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Friday, November 28, 2008

Will Blu-Ray Eventually Knockout Movie Theaters?

movie theater closing

Blu-Ray Players are one of the hottest items for Christmas this year, and as more Americans upgrade their home theater, movie theaters are searching for profit solutions.
Despite the fact that Blu-Ray sales fell short of sales projections for this quarter, Sony's head of electronics Stan Glasgow, believes that figure can be credited to the slouching  economy as a whole. He told Reuters:

It's not that far off of it/Maybe 10 percent off of what we had thought. It's truly one of the items that has performed well during this economic mess.

Compared to the steep decline in movie theater revenue, Blu-Ray appears to be in much stronger condition than your local box office. For example, AMC Entertainment Inc., (NYSE:AC) said it earned $3.7 million in the quarter ending Oct. 2, compared with $36.9 million a year ago.theaters in South America.Revenue fell 10 percent from $701.4 million to $630.5 million.Carmike Cinemas,  the fourth largest theatre company in the United States, lost $25 million in 200. Since 2004, its stock price dropped from 39.00 per share to 3.09 today.In that same span, Regal Cinemas has fallen from $20.86 to $9.07.

Distinct advantages movie theaters once boasted, such as superior picture quality and surround sound,have been eliminated by the latest innovations in home theater technology.Of course, one appeal  the movie theater will always have is the lure of simply "Getting out", but I wonder if that still has the same appeal to modern families.

Short-term, opting for the theater is obviously much cheaper than throwing down $400 for a new home entertainment system, but with ticket prices averaging $8-$10 and concession stand menus with outrageous prices, parents of large families can appreciate the value behind a home theater. Blu-Ray movie are a bit pricier than DVDs,for now, but they're not unreasonable.Iron Man, one of the biggest box-office hits in 2008, sold for $22 Blu-Ray format it hit Target's shelves.Disney signed an exclusive deal to release  Netflix has added Blu-Ray to its subscription plans.
I think movie theaters will always have a place in American society, but as they lose their technological and economic edge, I wouldn't be surprised if many of those big screens fade to black, permanently.

By Matt O'Hern at 11:35 AM | Comments (4)

(4) Thoughts on Will Blu-Ray Eventually Knockout Movie Theaters?

You are way off on the move theatre revenue comment. Revenue is up for the last three years. It has been up for all but four of the last 20 years. In fact the summer of 2007 set a record and full year 2008 is on track to set an all time record.

Your information about AMC is net profit not revenue. That has to do with how the company is managed, not whether people are going.

This is a link to the NATO website. They have statistics on the movie theatre industry whenever you want to include accurate information.

You comments about the stock prices are almost comical. Is Apple effected by Blu Ray also, Bank of America, GM, AIG, Target? The entire stock market fell to 1997 levels.

Movie Theatres continue to be the most affordable form of entertainment for families. If you will look at the NATO statistics you will see that ticket prices have lagged all other ticketed entertainment and have lagged well behind CPI. Meanwhile the movie venues have gotten better and better. 10 to 15 years ago you would have gone to a sloped floor theatre with 18" seats, now you have beautiful state of the art megaplexes with stadium seating, digital sound, digital projection in some, 23- 25" seats, and big screens.

Weak premise, lazily researched, poorly executed.

Comments by informed : Saturday, November 29, 2008 at 02:39 AM

Judging from the content of your comments, I can see why you didn't provide a legit email in your response.
If you're going to call my premise weak and my research lazy, how about you look at the actual numbers and show some common sense.

You're only showing part of the picture with your "Stats" from NATO. First of all, that link you provide is misleading, because it's labeled as Total U.S. Box Office Gross-but when you click it and access the list, it reads : Total U.S. and Canada Box office grosses:(By the way, did you even remember to adjust box office gross profit for inflation?)

I guess you don't trust Reuters? This article is two weeks old- your NATO profit stats end at 2007.

The numbers announced by Carmike after the market close paints a different picture. The company reported a *$24,000 profit, down from the $2.1 million recorded in the year-ago period as revenue dropped 7.4% to $122.9 million.
*Admissions revenue fell 6.9% to $81.1 million, and concession revenue decreased 8.3% to $41.8 million, exacerbating the situation. Columbus, Ga.-based Carmike operates 250 U.S. theaters.
*Earlier in the day, Cinemark reported a third-quarter profit of $20.4 million, reversing a year-ago loss of $23.4 million.
*Revenue rose 1% to $476.2 million, BUT ONLY because GAINS IN INTERNATIONAL markets MADE UP FOR LOWER US RESULTS.

*International revenue in the quarter rose 26.1% to $118.4 million, but the U.S. saw a 5.2% decline to just below $360 million. Plano, Texas-based Cinemark operates 414 theaters in the U.S. and additional ones in 12 foreign countries, including Mexico and South and Central America.
Financial details mentioned on Cinemark's earnings call provided further insight into the divide between domestic and international operations in the latest quarter.

*Overall admissions revenue increased 0.2% (PLUS 23.9% internationally and NEGATIVE 5.5% domestically) driven by a 4.5% gain in average ticket prices (+3.1% in the U.S. and +16.4% abroad). *Concession revenue climbed 1.2% (-4.7% in the U.S. but +27.8% internationally).
*ATTENDANCE DECLINED 4% (-8.4% in the U.S. and +7% internationally), executives said in a conference call.

Also, a lot of the inspiration from my work isn't just from stock numbers or economic reports, its from the comments I hear from my family, friends and regular everyday people who just don't see the point in spending $70 to entertain their family when they can rent a movie and watch it in the comfort of their own home- for a fraction of the price. So I guess if my premise is weak, they're all "weak".
In response to your statement
"You comments about the stock prices are almost comical. Is Apple effected by Blu Ray also, Bank of America, GM, AIG, Target? The entire stock market fell to 1997 levels."
You must have missed the section where I wrote "
Sony's head of electronics Stan Glasgow, believes that figure can be credited to the slouching economy as a whole.

You also said: "You(r) comments about the stock prices are almost comical. Is Apple effected by Blu Ray also, Bank of America, GM, AIG, Target?"
Maybe I wasn't clear enough the first time.
I believe movie theaters will be affected by Blu-Ray, because they're both pitching the SAME product- the only advantage owned by the theater is four to six months earlier release and the entire "night out" appeal.
If you don't see the pure logic behind that comparison, then I can see why this article has you so upset.

Comments by matt : Saturday, November 29, 2008 at 02:34 PM

A better argument would be "Are digital downloads going to kill bluray?"

Comments by Ryan : Monday, December 01, 2008 at 01:19 PM

Ryan, you made a very interesting point and I may consider that debate for a future post. Thanks for your comment.

Comments by Matt O'Hern : Monday, December 01, 2008 at 01:41 PM

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