Hollywood Harakiri: A Bad 2011 for the Movie Business

Sequels slumped, stars went dark and animated features lost their luster in the worst year for ticket sales since 1995.

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L. to R.: Warner Bros.; Bruce Talamon / Universal Pictures

Hollywood loves happy endings, and got a feel-good present in the end-of-year box office reports. The franchise titles Mission: Impossible, Sherlock Holmes and Alvin and the Chipmunks lassoed plenty of customers over the long Christmas and New Year’s weekends, both of which raked in more cash than the same holiday frames the year before. Hooray for Hollywood!

In an action picture or romance, the happy ending resolves all problems and wipes out the old bad with a grand final flourish. But businesses don’t work that way. Red ink cannot be erased with the wave of a scriptwriter’s wand, and 2011 — especially the first four months and the period between Labor Day and mid-December — sired too many dud movies to be redeemed by a gift from Santa. Hollywood had dug itself a hole too deep to climb out of.

(MORE: The Box Office Wrapup for 2010)

According to the stats mavens at Box Office Mojo, domestic box-office revenue (from U.S. and Canadian theaters) was $10.17 billion for the year, down $400 million from 2010. That so-so showing could be attributed to jacked-up prices for 3-D movies. The real drop was in attendance: North American ticket sales sagged 4.7%, to 1.28 billion, the lowest number since 1995. These are numbers the moguls don’t want to crunch but to shred.

Box-office historians could further depress the heads of movie studios by noting that last year’s 1.28 billion is less than a third of the four billion movie tickets sold in 1946, back when moviegoing was a national habit, not an event (and the average price of admission was about 35 cents). In that postwar year, an average of 30 tickets were sold to every man, woman and child. If the same teeming attendance rate applied today, the industry would have sold 9 billion tickets and earned about $70 billion in theatrical revenue.

(MORE: Box Office Blues, or the Blockbusters That Weren’t)

Of course in 1946 there was virtually no TV to give audiences a free alternative to moviegoing. And no DVDs, which for a decade or so beginning in 1997 buoyed the industry with free money and in some years accounted for bigger profits than the box office did. But the DVD cash cow is nearly milked dry, as audiences go for cheaper downloading and streaming formats. Most signs point south, and some industry analysts predict catastrophe. “The business will never be the same again,” Harold Vogel, head of Vogel Capital Management and author of Entertainment Industry Economics: A Guide for Financial Analysis, told The Wrap late last year. “It’s not cyclical. This is a technological shift on a generational scale, and the long-term technology is distribution on the web — and that’s not ten years, that’s forever.”

Forever comes later; let’s cast a shuddering glance at 2011. Here are the revenue stats (from January 1 to December 21) for the 10 top-grossing films released last year in North American theaters, as tabulated by Box Office Mojo:

  1. Harry Potter and the Deathly Hallows Part 2, $381 million
  2. Transformers: Dark of the Moon, $352.4 million
  3. The Twilight Saga: Breaking Dawn Part 1, $276.7 million
  4. The Hangover Part II, $254.5 million
  5. Pirates of the Caribbean: On Stranger Tides, $241.1 million
  6. Fast Five, $209.8 million
  7. Cars 2, $191.5 million
  8. Thor, $181 million
  9. Rise of the Planet of the Apes, $176.8 million
  10. Captain America: The First Avenger, $176.7 million

All those nine-figure numbers hint at a healthy top tier, but it was far below 2010, when four films, not two, earned more than $300 million domestic (Toy Story 3 climbed above $400 million), and 10 films, not six, grossed at least $200 million.

Count the ways, and cry for the Hollywood elite:

Movies are a seasonal entertainment. It was the winter, early spring and autumn of Hollywood’s discontent. No films released before the end of April, and only two films that opened after Labor Day (The Twilight Saga: Breaking Dawn 1 and Paranormal Activity 3), earned as much as $40 million in their opening weekends. Summer perked up, with the Harry Potter, Transformers and Pirates of the Caribbean franchises raking in the predicted coin. Deathly Hallows Part 2 amassed $1.3 billion worldwide, becoming the planet’s all-time top-grossing film that was not directed by James Cameron (Avatar and Titanic); the Transformers and Pirates episodes also broke the $1-billion worldwide ceiling, capping a sweltering summer. But if Hollywood is going to be a May-to-August business, it may as well bring back drive-ins.

Sequels are sagging. Yes, the year’s top seven films — Potter 7.2, Transformers 3, Twilight 4.1, The Hangover 2, Pirates 4, Fast Five and Cars 2 — were retreads; yet the grosses of all but two of them (the Potter finale and the fifth Fast & Furious installment) were well below the takes of their previous episodes. Potter is kaput, unless J.K. Rowling dreams up a next-generation story, and Twilight goes dark after one more episode. Also, there aren’t enough “new” hits to stoke the next wave of franchises. But since there’s nothing new under the moguls’ sun lamps, they make sequels anyway. Warner Bros. has greenlit a Green Lantern 2, though Green Lantern underperformed severely, earning barely $200 million (which is what it cost to make) worldwide.

Young men have gone AWOL. The tepid returns for burly fare like Green Lantern and Cowboys & Aliens underlines how young males are staying home with their social networking and their video games. (On its first day, Call of Duty: Modern Warfare 3 rang up about $400 million in sales — more than the year’s top-grossing movie, earned in its entire domestic run.) The young, of both genders, have been ducking movie duty for decades now. In 1975, fully 60% of ticket buyers were between 12 and 24; last year, only 32%. Meanwhile, women turned the low-budget films Bridesmaids and The Help into winners. Finishing 11th and 12th at the 2011 box office, they were the year’s highest grossing films whose stories were not swiped from an earlier movie or comic book. And the percentage of moviegoers over 40 has tripled since 1975. So there’s now a mass audience older than 40 willing to pay for adult fare. Hollywood’s dilemma: it’s forgotten how to make films for grownups.

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