Hooray for Hollywood!

Thanks to blockbusters like "Pirates of the Caribbean" and sleepers like "Little Miss Sunshine," it will be an up year at the box office. 2007 looks even better.

By Paul R. La Monica, CNNMoney.com editor at large

NEW YORK (CNNMoney.com) -- Remember all the talk at this time last year about how the movie industry was dead? Uh...scratch that.

With a few weeks left in 2006, movie studios have reason to celebrate. According to figures from box office tracking firm Media By Numbers, there has been $8.57 billion in ticket sales through December 3, up nearly 6 percent from the same time last year. And attendance is up 4 percent.

It was a magical year for Disney. "Pirates of the Caribbean: Dead Man's Chest" was the runaway box office champ, grossing $423.3 million...
...while "Cars", produced by Disney-owned Pixar, came in second with $244.1 million.

Last year, ticket sales and attendance were both lower than they were in 2004, prompting many to wonder if Hollywood's best days were behind it.

Pundits blamed high ticket and concession stand prices, more lavish home entertainment systems and shorter windows between when films hit theaters and were released on DVDs as reasons that more moviegoers were staying home instead of heading to the multiplex.

But the simplest reason for 2005's malaise may have been that many of the movies were not that good. Or rather, not compelling enough to get people off their couches.

"Last year, it was all doom and gloom. But it's a cyclical business and thank goodness, movies were much better this year. They were more appealing this year," said Paul Dergarabedian, president of Encino, Calif.-based Media By Numbers.

This year, in addition to blockbusters like "Pirates of the Caribbean: Dead Man's Chest," "Cars," and "X-Men: The Last Stand", there also have been many less-mainstream movies that have also put up respectable box office figures.

Movies like "Little Miss Sunshine," "The Prestige" and "Jackass: Number Two" all grossed more than $50 million. And "The Devil Wears Prada," "The Departed" and "Borat" have each grossed more than $100 million in the U.S.

Interestingly, there have been fewer huge hits this year than last year. So far, according to figures from Box Office Mojo, another movie industry research firm, only seven movies have cracked the $150 million barrier at the box office. Last year, thirteen movies surpassed that level.

Robert Bucksbaum, owner of Los Angeles-based industry tracking firm Exhibitor Relations, said studios seem to have gotten smarter about marketing this year and realize that not every movie needs to be a huge hit. He said that studios are also being more successful with online promotions catered to specific audiences.

"It used to be that studios would go for broke and target everybody. The future is in more niche marketing," Bucksbaum said. "Studios are looking more at the Internet to get their messages to the right people. Look at MySpace. How huge is that? And it's so cost-effective."

The rebound in the box office has been good news for major media firms that own movie studios. Shares of Walt Disney (Charts), News Corp. (Charts) and Time Warner (Charts), have all posted double-digit percentage gains this year. (Time Warner also owns CNNMoney.com)

Time Warner's Warner Bros. studio has had a tough year at the box office but it has bounced back in recent months thanks to the success of "The Departed" and the computer animated film "Happy Feet."

The one exception is Sony (Charts). Although it actually is leading the box-office market share race this year thanks to hits such as "The Da Vinci Code," "Talladega Nights: The Ballad of Ricky Bobby" and the new James Bond movie, "Casino Royale," shares of Sony have fallen 2 percent this year. The company's movie business represents just a small portion of sales for the Japanese consumer electronics giant.

Smaller studios have also done well on Wall Street. DreamWorks Animation (Charts), which released "Over the Hedge" this year, has gained 19 percent while shares of Lionsgate (Charts), the studio behind successful horror movies "Saw III" and "Hostel" as well as "Tyler Perry's Madea's Family Reunion" are up nearly 50 percent.

And the good news for studios and possibly the two publicly held theater chains Regal Entertainment and Carmike Cinemas is that 2007 could potentially be an even better year at the box office. Regal's stock is up 8 percent this year while Carmike's has fallen 23 percent.

Still, when all is said and done, Dergarabedian and Bucksbaum said that it is unlikely that this year will break the box office record of $9.4 billion, set in 2004.

The movies that are due out later this month lack the firepower of 2005's big year-end releases "The Chronicles of Narnia: The Lion, the Witch and the Wardrobe" and "King Kong."

Dergarabedian said ticket sales should surpass the $9 billion level though, which is significant since last year was the first time the industry failed to reach that level since 2001.

And Bucksbaum and Dergarabedian both said it's possible that 2007 will be a record year. Next May, in particular, should be huge for Hollywood. That's because the third movie in the "Spider-Man," "Shrek" and "Pirates of the Caribbean" franchises are all due out.

This year's "Pirates" film set a record for an opening weekend at the box office, a record that was previously held by the original "Spider-Man" movie from 2002.

So it will be interesting to see if "Spider-Man 3," which comes out on May 4, can set a new record and if so, whether or not "Pirates of the Caribbean: At World's End", due out on May 25 can top that.

And "Shrek the Third," which comes out on May 18, is no slouch either. "Shrek 2" actually beat out "Spider-Man 2" at the box office in 2004. The big green ogre grossed $441.2 million in the U.S. while Spidey pulled in $373.6 million.

"May 2007 could be the biggest box office month in history. That trifecta is completely out of control," said Dergarabedian.

But the rest of the summer looks promising as well. Disney's Pixar unit will have a new movie out called "Ratatouille." News Corp.'s Fox is releasing the long-awaited movie based on the animated TV show "The Simpsons" as well as a "Fantastic Four" sequel. There will also be a new "Harry Potter" film as well as "Ocean's 13" from Warner Bros.

"On paper, 2007 looks phenomenal and could break box office records. Studios are heading in the right direction in terms of what the market wants. There is so much potential out there and it's great for the industry," Bucksbaum said.

The reporter of this story owns shares of Time Warner through his company's 401(k) plan. Top of page

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