The summer of 2017 was a box-office bust: was it just bad movies or is there something bigger going on? The Center’s director explores some answers.

By Jeffrey Cole

This summer, Hollywood reported the worst box office in 25 years. At the film studios, panic began to set in. Studio executives wondered if this was the beginning of the end for large audiences going out to the movies.

What was the cause of the 2017 movie meltdown? Was it Netflix, HBO, Hulu and Amazon, or was it bad movies in the theaters, or both? With so much great content on television, would audiences still make the effort to go to the movies and pay as much as $16 a film?

Some of the panic receded a bit when It became a box office sensation, setting records for both a horror film and a September release. Now, studios and analysts are trying to learn the lessons of why this summer’s box office was the worst since 1992.

“The rules of baseball” for moviemaking

The movie business changed significantly after mass audiences moved to television beginning in the late 1940s and early 1950s. In 1937, the eight major studios released 403 films. In 2016, there were no longer eight major studios, just six, and they released a total of 126 films. Lionsgate – which doesn’t own a square inch of physical studio space — can now be considered a major studio, and it released a whopping 46 movies last year.

In 1937 the studios followed the rules of baseball: when they released one film a week, they knew that many would strike out, some would get a single, fewer doubles and triples, and only a handful would be home runs. When 403 films were released, the studios could be comfortable that all tastes would be accounted for and the box office would be relatively stable. And, continuing the baseball metaphor, the biggest home run hitters also suffered the most strikeouts.

Since so few movies came out in 2017, it’s important for the studios to understand why each film works or doesn’t work. They also must determine whether this summer is a one-time setback or the beginning of a long — or permanent — downward trend.

Every year, Hollywood tries to learn lessons based on its successes and failures: were there too many sequels or not enough? Should the studios rely on big stars because they bring an audience or accept that no one performer can guarantee an audience anymore? Should they stay focused on youth or begin to look at broader audiences?

Looking beyond 2017, we see three developments that provide context for what happened this year; these developments also shed light on the future of movie going.

1. The movie theater business has been shrinking for a long time.

In 1946, moviegoers in North America bought 4.3 billion tickets. Considering the population increase, in order to keep pace, moviegoers today would have had to purchase about 9 billion tickets this year.

Instead, we bought just 1.3 billion tickets.

The movie business is a shadow of its former self.

Sixty years ago, the main reason for the biggest decline was the introduction of television. To counter its losses to television, Hollywood shifted away from a medium that appealed to the broadest audience, and instead focused on youth between the ages of 12 and 24 — the people most likely to go to the movies. Of course, the studios produced a few films each year for other audiences, but the big films with coveted release dates and big budgets were for the young.

Another way to see the movie audience shrinkage is to look at the most successful films ever made. Fox points to Avatar as having the largest box office of all time. Fox is justified in being proud of Avatar‘s financial success, but Avatar is far from being the most popular film ever made. With tickets that cost $9-10 each at the time (plus more for 3D and IMAX), Avatar is hugely successful, but Avatar can’t begin to compare to the popularity of Gone with the Wind, which had an average ticket price of 23 cents, and was seen by far more people in the theater than any other film.

When we look at the lessons learned in 2017, it is important to keep in mind that this shrinkage in the movie business may slow, but is likely to continue.

2. Television has never been so good.

The Golden Age of Television was not the 1950s, it’s right now, thanks to an explosion of new platforms for programming — on cable, through new over-the-top (OTT) content producers like Netflix, Amazon, and in other OTT providers that are beginning to emerge (like Hulu or CBS All Access).

In the past, when television actors became famous, they got out of television as fast as possible and moved to film (George Clooney and Denzel Washington, to name just two). Today the biggest stars are just as likely to be working in 10-part (or so) television series as they are in a big-budget theatrical film.

Netflix currently spends $6 billion a year on original productions and can afford programming such as The Crown (the most expensive television program of all time — for now) that looks as majestic and impressive as any theatrical film. HBO spends $2 billion on content, Apple just entered the market with $1 billion.

Nobody really knows how many billions Amazon spends, but Jeff Bezos can write checks for whatever it takes.

Since most new television purchases are for screens 50 inches or bigger and feature cinema-quality 4K technology, the movie theater’s historical advantage in quality is minimized if not eliminated. A $16 dollar ticket for one movie ticket looks like an indulgence when HBO costs $15 per month, and Netflix offers massive amounts of high-quality original content (as well as old television and movies ) for $11 per month.

This year may be the beginning of a significant and permanent shift in audiences moving toward original television content and away from movie theaters.

3. Betting heavily on young people may now be a mistake.

Today’s teenagers and their older brothers and sisters are more interested in video and content than any generation we have ever seen. But they don’t just watch on conventional screens because they can watch video everywhere — not just at home and in the movie theater.

Our work shows that college students graduating and getting their first apartments are not buying television sets. Instead, they are watching on computers, tablets and — especially — smartphones .

Their parents are quick to tell them they are foolish to watch on a tiny phone screen when they can watch on a 65 inch 4K monitor or go to a massive screen in the theater. But this criticism falls on deaf ears.

Younger audiences in growing numbers like watching on personal screens. In all likelihood, this preference will change when they marry, and especially when they have children and want to watch as a family. But for now, we’re seeing a generational shift toward personal screens and away from big, shared screens.

The studios and theaters have been slow to realize and appreciate that the fastest growing part of the in-theater audience is people over the age of 60. They have the time and the money and they have a lifelong affection for going to the movies. They are also willing to pay premiums for first-class theater seats and better food and alcohol delivered to those seats. But appealing to this age group will require a significant shift — to say the least — in thinking at all of the major studios.

Will lessons be learned?

As in the past, Hollywood will debate the quality of the films being released, and decide whether or not it’s the movies or the audience that is the problem. A focus on film quality, actors, budgets, release schedules, and the like is always useful. But the lessons learned in 2017 will have to be relearned in 2018.

Movie theaters will never go away. Movies are still great entertainment and the best first-date experience ever. There are few things more exciting than going to a highly-anticipated film (like Star Wars VII) with a large audience. This energy will never die.

However, the movie business is changing, and focusing on the particulars of a slate of 2017 films will not solve its problems. There are the bigger forces at work that need to be understood.


Jeffrey Cole is the director of The Center for the Digital Future at USC Annenberg.



See all columns from the Center.

October 5, 2017