ShoWest is billed as the largest motion picture convention and trade show in the world. It brings together theater owners – represented by NATO, the National Association of Theater Owners – and the major international film distributors – represented by the MPAA, the Motion Picture Association of America. Together they celebrate their past year’s achievements and talk about the big ideas for the future of the motion picture exhibition business.
There was plenty to celebrate at ShoWest 2010. The global box office set another all-time record in 2009, reaching almost $30 billion. North American box office increased for the fourth consecutive year, and was a full 10% higher than in 2008, finishing at a record $10.6 billion. 11% of the North American box office came from 3D showings.
What about the future of movies at the theater? In his remarks, MPAA Chairman Dan Glickman said “…I predict the best is yet to come for the box office.” He highlighted four key industry trends the MPAA is engaged with:
- Globalization: The motion picture business is truly a global business. Global box office has soared, and international release strategies are just as important for major motion picture distributors as are their North American premieres.
- Technology: Digital cinema has enabled 3D. People are eager to pay for the entertainment value 3D offers. It has increased admissions, even with ticket price premiums.
- Content protection: Motion picture content is highly valuable intellectual property, and must be protected from the challenges of piracy in an increasingly digital age.
- The ratings system: As content becomes more accessible, the MPAA ratings system has enduring value as a tool for parents.
People in Kodak’s Entertainment Imaging business pay close attention to what’s said as ShoWest, because it’s important to our future at the movies. In particular, globalization and technology have a direct impact on the business of motion picture film.
The most obvious impact on film is from technology. ShoWest has talked about digital cinema since the early 2000’s, and industry pundits quickly began wondering if “film is dead.” For most of the decade, while the number of digital screens grew, the worldwide color print film market grew too (due to many factors, including globalization). With 3D, the implementation of digital cinema has finally surged forward to the point where the print film market has been impacted. Of course, 3D will not power a digital cinema surge for long. Many exhibitors are willing to pay the full cost for their digital 3D screens – due to the box office opportunities they enable – but not every screen needs to be capable of 3D.
An equally important impact on film comes from globalization. The amplifying magnitude of the international market has many effects on the film business:
- The use of international day-and-date releases continues to expand. This means film prints from the US cannot be recycled for use in international territories, which means a better audience experience (and more film prints overall).
- International releases from the major studios are wider than they used to be, opening on more screens and in more countries.
- This is not just a Hollywood story. There are more releases from other countries and those releases are wider too. Some of the widest, most Hollywood-like releases in key international territories are for local films, not major studio films.
- Ten years ago, half of the worldwide color print film market was in North America. In 2009, more than two thirds of the market is international. North America isn’t even the biggest film region now; Europe is. The film market size in Latin America has doubled in those ten years. In Asia it has tripled.
Most importantly, record-setting box office provides the incentive both distributors and exhibitors need to keep investing in the future of the movie business. It means producing more movies people want to see (some of them in 3D), and distributing them widely. It means building new, better, more modern theaters. John Fithian – President and CEO of NATO – explained the exhibition commitment to movie industry success: “Movie theater owners have invested millions in new theaters with the latest technology…” He wasn’t just talking about digital cinema and 3D projection. He first listed investments like providing a better viewing experience through stadium seating, modern multiplexes with unprecedented convenience in selecting movies and show times, online and kiosk processes that make ticket buying easier, and the emergence of venues offering high-end experiences with new amenities. These are the kinds of investments being made not just in North America, but in theaters all around the world.
We can look at the past ten years and see how all of the above factors have grown between 1999 and 2009:
- Global box office has increased 78%
- Digital cinema has gone from 0 commercial screens in 1999 to more than 16,000 screens worldwide in 2009 (more than half of them 3D)
- The worldwide exhibition market size – our measure of film plus digital cinema – has increased 71%
- The worldwide color print film market – even with the growth of digital cinema – has increased 47%
In the next years, we know digital cinema will grow further. But the overall growth in global box office will continue to fuel the long-term growth of distribution and exhibition, and film will have a meaningful position in the future of the movies for many years to come.