$9.63 bil boxoffice for '07 breaks record

Domestic boxoffice returns from the U.S. and Canada hit a record $9.6 billion last year, a 5.4% increase over 2006, according to the final figures released March 5 by the MPAA in its annual state-of-the-business report, which for the first time it compiled in partnership with Nielsen EDI. The figure represents grosses for all commercial releases in North America, not just those of the MPAA companies.

The story was much the same around the world as international boxoffice for all commercial moviegoing hit $17.1 billion, up nearly 5% from 2006. That brought the worldwide boxoffice total for 2007 to a record $26.7 billion. The MPAA companies' portion of that total international tally of $17.1 billion in grosses was nearly $9.5 billion.

"All in all, 2007 proved a healthy year at the boxoffice," MPAA chairman and CEO Dan Glickman said. "We had a very good year domestically," while the international returns were "also bullish."

But though more money was flowing into Hollywood, more money also was flowing out.

The studios' investment in the average movie's negative cost rose to $70.8 million from $65.8 million in 2006. And since the MPAA doesn't include the outside investment money that the studios now routinely solicit to co-finance many of their films in that calculation, the average production cost of a movie actually is substantially higher than that.

At the same time, the average marketing costs on a film rose from $34.5 million in 2006 to $35.9 million in 2007. As a result, the total average negative and marketing figure also hit a record: a forbidding $106.6 million.

The outlays on the part of the studios' specialty divisions were even more dramatic. While the divisions that turn out potential Oscar winners -- such as Disney's Miramax, Paramount's Vantage, Universal's Focus and Fox's Searchlight -- may concentrate on producing, acquiring and releasing "smaller" movies, in their case, small is a relative term.

The subsidiaries' average negative investment in 2007 rose to $49.2 million, while average marketing costs soared to $25.7 million. The total negative and marketing cost of the average specialty film soared to $74.8 million, up more than 54% over the comparable 2006 figure of $48.5 million.

Glickman contended, though, that those business decisions paid off last year in higher boxoffice returns -- particularly for the big movies of summer.

In 2007, Hollywood saw 28 movies climb above $100 million at the domestic boxoffice -- compared with just 19 the previous year. And at the top of the heap, four movies -- "Spider-Man 3," "Shrek the Third," "Transformers" and "Pirates of the Caribbean: At World's End" -- took in more than $300 million domestically, compared to just one, "Pirates of the Caribbean: Dead Man's Chest," that crossed the mark in 2006. It went on to gross $423 million.

But while Hollywood's biggest movies were, for the most part, bigger than ever, the film industry didn't actually get more Americans to go to the movies more often.

Actual admissions in 2007 were flat. The year's total of 1.4 billion admissions was just 0.3% above 2006's 1.395 billion admissions. And neither year challenged the modern-day record of 1.6 billion admissions set in 2002.

The fact that overall boxoffice grew by 5.4% was largely a result of an increase in the average ticket price, which the National Association of Theatre Owners said grew from $6.55 in 2006 to $6.88 in 2007 -- an increase of 5%.

"The vast majority of that ticket price increase does correspond to inflation and rising consumer prices," NATO president John Fithian said. "Over 80% of that increase is just to keep up with the pace of inflation."

However, rising ticket prices also are beginning to reflect the growth of luxury theaters charging premium prices as well as the growing popularity of large-format and 3-D movies. "I can't quantify it, but some of it is reflected by a fairly rapid growth rate in luxury cinemas," Fithian said. And with eight to nine 3-D movies promised for 2009, further price increases could be in the offing.

At the same time, Fithian noted that inflation has outpaced the rise in ticket prices over the long term. For example, the average ticket price in 1977 was $2.23; in '07 dollars, its equivalent would have amounted to $7.63.

While the actual number of admissions didn't grow in 2007, neither did the number of films released in the U.S.

Overall, 590 new releases and 13 reissues hit theaters in 2007, on par with the 599 new releases and eight reissues that competed for moviegoers' attention in 2006.

But the MPAA companies -- Paramount, Sony, Fox, Universal, Disney and Warners -- did scale back their output. The majors and their affiliated subsidiaries distributed 179 new films in 2007, down from 203 the year before.