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Movie Theaters Are Still Scary Places

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It was another dud of a weekend at the box office.

None of the four movies that opened this past weekend -- End of Watch, House at the End of the Street, Trouble With the Curve, and Dredd 3-D -- drew sizable audiences. Gritty buddy cop film End of Watch led the way with $13.2 million in ticket sales, with the scary House at the End of the Street close behind at $12.3 million.

Unfortunately for movie studios and exhibitors, this wasn't a fluke. This is the fourth consecutive weekend that ticket sales fell short of the same week in 2011.

Anyone that remembers how ugly 2011 was will know how grim that particular trend is now.

Finding Finding Nemo
The four original releases this past weekend were going to have an uphill battle in promoting their screenings, but it's still been hard for a known Hollywood property in Disney's (NYSE: DIS  ) 3-D re-release of Finding Nemo.

The original run in 2003 was a record breaker for Pixar and its distributor -- and now owner -- Disney. It wasn't until Toy Story 3 that Disney had a higher grossing animated feature. Why is it doing so poorly? It has only sold $30 million in ticket sales through two weeks, falling short of $10 million in box office receipts this past weekend.

We can't blame the 3-D re-release model. The Lion King took in nearly $95 million in the enhanced format last year. Beauty and the Beast followed earlier this year with just $47.6 million, but it also wasn't as successful originally as The Lion King or Finding Nemo.

One can argue that moviegoers are just tired of seeing the family entertainment giant spruce up its vault with 3-D effects, but other studios are also suffering.

Reel problems
Last year may have been the first year since 1995 that domestic theaters failed to sell at least 1.3 billion movie tickets, but things may be even worse in 2012.

Multiplex operators are already trending lower, and it may be naive to believe the final three months of the year will bail out the industry.

The year got off to a blazing start with hits including Hunger Games in March and The Avengers setting a new opening weekend record with $207.4 million in North American ticket sales two months later. Yes, The Avengers sold roughly 16 times as many tickets when it opened as this past weekend's top draw.

This is obviously bad news for movie theater operators, since they count on big crowds to gobble up the overpriced popcorn and tubs of soda, where the real profit margins are made.

Technically there is still time for a happy ending, but the likelier possibility is that Hollywood has a big problem on its hands.

The Motley Fool owns shares of Walt Disney. Motley Fool newsletter services have recommended buying shares of Walt Disney. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Disney. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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  • Report this Comment On September 27, 2012, at 11:33 AM, mavenwatch wrote:

    Lion King and Beauty and the Beast are both older Disney properties that are examples of classic animation.

    The fact that they havent been seen on a big screen for a longer period of time increases the number of people that would want to see them. Nemo may just be too recent. Also Lion King is a classic, timeless story, and of course Beauty and the Beast's legacy as a story goes back even further. I am not sure Nemo is in either's class in terms of story telling.

    Also you used box office dollars to compare the titles, and total tickets sold during their respective runs would be interesting to see.

    Thanks for the comments as the theme you bring up, the decline in movie going, concerns me as whether it is a short term deal or signs of a secular decline. The rise of the big tent pole special effects films sucking the air out from everything else, rise of multiple ways to see media, economy, poor quality films etc., makes me wonder.

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