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If We Build It, Will They Come?

Movie theater attendance was down in 2011, but Tribeca's COO asks: What can we learn from pro sports?

The preliminary estimate of a 4% decline in movie theater attendance in 2011 vs. 2010 is certainly not good news for the film industry.

That said, if you are in a room filled with the 48 owners of professional sports teams whose teams also saw their attendance decline in the last year or, more specifically, sitting next to any of the 21 team owners who saw their attendance decline by more than 4 percent, you would realize attendance woes are not ours alone.

Attendance at professional sporting events (NFL, NBA, MLB, NHL) in U.S. was flat in 2011 at 132 million. This amounts to about 10% of the 1.2 billion Americans who last year attended movie theaters.

And while the film industry gets bashed over rising ticket prices, on a national average movie ticket prices went up less than 1% from 2010 to 2011. This might look a little high relative to the MLB teams, which raised prices 0.6%. On the other hand, NFL teams raised them 1.1% and the NHL raised them 5.3%.

Many in our industry argue that movie attendance is down because the theaters haven’t been upgraded and the experience stinks… however, it seems facility upgrades and better concessions (and the associated price increases) don’t necessarily hold the answer. Look at the New York Yankees, who recently spent $1.5 billion on a new park but saw attendance drop 3% in 2011, or look at the World Champion St. Louis Cardinals, who play in an almost brand-new stadium and saw attendance drop 6%, or when you look at the Dallas Cowboys, who moved into a new $1.2 billion stadium in 2009 and have seen attendance drop from 2009 to 2010 and again from 2010 to 2011.

In contrast to sports and movie attendance, Broadway raised ticket prices 4% in 2011 and saw attendance up 5%! Spider-Man Turn Off the Dark just set the record for the highest single week gross in Broadway history.

In the first half of 2011, ticket sales for the top 50 music tours were down 2%. However, revenue from these tours was up 11% due to increased ticket prices. And the recent year-end report shows music sales rebounding, albeit slowly. Album sales were up 1% overall, with bright spots like sales of jazz albums, which were up 26%. Adele sold 5.8 albums, of which 1.8 million were digital—the highest ever.

So what does this all mean, and what should we look for in 2012? Here are some thoughts:

1. We in the movie industry are great at looking at ourselves and our shortcomings, but it’s important we spend time looking around at other people’s shortcomings (and successes too) in order to gather learnings and context.

2. While the macro-picture is interesting, it is of limited interest to many of us who work in the industry and are much more focused on how each of our companies and projects perform on an individual basis. So while there might be bad attendance news for some studios coming out of 2011, attendance at Paramount’s films was up 12% and Universal’s 15%. In pro sports, 11 teams posted double-digit gains in 2011, among them the Toronto Blue Jays, whose attendance was up more than 10% despite a worse record. The Cincinnati Reds also posted gains despite losing 12 more games and finishing 3rd, down from their 1st place finish in 2010.

3. Declining attendance at movie theaters or sports stadiums or concerts doesn’t necessarily herald an overall decrease in interest or economic upside from movies, sports or music, as we can see by the growth in TV sports rights fees (the new NFL broadcast deal has fees up 60%) or stabilizing music sales.

4. The focus has to be on the whole film experience: before, during and after the movie, both inside and outside the theater. And while the quality of films and play on the field is of paramount importance, it’s not the answer in and of itself. Some sports teams have done a great job of engaging their fans through the use of new technology and others by creating high-touch experiences at little incremental cost.   For the movie industry it doesn’t just come down to better movies, better concessions and nicer seats (at higher prices). It needs to be about increasing fan engagement and focusing on the quality of the overall experience.


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