The Movie Industry

According to Price Waterhouse Coopers, ‘Global Entertainment and Media Outlook 2004-2008 report’ the film industry is projected to significantly increase in revenue. The report states, “We project filmed entertainment spending in the United States, EMEA (Europe, Middle East, and Africa), Asia/Pacific, Latin America, and Canada will rise at a 7.5 percent compound annual rate, reaching $108 billion in 2008 from $75.3 billion in 2003. EMEA will be the fastest-growing region, rising by 10.3 percent compounded annually to $36.9 billion in 2008 compared with $22.6 billion in 2003. The U.S. market will expand at a 6.3 percent rate, from $34.3 billion in 2003 to $46.6 billion in 2008. Spending in Asia/Pacific will increase from $13.3 billion to $17.3 billion in the five-year period, growing at a 5.4 percent compound annual rate. Filmed entertainment in Latin America will total $1.6 billion in 2008, up from $1.3 billion in 2003, representing a 4.6 percent gain compounded annually. Spending in Canada will rise from $3.9 billion in 2003 to $5.6 billion in 2008, 7.7 percent compounded annually”.

The motion picture industry has become reliant on independent production companies to produce the bulk of the movies distributed. Moreover, numerous new markets have opened up with the birth of home video, DVD, cable, satellite television, the internet, and the explosive growth of foreign box office receipts. Today, the domestic box office receipts for a typical film contribute only 17% of a film's total revenue. This drop is not the result of a withering domestic box office, however. On the contrary, domestic ticket sales have remained constant. These new "ancillary" markets, including the soundtrack market, have simply added onto the revenue stream for feature films. Foreign countries are extremely hungry for American content. And the advent of global 500-channel digitally distributed entertainment virtually guarantees the continued growth of niche markets which cater to a wide variety of tastes.

Today is the era of the independent filmmaker. When the average Hollywood film costs $90 million to produce, high-quality lower budgeted independent films (under $15 million) have rushed in to steal the show - not only at the box office but also at the awards ceremonies. This trend can be seen today with the independent documentary which shook Hollywood major studios when the “March of the Penguins” out did most of the recently released major studio films bringing in thus far in box office sales alone over $75 million dollars. Since the movie is still in major theaters, the total money from second-runs, theatrical releases, home video, pay-per-view, cable, or broadcast television, could more than triple the total. The success of independent films at the Oscars and other award shows has also increased over the years.