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Despite Dire Predictions, the Movie Industry Remains Healthy in 2018

By Motley Fool Staff – Updated Sep 20, 2018 at 12:25PM

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To get a pulse on the movie business this year, "Industry Focus: Consumer Goods" goes straight to the numbers.

Industry Focus: Consumer Goods is headed to the movies! At least, they're talking movies, revisiting a late summer theme from last year to see how the business has fared so far year to date.

In this segment, host Vincent Shen and contributor Asit Sharma break down box office receipts so far in 2018. Can you guess which studio has been the biggest winner? Click below to find out.

A full transcript follows the video.

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This video was recorded on Sept. 4, 2018.

Vincent Shen: We last discussed the movie industry and the box office around this time last year. We have updated results on tap from the box office. We're also going to talk about the growing popularity of some of these membership plans for moviegoers thanks to the rise of MoviePass, and how that could reshape the industry, in terms of attendance, and also the profitability for theater operators, and how that shakes out. Asit, why don't you start us off with some of the big picture box office results so far for 2018? From what I could see, it looks like we're going to be reversing the trend, at least relative to the down year that we had in 2017.

Asit Sharma: It looks like it, Vince. I always get caught up in this narrative of long-term decline of the movie business, and no one is going to the movies. But when I check the stats, they always seem to be positive, at least over the last 12 months or so. Year to date, this is per Box Office Mojo, which is the source we consulted last year, late summer -- total domestic box office gross receipts are $8.34 billion. That's up about 10% vs. 2017.

Now, if you're like me, you always like to ask the skeptical question, "Yeah, but what about the price of tickets? Is that making up all the difference?" Average price per ticket this year is $9.27. That's only about 3.33% ticket inflation. Not so bad.

I'm going to pause for a moment and ask you to guess what the highest opening weekend was so far this year.

Shen: I'm going to guess that it was a weekend I contributed to with my wife and three kids that we were babysitting, with Infinity War.

Sharma: You're absolutely right, Vince! I think you pushed this movie over the hump in another competition that it has going with another great film, which is actually Black Panther, for title of highest-grossing film of the year. But, the honor of biggest opening weekend does, indeed, belong to Disney's (DIS -1.83%) Avengers: Infinity War. It had $258 million on its opening weekend. That beat out last year's biggest movie, which was The Last Jedi, which opened with a relatively smaller $220 million.

Top five movies so far this year. I'm going to read No. 1 through No. 3 first, because they are all by the same studio, Disney Films. Buena Vista is the actual movie house that these are listed under. Black Panther in the top spot at $700 million. Vince and family pushing Avengers: Infinity War to a close second with $679 million. Incredibles 2 has grossed $603 million. That's followed by Universal's Jurassic World, which has grossed $415 million, and Deadpool 2, which is a 21st Century Fox film, which made $319 million at the box office.

I want to do a bit of quick math here. Last year, we were discussing through date, I think that was mid-August, that the top five films had made up about 25% of total box office receipts. This year, we've got about three more weeks of comparison. The top five have made up about a third of total receipts. The top 10 films have accounted for 45% of the total box office so far in 2018.

Vince, I'm going to ask you to guess how much Disney made up of the total box office take this year. How much of that is due to Disney?

Shen: I looked at this, but only in the context of the top 10 films, in terms of the Disney contribution. For total receipts, I'm going to guess somewhere around 30%.

Sharma: That's why they pay you the big money. That's why I get the second biggest money. Disney made up 32% of total box office receipts so far this year. That's about $2.7 billion year to date. I just wanted to remind listeners, if you're wondering outside of films I named, what else makes up that total, movies like Ant Man and the Wasp, Solo: A Star Wars Story, A Wrinkle in Time, and Coco.

I just want to take a second. Vince, I've read that Solo was a big flop this year. We still haven't seen it. In fact, it's so late now that it's only in the dollar theaters. Hopefully my family can still make it before the summer completely ends. But, this film actually grossed $214 million. It was the, eighth-highest grossing domestic film to date. Were you aware of that?

Shen: I think everything, when you look at it like that, in terms of, $220 million sounds phenomenal, but relative to the budget and expectation, that's where you then get this narrative, this angle that the movie was a big flop. In the end, the Star Wars titles, this was supposed to be a cash cow, guaranteed hit for Disney. Relative to the other reboot movies that Disney has released under the Star Wars franchise -- and that includes the spin-offs like Rogue One, too -- it has been a relative underperformer.

Sharma: True that. The number cruncher in me is not overly impressed, but thinks it's a pretty decent performance. The film critic in me, though, we'll have to wait for that. I think, with any Star Wars film, the expectations are so high. It pushes the studio into this precarious balance between monetizing these films to the utmost, but maybe having too much familiarity. Familiarity breeds contempt in the movie industry, as we know. We'll have to see. Next year, we're slated for the next installment in the primary Star Wars movies.

Asit Sharma has no position in any of the stocks mentioned. Vincent Shen has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool has a disclosure policy.

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