Brick & Mortar Meltdown Reaches Movie Theaters

by Wolf Richter, Wolf Street:

Is jacking up ticket prices helpful in this environment?

We keep hearing the good news, and we love it. During the four-day weekend, “Star Wars: The Last Jedi,” became the highest-grossing movie of 2017 with 58.1 million tickets sold in the US and $517 million in ticket sales so far, according to movie data provider The Numbers. “The Last Jedi” was released on December 15 and grossed $220 million that weekend, making it the movie with the biggest weekend of the year.

And it continues to sell tickets into 2018. This, as the Wall Street Journal put it, gave Walt Disney “another banner year at the box office that left rival studios fighting for leftovers.”

The top ten movies in US ticket sales in 2017:

1. “The Last Jedi” (Walt Disney): $517 million
2. “The Beauty and Beast” (Walt Disney) $504 million
3. “Wonder Woman” (Warner Bros.) $413 million
4. “Guardians of the Galaxy” (Walt Disney) with $389 million
5. “Spider-Man: Homecoming” (Sony) $334 million
6. “It” (Warner Bros.) $327 million
7. “Thor: Ragnarok” (Walt Disney): $311 million
8. “Despicable Me 3” (Universal): $267 million
9. “Logan”(20th Century Fox): $226 million
10. “The Fate of the Furious” (Universal) $226 million

These are big numbers. And ticket sales for “The Last Jedi,” which continue into 2018, will likely remain behind the record $937 million in domestic box office sales raked in by “The Force Awakens” in 2015.

And that may be symptomatic.

The number of actual tickets sold in US movie theaters in 2017 fell 3.6% year-over-year to 1.25 billion tickets, according to The Numbers. That’s down 21% from “Peak Ticket Sales” in 2002, when box offices sold 1.58 billion tickets. In fact, the number of tickets sold in 2017 was the lowest since 1995.

This chart shows what’s going on in terms of filling seats in brick-and-mortar movie theaters in the US:

Sharp price increases per ticket Band-Aided the pain of dropping ticket sales until 2012. Since then, even those price increases haven’t been enough. According to The Numbers, the average ticket price has more than doubled from $4.35 in 1995 to $8.90 in 2017.

Only $8.90?

I have to say that it has been years since I paid less than $10 a ticket for a major movie. For example, a ticket for “The Last Jedi” goes for $22.49 — not for a family of three, but for just one adult — at one of the AMCs in San Francisco. Not exactly an encouragement to go see it. But there are cheaper movies out there, and there are cheaper cities too, and national averages might not parallel personal experience.

Since Peak-Ticket-Sales in 2002, the average price has jumped 53% from $5.81 to $8.90 in 2017. At the same time, the number of tickets sold has plunged 21%. Connection? Maybe. One thing’s for sure: When ticket sales drop, the industry has to raise prices to make up for the drop; and the more the industry makes up with price increases for dropping ticket sales, the more consumers start looking for alternatives.

Thus overall ticket sales in dollars only inched down 0.8% in 2017 to $11.13 billion. Fewer and fewer people go to the movies, but they pay more and more each time, and as ticket prices have soared (right scale), overall ticket sales in dollars (left scale) are only languishing rather than plunging:

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