James Cameron's 3-D epic Avatar has raked in more than $1 billion in worldwide box office receipts after only three weekends in release. This comes just a month or so after The Twilight Saga: New Moon posted the third-largest opening day in domestic box office history. As recent times illustrate, there has been no shortage of movie-theater hits -- but how this is actually affecting Hollywood may be different than what you'd think.
According to an Adams Research study discussed in The Wall Street Journal, Americans spent 10% more at the box office this past year than they did the previous year. In addition, 2009 marked the first time since 2002 that consumers spent more money on pricey box office tickets than they did on home movies. This should be good news, right? Well, not exactly. Home entertainment revenues help take a huge bite out of the extraordinary production costs that companies like News Corp.'s
If consumers are spending less on DVD and Blu-ray purchases, it becomes more difficult for studios to offset their high costs. Additionally, because of influences like Netflix
This puts more and more pressure on companies to make smash hits that can shrink the gap between the money they bring in and the cash they have to shell out. It may also put more pressure on producers to come up with grandiose movies that can be shown in IMAX
As stated by The Wall Street Journal: "Consumers are still in love with movies," said Tom Adams, president of Adams Media. "In this environment, however, they're seeking the biggest bang for their bucks."
Does more bang for the buck always mean showier, more fantastical displays of cinema? Will 2010 be the year of the blockbuster as studios move away from niche markets? Let us know what you think in the comments area below!
Fool contributor Jordan DiPietro owns shares of General Electric. IMAX is a Motley Fool Rule Breakers pick. Netflix is a Motley Fool Stock Advisor selection. The Fool has a disclosure policy that prefers art house films.