Movie Industry Analysis

Movie Industry Analysis Movie Industry Analysis The global motion picture industry has annual revenues of approximately $60 billion USD. • The studio business has a historical rate of return of around 13% per year, which is likely to increase as digital media creates new opportunities for the distribution of film properties • US box office for 2005 was $8. 99 billion. For the fourth straight year, domestic cumulative box office from all studios continues to hold near $9 billion • Worldwide box office held steady at $23. 4 billion in 2005 but reflects a 46% growth over 2000. • In 2005, PG and PG-13 films accounted for 85% of the year’s top 20 films. • The average cost to make and market an MPAA film was $96. 2 million in 2005. This includes $60 million in negative costs and $36. 2 million in marketing costs. • In 2005, the average ticket price for the US was $6. 41. This represents a 3. 2% increase over the 2004 average ticket price of $6. 21. In 2005, the total of new films released increased by 5. 6% from 2004, with 549 new films versus 520 in 2004. The US film and TV production and distribution industry includes about 9,000 companies with combined annual revenues of $50 billion. Large companies include Walt Disney, Sony/MGM, Paramount, Twentieth Century Fox, Universal, and Warner Brothers. These studios are generally part of large publicly traded media companies.

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The industry is highly concentrated: the 50 largest companies account for about 80 percent of industry revenue. There are also independent production companies, and a large number of companies that provide services to the industry including creative talent, equipment, technical expertise, and various technical production and distribution services. Demand is driven by consumer spending, which in turn depends on consumer income. The profitability of individual companies depends on creativity and cost control.

Large companies often have long-term contractual relationships with actors and directors, and can maintain a permanent staff of technical Major revenue streams for feature films include: box office ticket sales, DVD sales and rental, pay-per-view, cable, network TV, TV syndication, ancillary markets (offshore oil rigs, military, airplanes), and new media (high-def, wi-fi,podcasts. ) Revenue streams endure over roughly a 60 month period with the US box office, international box office, and DVD sales and rental fees generally contributing between 65% and 85% of the total revenues.


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