to see this industry grow as much as it can. (Granted, going forward, issues like piracy and illegal Internet downloading will present plenty of challenges).
With Disney's Pixar picture Cars on the horizon -- as well as Disney's next Pirates of the Caribbean project and Time Warner's Superman Returns -- the summer should provide a lot of opportunity for the various studio operating segments to bring in the bucks. A loud box office now will ensure a healthy DVD pipeline in the upcoming holiday season, good pay-TV dollars in the near future, and plenty of movie-related merchandise, which is also key to these media conglomerates. With all these moving movie parts, it looks like a good time to take a close look at some of the companies that will benefit from a strong film season. See you at the movies, Fools.
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