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Hollywood's box office flameout
Movie fans are loving DVDs, but not theaters. Maybe it's time for a big change in movie viewing.
May 11, 2005: 9:53 AM EDT
By Krysten Crawford, CNN/Money staff writer
Johnny, Hayden and Angelina are Hollywood's big bets this summer. Will it be bliss or bust at the box office?
Johnny, Hayden and Angelina are Hollywood's big bets this summer. Will it be bliss or bust at the box office?
The sixth and final
The sixth and final "Star Wars" installment promises to be a blockbuster. It could also lure the masses into trying other summer movie fare.
Photo GallerylaunchSee more photos

NEW YORK (CNN/Money) - There are all kinds of possible explanations for why the first weekend of the summer box office was so depressing.

Maybe Orlando Bloom, the young heartthrob who starred in "Kingdom of Heaven," released on Friday, and Paris Hilton, the wealthy hotel-heiress-turned-gossip-generating-minx featured in "House of Wax," aren't ready for the big time.

Maybe the Idaho residents who got a light snowfall over the weekend didn't realize that summer had started and it was time to beeline to the movies.

Perhaps audiences are even more fickle given rising ticket prices and the knowledge that any movie out today will likely be available on home video before summer's end.

Or maybe, it's a combination of all three: uninspiring movies, a shockingly early start to the season, and finicky fans.

"What sells nowadays is excitement," said Gitesh Pandya, a movie industry analyst with "A pretty good movie isn't good enough anymore." To hit at the box office, "a movie has got to be spectacular," he said.

This weekend's opening receipts sank a startling 22 percent from last year, according to industry tracker Exhibitor Relations. Analysts had expected year-over-year numbers to be down, given that 2004 had a stronger inaugural weekend lineup, but not this far down.

It's early yet to declare a box office crisis.

Analysts say that either one of the summer's two anticipated blockbusters, "Star Wars Episode III: Revenge of the Sith" from Lucasfilm Ltd. and "Madagascar" from DreamWorks Animation (Research), could turn mass stupor into a box office stampede. Both films debut later this month, with "Star Wars" up first on May 19. (For more on "Star Wars," click here.)

Still, while no one knows how the summer box office will fare, there are reasons for Hollywood to worry.

The box office has slumped for 11 consecutive weeks, with year-to-date ticket sales down 5.4 percent from last year even as ticket prices rose a moderate 3 percent, to around $6.40 on average, according to Exhibitor Relations. Theater attendance has tumbled about 8 percent.

"This was the worst weekend of the year at the box office and the slowest start to summer we've seen in years," said Paul Dergarabedian, president of Los Angeles-based Exhibitor Relations, who estimates summer ticket sales account for about 40 percent of annual receipts.

And with sales down year-to-date, "there is a lot riding on this summer," said Dergarabedian.

The slump is likely to continue this weekend, too. Jane Fonda's return to the screen in "Monster-in-Law" isn't expected to jolt audiences awake.

Going down, down, down

The declines so far this year aren't anomalies. Audience levels have steadily dropped since 2002, said Dergarabedian. And the only reason 2004 was a record at the domestic box office was due to higher ticket prices.

The softness at the box office comes at a critical time for Hollywood. Not only are DVD sales hitting record levels, but new technologies have created an incipient demand for movies delivered directly via the Internet, over-the-airwaves, satellite dish or cable set-top box.

At the same time, movies have become exorbitantly expensive to market and distribute, and the growth of in-theater advertising, rising ticket prices and disruptive cell phones have made movie-going far less enjoyable.

None of these handicaps matter when a movie hits with audiences. Knowing that, Hollywood bet even more heavily than in years past on a calendar full of remakes of old films, and adaptations of popular television shows or best-selling books.

"A couple of years ago it was 'sequel, sequel, sequel,'" said Dergarabedian, speaking about the summer lineup before this weekend's box office bust. "I think Hollywood is erring on the side of caution by thinking that a concept that has proven to be successful can be a way to hedge its bets and take out some of the risk."

Almost all of the heavily-hyped summer flicks are remakes or TV homages, among them "House of Wax," "The War of the Worlds" from Viacom (Research)-owned Paramount, "Bewitched" from Sony Pictures Entertainment, Paramount's "The Honeymooners," "Mr. and Mrs. Smith" from Twentieth Century Fox Film, Disney's "Herbie: Fully Loaded," and "Charlie and the Chocolate Factory" from Warner Bros.

Pandya, of, thinks the glut of copycat films could turn out to be a bad gamble for studios. The top four box office draws so far this year -- Sony's "Hitch" at No. 1, followed in order by "Robots" from Fox, "The Pacifier" from Disney, and "Are We There Yet?" from Sony -- are all based on original concepts (See correction).

So are the summer season's projected hits, the sixth and final "Star Wars" installment and "Madagascar."

"It might take getting through the whole season to see whether remakes work or not," said Pandya. "But right now they're not selling."

If the early summer trends continue and the box office once more ends the year down, odds are that Hollywood will rethink how they deliver movies.

The end of the box office?

One notable difference this year: The top studios have collectively released about eight fewer films this year and are on track to finish the year with a total 126 releases, or about a dozen less than in 2004, according to Exhibitor Relations.

On top of shrinking the movie supply, another option that analysts point to is an accelerated DVD cycle. Certain movies could have a more limited theater release so as to generate just enough buzz to drive home video sales. This way, analysts say, Hollywood studios can cut back on their soaring marketing and distribution costs and get DVDs, a bigger moneymaker than box office ticket sales, to consumers faster.

One current example, according to Pandya, is "Crash," the star-studded drama about race relations in Los Angeles that opened this past Friday. The movie, said Pandya, "didn't open in 3,000 theaters like everything else." Lions Gate Films, the film's distributor, decided to do a smaller release on the hope the film will find a bigger audience with DVD sales.

A more extreme version of this -- known as direct-to-video, which involves bypassing theaters altogether -- has been happening for years with animation and horror films.

Pandya says faster DVD debuts with more films are possible if the box office slump continues.

That said, Pandya said the box office will never go away completely. "Harry Potter," "Lord of the Rings" and "Spider-Man" are always going to sell buckets of popcorn.

Said Pandya: "The big franchises are always going to sell. There's a level of excitement around them that sells."

Want a sneak peek at coming movies? Click here.

Correction: An earlier version gave an incorrect credit for "The Pacifier." It is a Disney film. CNN/Money regrets the error.  Top of page


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