Surging Rental Market Contributes to Slouching Box Office, According to New Harris Poll

Surging Rental Market Contributes to Slouching Box Office, According to New Harris Poll

ROCHESTER, N.Y., Aug. 11 /PRNewswire/ -- A recent study by the Media and Entertainment team at Harris Interactive(R) explored the confluence of long- and short-term trends that lay behind the year-to-year decline in box office revenues.

Box office revenues declined from $4.7 billion in the first half of 2004 to $4.3 billion in the first half of 2005.(1) At one stretch, weekend box office receipts were down year-to-year for 19 weeks running. While the streak was broken a few weeks ago, a few large questions linger.

Who is missing from the picture?

According to the Harris Interactive study, 30 percent of American adults say they have seen fewer movies in theatres this year than last year, while only 15 percent say they have seen more. "A number of explanations have been offered for the decline in the box office receipts in the first half of the year," says Harris Interactive Media and Entertainment research manager, Greg Durkin. "But a lot of them, such as rising ticket prices or more people watching movies on DVD, are trends that we've seen for years, so it's not clear why we'd only see a year-to-year box office revenue decline this year."

As compared to this year's films, more of the films in the market last year were broad-reaching. For example, no movie this year has brought out as many moviegoers in the over 58 age category as Passion of the Christ did last year. One in five (20%) "Matures" report having seen Passion in the theatre last year. The most popular movie for that age bracket this year has been Star Wars: Episode III, which only 12% of Matures have seen.

Durkin observes, "Few movies can penetrate the older audiences, which further supports the unorthodox performance of Passion of the Christ last year."

Further evidence of the relative weakness of the product flow this year can be found in the numbers who say they saw each of the top movies from the first half of 2005 and 2004 in theatres. Star Wars: Episode III is the only movie this year seen by at least 20 percent of adults, while last year at that time Passion, Shrek, Harry Potter, and The Day After Tomorrow all reached 20 percent or higher.

In fact, 18 percent of Americans who saw Passion of the Christ in theatres last year say they did not see any movies in theatres during the first half of this year. Nor did 11 percent of those who saw Harry Potter: The Prisoner of Azkaban. Six to nine percent of those who saw most other leading titles from the first half of 2004 such as Shrek 2, The Day After Tomorrow, 50 First Dates, Troy, and Van Helsing did not see any movies in theatres in the first half of 2005.

Impact of competing industries on the box office

Product flow alone is not the only reason behind the decline in box office revenues. Among those who saw fewer movies in the first half of this year than the first half of last year, ticket prices (49%) and time (40%) are big factors affecting their theatre-going behaviors. More than a third says DVDs come out so quickly so they are willing to wait (36%) and that they are watching more movies that they rent on DVD (35%) - while one-third (33%) say the reason is that the movies this year aren't as good.

"Indeed, dissatisfaction with the theatrical experience and the increasing attractiveness of home entertainment as an alternative do seem to play roles," says Durkin. "And, while relative to the value offered by a DVD, movie tickets may seem expensive, there are signs that the growth in DVD sell-through market over the past few years is beginning to slow down."

Another recent Harris Interactive survey of 5,371 active DVD buyers within the core market of 15-39 year olds finds that just 11 percent expect to buy more DVDs in the next six months than during the last, compared to the 15 percent who expect to buy fewer and the 74 percent who expect no change in their purchase levels.(2)

Says Durkin, "The real surprise is the growth in the rental market." Rentrak, an industry source for rental transaction data, reports that Americans rented more than 1 billion DVDs during the first 26 weeks of 2005, an increase of 17.7 percent from 856.5 million units rented last year. Leading the charge, subscription rental service Netflix's 2nd quarter revenues rose 37 percent year-to-year. In addition to offering its own subscription rental service, rental market leader Blockbuster ran their largest promotional campaign in years, boasting "No More Late Fees" in an effort to enhance its traditional business.

"The ever shorter time between the theatrical and home video release of movies, DVD home delivery services, and rapidly improving home theater systems certainly make it more enticing to stay home." says Durkin.

TABLE 1
MOVIES SEEN IN LAST YEAR AT THEATRES
"Which of the following movies did you see in theatres last year?"

Base: All Adults

Echo Baby
Boomers Gen X Boomers Matures
Total Aged 18-27 Aged 28-39 Aged 40-58 Aged 59+
(n=2339) (n=322) (n=500) (n=803) (n=714)
% % % % %
Shrek 2 28 37 38 29 10
Passion of
the Christ 25 23 27 28 20
Harry Potter
and the Prisoner
of Azkaban 24 30 31 24 13
The Day After
Tomorrow 20 34 22 21 7
50 First Dates 15 26 18 13 6
Troy 14 23 17 12 8
Van Helsing 14 19 21 14 4
Starsky and Hutch 10 17 13 8 4
Mean Girls 10 17 14 9 2
Along Came Polly 9 11 14 8 4
None of these 40 25 25 40 64

TABLE 2
MOVIES SEEN THIS YEAR AT THEATRES
"Which of the following movies have you seen in theatres this year?"

Base: All Adults

Echo Gen X Baby
Boomers Aged Boomers Matures
Total Aged 18-27 28-39 Aged 40-58 Aged 59+
(n=2339) (n=500) (n=322) (n=803) (n=714)
% % % % %
Star Wars
Episode III
- Revenge of
the Sith 27 42 41 22 12
Batman Begins 13 28 18 8 5
Hitch 12 20 15 12 5
Mr. and Mrs. Smith 12 27 14 8 6
Madagascar 10 10 16 9 4
The Longest Yard 8 15 8 7 4
Robots 7 7 10 8 3
The Pacifier 7 9 8 6 5
Monster-in-Law 6 8 5 7 5
Are We There Yet? 6 7 7 7 4
None of these 48 23 33 53 73

TABLE 3
NUMBER OF MOVIES SEEN IN THEATERS THIS YEAR
"How many movies have you seen in theatres this year?"

Base: All Adults

Total
(n=2339)
%
0 35
1 14
2 12
3 9
4 7
5 6
6 4
7 2
8 2
9 *
10 or more 9

* indicates response by fewer than 0.5%

TABLE 4
NUMBER OF MOVIES SEEN IN THEATRES THIS YEAR
"How many movies have you seen in theaters this year?"

Base: All Adults

Adults who saw specific movie in theatre last year

Passion 50 The Day
of the First After
Total Christ Shrek 2 Dates Tomorrow Troy
(n=2339) (n=599) (n=626) (n=310) (n=415) (n=309)
% % % % % %
0 35 18 7 7 8 6
1 or more 65 82 93 93 92 94

Adults who saw specific movie in theatre last year

Harry
Potter &
The
Prisoner Along
of Van Starsky Came Mean
Azkaban Helsing & Hutch Polly Girls
(n=564) (n=300) (n=195) (n=190) (n=190)
% % % % %
0 11 9 8 7 5
1 or more 89 91 92 93 95

TABLE 5
NUMBER OF MOVIES SEEN IN THEATRES THIS YEAR
"How many movies have you seen in theaters this year?"

Base: All Adults

Adults who saw specific movie in theatre this year
Star
Wars:
Episode
III: The
Revenge Longest
Total of the Sith Hitch Madagascar Yard Robots
(n=2339) (n=617) (n=253) (n=228) (n=163) (n=169)
% % % % % %
0 35 * * * * 1
1 14 11 2 8 2 2
2 or more 51 89 98 92 98 97

Adults who saw specific movie in theatre this year
Mr.& Are We
Batman Mrs. The There Monster
Begins Smith Pacifier Yet? in Law
(n=282) (n=267) (n=168) (n=108) (n=133)
% % % % %
0 * * 2 1 *
1 1 1 2 11 3
2 or more 99 99 96 88 97

TABLE 6

SEEN MORE, FEWER OR SAME NUMBER OF MOVIES "Compared to the first six months of 2004, have you seen more, fewer, or about

the same number of movies in theatres in the first six months of this year?"

Base: All Adults

Total
(n=2339)
%
I saw more movies in theatres in the first
half of this year 15
I saw fewer movies in theatres in the first half
of this year 30
I saw about the same number of movies in theatres
in the first half of this year 43
Not sure 12

TABLE 7
REASONS FOR SEEING FEWER MOVIES
"Why have you seen fewer movies this year than last year?"

Base: Adults who saw fewer movies in first half of 2005 than in first half
of 2004

Total
(n=709)
%
Shift to Home Entertainment (Net) 66
Movies come out on DVD so quickly now, I don't
mind waiting. 36
I'm watching more movies that I rent on DVD. 33
I'm watching more movies that I own on DVD. 20
I'm watching more television. 16
My home entertainment system has gotten much
better in the last year. 14
I'm watching more movies through Video on Demand 10
Dissatisfaction with theatrical experience (Net) 53
Ticket prices have gotten too high. 49
I don't like the advertising before the movies
at the theatre. 14
Time Constraints (Net) 44
I just haven't had the time this year. 40
I'm spending more time traveling or on vacation
this year. 5
The new movies this year haven't been as good. 35
Other 8

Note: Percentages do not add up to 100% because multiple responses were allowed

TABLE 8

MOST IMPORTANT REASON SEEING FEWER MOVIES IN THEATRES

"Which of the following is the most important reason why you have seen fewer

movies this year?"

Base: Adults who saw fewer movies in first half of 2005 than in first half
of 2004

Total
(n=709)
%
Shift to Home Entertainment (Net) 30
I'm watching more movies that I rent on DVD. 9
Movies come out on DVD so quickly now, I don't
mind waiting. 8
My home entertainment system has gotten better
in the last year. 4
I'm watching more television. 4
I'm watching more movies that I own on DVD. 4
I'm watching more movies through Video on Demand 1
Dissatisfaction with theatrical experience (Net) 23
Ticket prices have gotten too high. 22
I don't like the advertising before the movies
at the theatre. 1
Time Constraints (Net) 23
I just haven't had the time this year. 22
I'm spending more time traveling or on
vacation this year. 1
The new movies this year haven't been as good. 15
Other 9

Note: Percentages may not add up exactly to 100% due to rounding.

Methodology

The Harris Poll(R) was conducted online within the United States between July 12 and 18, 2005 among a nationwide cross section of 2,339 adults (aged 18 and over). Figures for age, sex, race, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was also used to adjust for respondents' propensity to be online.

Though this online sample is not a probability sample, in theory, with probability samples of this size, one could say with 95 percent certainty that the results for the overall sample have a sampling error of plus or minus 2 percentage points. Data from sub-samples will have higher and varied sampling error. Unfortunately, there are several other possible sources of error in all polls or surveys that are probably more serious than theoretical calculations of sampling error. They include refusals to be interviewed (nonresponse), question wording and question order, and weighting. It is impossible to quantify the errors that may result from these factors.

These statements conform to the principles of disclosure of the National Council on Public Polls.

About Harris Interactive(R)

Harris Interactive Inc. (www.harrisinteractive.com), the 13th largest market research firm in the world, is a Rochester, NY-based global research company that blends premier strategic consulting with innovative and efficient methods of investigation, analysis and application. Known for The Harris Poll(R) and for pioneering Internet-based research methods, Harris Interactive conducts proprietary and public research to help its clients achieve clear, material and enduring results.

Harris Interactive combines its intellectual capital, databases and technology to advance market leadership through its U.S. offices and wholly owned subsidiaries, HI Europe in London (www.hieurope.com), Novatris in Paris (www.novatris.com), and through an independent global network of affiliate market research companies. EOE M/F/D/V.

To become a member of the Harris Poll Online(SM) and be invited to participate in future online surveys, www.harrispollonline.com.

Press Contacts:
Nancy Wong
Harris Interactive
585-214-7316

Kelly Gullo
Harris Interactive
585-214-7172

The Harris Poll(R) #62, August 11, 2005
By Greg Durkin, Media and Entertainment Research Manager, Harris
Interactive.

(1) Nielsen EDI, Inc.
(2) Harris Interactive survey referred to as the PSP Impact Study - a
syndicated study about the PlayStation Portable and Universal Media
Disc (UMD) movies conducted online in the U.S. between June 14 and 27,
2005 among 10,368 individuals between ages 15 and 39.

Source: Harris Interactive

CONTACT: Press Contacts, Nancy Wong, +1-585-214-7316, or Kelly Gullo,
+1-585-214-7172, both of Harris Interactive

Web site: http://www.harrisinteractive.com/

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