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February 06, 2006


Rishi Khaitan

Great post! I've been enjoying the entire Death of the Blockbuster series.

I remember reading an article (no idea where) that a reason why box office sales are decreasing is that people are increasingly spending their dollars on other forms of entertainment. Not only are theaters feeling the pain of this but other traditional entertainment businesses such as bowling alleys, miniature golf, arcades, etc. I believe the point of the article was that dollars are being directed to digital at-home entertainment such as the Internet, video gaming, home theater, etc.


"Never underestimate the motivational power of fun."
Nice quote :)

Peter da Silva

Very selective graphs there, particularly the last two, the ones (by the way) that got Boingboinged. Tufte would be mortified.

Between the 1990s and the 2000s you're showing a change from, what, 49% to 46% of the revenue coming from blockbusters. That's a 3% absolute change, a bit over 6% relative change.

For the costs of the blockbusters, you're showing a change from 0.6% to 0.7%, or 0.1% difference on a radically compressed scale (you've got 3 points on the y axis marked as 0.6%!).

But the average box office over the '90s was about $6B, and in the 2000s it's $8B, so while the relative role of blockbusters has dropped by 6%, the total revenue has increased by 25%. The profit margin is less, but they're still making more money per dollar spent than on non-blockbuster films.

There's similar problems with the rest of your graphs. When you examine them they don't support your thesis. What they do show is that there's been a downturn in the movie business. The economy as a whole hasn't been doing all that hot, lately, or haven't you noticed?


i think you are concluding far too much here. the box office isn't even really where the movie biz makes their money, it's at home.

as far as musicians go, i think that you're a bit off there too. yes, the more technology develops, the cheaper and easier it becomes for grandma to record her favorite hymns cd for fun, but you're missing something. there are more and more bands and artists that only do music, no other jobs, but aren't writing hits.

bands know that they can either get signed to a major and be set for life, or they can release their own album or sign with an indie label and tour and sell t-shirts, stickers, pins etc and support themselves.

the chance of getting signed is pretty slim, and it's unpopular to sign to a major right now, no matter what the benefits might be.


I'm with Peter da Silva...

Those last two graphs are the stuff of statisticians' nightmares. Truly horrible. The scales are completely misleading, and the actual data are nowhere near solid-enough to support the author's claim.


May these not just be noise? As per Kris, the differences here are miniscule.


I hate to chime in with the naysayers, but, at least in terms of movies, you really need to widen your perspective. "Hollywood" has long realized that the growth prospects of blockbusters in the DOMESTIC box office are slowing, but profits made in the INTERNATIONAL box offices are skyrocketing.

Many articles have been written about the lessening role of domestic box office in the overall "take" for film studios. Even discounting merchandising, the international box office, DVD sales, pay-per-view, and TV rights have played ever-larger roles as revenue streams since the mid-1990s.

Here are a few articles addressing the power of non-domestic box office revenues, just off the top of my head.


http://www.mecfilms.com/moviepubs/memos/moviein.htm (revenue analysis of outlets from early 2000)

http://www.factbook.net/wbglobal_rev.htm (an analysis from 2000 more focused on domestic revenue streams; also available at http://www.pbs.org/wgbh/pages/frontline/shows/hollywood/business/windows.html)

While these articles do not address the "Top 25" specifically, and two studies are from the year 2000, there is room to extrapolate from the revenue statistics. Were you to argue that blockbusters are a dying breed or a loss-leader, I think many analysts would make *very* strong cases against you.


Box office != health of movie production biz

Box office == health of movie theater biz

Pete Mauro

I agree that this argument is completely misleading. In modern studio economics, you can not judge the sucess of a film property in the theatrical window alone. You MUST consider all the ancilirary markets (especially DVD which is the largest revenue contributor). If you look at revenue from DVD, VOD, SVOD, Terrestrial TV, Cable, etc you will find that the rising costs (compared to theatrical revenue) is insignificant.


I think it would be interesting to see statistics based on the online music sales by themselves and in relation to CD sales. Maybe that's part of your book. CD album sales are not directly relatable to the a la carte selection of single songs online but maybe we can see the money spent total and per song to still get an idea.


The stats are a bit misleading. I'm also curious about the "cost" comparison. Are they just looking at top line costs of how much a movie costs, or actual costs laid out by the studio? Was the film licensed to a German production company? Did they pre-sell the blockbuster in different markets? There's a great article in Slate about the way Hollywood blockbusters can be almost entirely financed through loopholes and trickery, meaning that even though they say they spent hundreds of millions of dollars, it might not be true.

Nat Dykeman

It is NOT true that there is more music out there than ever before. During the same time that labels were crying that people were downloading their cds, and revenue was down 8%, they were quietly cutting the number of cds produced by up to 20%.

Personally, I think if you cut your expenses by 20%, and your sales drop 8%, you're doing better than before.

Billy C

I believe the last comment if false..

"Personally, I think if you cut your expenses by 20%, and your sales drop 8%, you're doing better than before.".

That statement is true if expenses in dollars is greater then or near the amount in dollars produced by sales. But who would invest if they invested more then their return or their increase was 0?

Here's an example..
Lets say you have 1 Million dollars in expenses, and your sales are 10 Million Dollars. 20% of 1 Million is $200,000, so you have saved $200,000 in expenses. But if your sales are 10 Million dollars, and they drop 8% , that is nearly 1 Millions dollars lost. So your net lost is $1,000,000 - $200,000 = $800,000 net loss.

You cannot compare 20% to 8% and say they are better before... you have to look at the base numbers of those percentages.

Lee White

Just wondering ... Pharma is another industry where "blockbusters" are a big deal. I am curious if the trends there are similar to this.


I agree with an earlier poster- the stats are horrible. Where are you error bars? You can't say anything conclusive on this data set without proper statitical analysis.


Statistics aside, I agree with Origami. Blockbusters are no longer the preserve of Hollywood, but international phenomena.
And global box office is, in turn, a fraction of the total revenues accrued by the most popular franchises.
Consider Ang Lee's botched The Hulk - costly to make and unpopular at the b.o. but they sold an awful lot of green monster hands...
Interestingly, and converse to my own arguement, Walden and Disney recently announced the sequel to Narnia, Prince Caspian. It will be made as a stand alone film, not the back-to-back as expected. Maybe there is something in this...

Tim Holt

One more from the Tufte club for you. That last graph is HORRIBLE! Two points do not a trend make. Show us some real data, like let's see the breakdown for each year, not decade. And while we're at it, let's see more historical data for the red graph (Cost of an average Top 25 film as a percentage of total box office). FFS the two datapoints are about 0.1% apart. Noise? A trend?

And for those looking for motivation, go here http://www.amazon.com/gp/product/0961392142 and then proceed to acquire all books by Tufte.


I think Chris' thesis is basically accurate, though not necessarily supportable by the figures above. A better angle is to consider how the increasing dominance of DVDs is shortening the theatrical window for movies-- studios are releasing a movie's DVD very shortly after it's in theaters, and that window is getting smaller and smaller. As it narrows, the audience more and more asks, "Why are me and my wife paying $20 to sit and watch ads and a stuntman lecturing us about Internet piracy in a theater surrounded by strangers mumbling into their cell phones and munching on snacks in crinkly bags when we could watch the same movie in our home just 3 months later on our 36" plasma screen with Dolby Surround sitting on our couch with the dog in our laps and a nice Cabernet in our hands for 2 damn dollars?"

Conversely, it could soon be that the *only* movies a large audience will pay for to see in theaters are epic blockbusters on the *LOTR* level. But even that doesn't look like a sure thing lately-- Peter Jackson's *King Kong* was widely expected to gross over *Titanic*, and it barely puffed and wheezed past $200 million. Audiences are less willing to watch a movie in the theaters again and again (which was why *Titanic* was so big), since they can just do that with DVD.

Anyway, I do recommend Edward Jay Epstein of Slate to explain the economy in full:


This death spiral was set in motion by the studios themselves about four years ago. The decision to shorten the video window did not proceed from a new technological development—such as TV in the 1940s or the video cassette in the 1970s—or a change in popular taste. As a top studio executive explained to me, "It was a voluntary decision made for purely financial reasons by the major players. It was done to satisfy quarterly profit goals, nothing more, nothing less." In short, the studios changed their business model so that they could opportunistically sell DVDs, which, after all, are a conventional retail product like soap or toys...

The main resistance to this change comes from the old-guard studio executives who fear that undercutting the movie-theater business will—even if it improves DVD sales—unravel the very foundations of Hollywood. They argue that the theatrical platform, to which the PR hoopla, magazine covers, TV talk shows, and the rest of the celebrity-worshiping culture is geared, transforms movies into media events that generate worldwide DVD sales. For them, the issue is how to keep the theatrical platform alive.

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Part of the reason why people are going to fewer movies is because of on-demand movies, but other reasons include the usual suspects, such as our fascination with video games (adults and kids alike); the cocooning of America, where people just don't have the energy or motivation to leave their homes; the lack of good movies; and the increase in HDTV and similar systems. Movie theaters will not go away, but I think they will continue to struggle over the next several years.


The second graph is probbly wrong. I am not sure what $b means, but I guess billions of dollars, which suggests the box office take was nearly ten trillion dollars last year. Sounds unlikely to me.

chris anderson


Good catch. Fixed.

Jim Rockford

I think you are missing the most important part of the Long Tail thesis.

COST drives the long tail. Last time I checked movies were very expensive to make, so they remain mass-market media. Music and books are far less expensive to produce. A band can put together an album for what, around $10-15K or so? Most "small" movies are going to cost around $20-60 million just to produce.

Edward Jay Epstein ("Hollywood Economist" on Slate, "The Big Picture") would tend to disagree with you substantially, he's produced a number of graphs and tables on his columns that show that Hollywood makes MOST of it's movie money off the Blockbusters, and this trend has accelerated rather than declined in the recent years. If the Long Tail held for movies, you'd see lots more "small" movies being made and many/most of them profitable. That simply hasn't happened.

[Epstein makes the point that the total cash flow for Studios which are parts of media companies includes box office, DVD/tapes, foreign sales, TV sales. And that library sales of past films to TV makes up substantial parts of this cash flow. Given the mass-market nature of broadcast TV this latter fact also undermines the Long Tail thesis]

The long tail in music and book publishing depends on lots of people who are willing to make little/no money for things they love. I doubt most long tail indy musicians are making a living off the long tail. I don't see that happening with movies simply because cost is just too high.

What SHOULD worry movie studios is the same thing that happened with music producers I believe. Which has nothing to do with the Long Tail. Instead older product in movies and music on DVDs and CDs compete with often inferior products being released. Ray Charles and the Beatles vs. Kanye West and Eminem. Die Hard and Stripes vs. Syriana and Family Stone.

Coffee producers supposedly blew it in the mid fifties by making cheap coffee with robusta beans and turned off a generation of coffee drinkers into Soda drinkers (caffeine substitution) until the Starbucks revolution. In this case the substitution is superior product from times gone by. Most music and movies these days simply isn't very good.

Bottom line something sold in mass-market channels like Wal-Mart (20% or so of Hollywood's DVD channel) is a mass-market phenom and probably resistant to the long tail hypothesis (which surely does not work for cars, CPUs, and and other high-cost to entry products).

chris anderson


Some reactions:

1) Your point about things sold in mass-market channels like Wal-Mart being resistant to LT phenomena is unfortunately contradicted by the music data. Wal-Mart is America's largest CD retailer, but that hasn't stopped music consumption trends from shifting away from the hits. True, Wal-Mart's sales are still very hit-centric, but the online retailers are much less so.

2) You make a good point about movies being expensive to make and thus not benefiting from the "democratization of production" effect I've talked about in things like books and music. That said, there *is* a trend towards smaller, cheaper films (the Miramax effect), including documentaries that are primarily released on DVD. That doesn't show up much in box office, but we do see the effect in the Netflix data, which is far more LT-heavy than box office.

3) I don't doubt that the studios make most of their money from blockbusters and will continue to do so for a long time. My bet, however, is that as channels with a capacity for much more variety, such as DVD distribution, take over, the emphasis on the blockbuster will decline.

4) I do agree that the place to look for that trend is not in the box office, which will be the last place to abandon the blockbuster model. I just showed the data because I have it. And as I said, I don't think the slight reduction in market share of the top 25 that I found is going to turn into a dramatic end-of-hit picture like we're seeing in music. It's just interesting that even in movies, the old model seems to have peaked.


It seems as though I hear a lot of attention being paid to two things as a cause of the downfall of movie attendance: quality of films decreasing and rise of home entertainment systems. What I think is being ignored is something related to the rise of home entertainment that has been bothering me for years and driving down my attendance... the drop in the quality of the movie-going experience itself.

More specifically, in the last five years I have had an unbelievable number of absolutely horrible cinema experiences. Cell phones and talking are the primary culprits. For example, a few years ago I went to see a film at the most expensive movie theater in the Los Angeles area (at the time). The theater had variable pricing based on the day of the week you attended and we were there on a Friday, the most expensive day. In addition, we were in the most expensive theater there, the one with the assigned leather seating and double-wide armrests. The ticket was at least $13.

Now, you might expect the most expensive theater in the home of movies to have a savvy movie-going crowd that respected the film viewing experience. No. In the first fifteen minutes of the film, one woman answered three cell phone calls without even one effort to lower her voice. Teenagers threw popcorn and used the railings as a jungle gym. And finally, a group of seven other teenagers laughed at us when we explained that the movie had started and that they probably shouldn't discuss who they were dating at a movie theater.

We left after fifteen minutes and got a refund. The manager told us that we just should go see a movie there on Fridays or Saturdays. I found it unbelievable that the manager would surrender so easily the experience that customers are paying for.

In the end, I was glad it happened. The movie was Master of Disguise and I have never had any desire to see any more of the movie than what I did manage to see. But experiences similar to this have happened to me time and again and make think twice every time I desire to step foot into a theater.

Sure, the quality of the movies is critical and may be dropping, but one of the great draws is the experience of watching, something that presenters at the Academy Awards were trying to play up, and it is dropping.

And let's not get started about movie prices.


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With Blockbuster Total Access, it is really going to give Blockbuster one up on Netflix. With the convenience of exchanging the DVD at the store, something Netflix can not offer. It is going to put pressure on Netflix to step it a notch. I think this going to put Blockbuster ahead in the poll.

See for yourself: http://todayspolls.googlepages.com/blockbuster_vs_netflix_poll

james salinas

I have a idea to help sell movies,games TO ANY COMPANY

james salinas

I have a idea to help sell movies,games TO ANY COMPANY

al galpern

Had dinner with the Blockbuster CEO - he is oblivious to his competitive space. The guy has no vision of his business beyond today's stores and a "super" mail program. I assume he will make a lot of money taking the share price to $0.

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gifts for men

All the blockbusters in my town have shuttered... This would of been a great idea like 5 years ago.I do like the SD route tho, SD+Xvid+Tv=Awesome......

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The Long Tail by Chris Anderson

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