Hollywood Sets $10+ Billion Box Office Record

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The MPAA has made it very clear that the economy is losing billions due to piracy. Illegal downloads, they say, are slowly killing the creative industries. While we're not going to dispute these movie industry commissioned numbers here, it is worth pointing out that at North American box offices a new record has just been broken.

For the first time in history total ticket sales have exceeded $10.7 billion. According to the most recent numbers total revenue this year will be around $10.8 billion, with 6 percent coming from this year’s blockbuster The Avengers.

The new record was set without raising ticket prices, and even when adjusted for inflation there’s a significant bump compared to last year’s grosses. And if that’s not enough, the total number of movies premiered in 2012 also went up to a record breaking 655.

The new record follows an even more stable international trend where box office revenues have been growing for several consecutive years. Over the past decade international grosses nearly tripled from $8.1 billion in 2001 to $22.4 billion in 2011.

Keep in mind that this was the same period that online file-sharing took off.

The good news for Hollywood is that “pirates” are not all that interested in the low quality “camcorded” movie releases that are usually available during the first weeks after a movie premiere.

There aren’t many movie fans who see a camcorded version of a movie as a true alternative to watching a film in a movie theater. The two are totally different experiences, and not direct competition at all.

If anything, downloading a camcorded movie could be compared to downloading a low quality bootleg of a concert. People who download these are collectors, passionate fans, or just curious.

The suggestion that online piracy may not be all that bad for the box office is in line with two recent academic studies. The first showed that the US box office is not suffering from movie piracy at all, and another one came to the counter-intuitive conclusion that the Megaupload shutdown negatively impacted ticket sales.

But does this mean that piracy is not an issue for the movie industry at all?

Not necessarily. Most “pirates” appear to be waiting for higher quality DVD and Blu-Ray rips which are more likely to affect the DVD-aftermarket and VOD sales. These high quality pirated copies are direct competition and can impact revenues.

The challenge for the movie industry is to make legal offerings more appealing than their pirated counterparts. Of course it may not always be able to “compete with free”, but there is still a lot of ground to make up when it comes to availability and quality of legal offerings.

But overall we’d say that the movie industry is still very much alive.


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