Higher incomes will draw in moviegoers, but rising online competition will pressure growth
Los Angeles, CA (PRWEB) October 26, 2012
The stubborn effects of the recession and rising competition have hindered the $14.2-billion Movie Theaters industry during the past five years. Faced with falling or stagnant disposable income, consumers cut spending on nonessential leisure goods like movie tickets. However, the unprecedented success of Avatar, both in terms of gross box office and higher-price 3-D ticket sales, created a strong 3.0% jump in revenue in 2009, exemplifying the powerful influence of a single blockbuster on industry performance, even in the midst of recession. As such, IBISWorld industry analyst Matthew MacFarland says industry revenue is expected to grow at a weak average annual rate of 0.7% during the five years to 2012, including a moderate bump of 1.2% in 2012 in response to improving economic conditions and the success of Marvel's The Avengers, which became the third-highest-grossing film of all time.
External competition from substitute entertainment products and other ways of accessing films, including online video, on demand services, internet-enabled TVs, smartphones and tablets, has increasingly shifted movie consumption away from theaters. Lower admissions during the past five years have caused a steady decline in the number of enterprises, and larger firms have consistently closed underperforming venues. Operators are concentrating their screens in fewer but larger megaplexes, where costs can be spread over higher admissions and concessions sales, says MacFarland. As such, profit has regained much of the ground lost since 2008, when it fell to a low of 0.2% of revenue. The Movie Theaters industry has a medium level of market share concentration. Major players include the Regal Entertainment Group, AMC Entertainment Inc. and Cinemark Holdings Inc. While the top companies do engage in acquisition activity, often acquiring individual theaters or small local chains, large firms have focused more on upgrading analog theaters to digital than on expanding their geographic presence and market shares. Industry concentration has fallen marginally since 2007.
Exhibitors are also focusing on upgrading their screens and auditoriums with digital projection systems and stadium-style seating, capital expenses that are expected to continue over the next five years. During the five years to 2017, the industry will benefit from rising consumer disposable income, which will encourage consumers to spend on entertainment like trips to the movies. In addition, blockbuster movies – especially ones that offer 3-D screenings – will be able to temporarily reduce falling admissions, as did Avatar in 2009. Ultimately, though, IBISWorld anticipates competition from online video access to largely mitigate these positive trends. As such, the Movie Theaters industry is forecast to grow slowly in the five years to 2017. For more information, visit IBISWorld’s Movie Theaters in the US industry report page.
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IBISWorld industry Report Key Topics
This industry comprises businesses that primarily exhibit movies. It includes cinemas, drive-in and outdoor movie theaters and film festival exhibitors.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.