THE SCREENING OF AMERICA
THE INDUSTRY AT A CROSSROADS
By Jill Bensley
Text of a speech to the Entertainment Real Estate Forum
June, 1997
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Everywhere you turn these days, another mega-plex cinema is going up. From 10-screen stadium seating venues to the
behemoth 30-screen complexes announced, the country (or should I say the world) is being mega-screened. What is
this doing to the industry, to supply and demand factors? Where will the equilibrium point be, and when will the country
be overscreened?
We undertook an analysis of the data to provide an answer to these questions. Lucky for us, the United States Census
and the International Motion Picture Almanac provide superb background numbers, admission, and number of screens
and admission revenue dating back to 1946! In my field, it is rare when you can play with trends and series dating back
50 years!
The fifty year trend is amazing, and shows that when movies were young (and before television), people just couldn't
get enough of them:
Admission Revenue Admissions ($ millions)
1946 4,067,200 1,692.0
1950 3,017,500 1,379.0
1960 1,304,500 984.4
1970 920,600 1,492.2
1980 1,021,500 2,748.5
1990 1,166,600 5,021.6
1996 1,338,600 5,911.5
Adjusted for the consumer price index, movie grosses from 1960 (when annual admission total was the same as 1996
were as follows:
CPI Adjusted
Annual Attendance Gross Revenue
1960 1,304,500 $5,217.9
1970 920,600 3,722.7
1980 1,021,500 5,233.5
1990 1,166,600 6,028.2
1996 1,338,600 5,911.5
Adjusting for inflation, revenue in the 36-year period has in effect, remained constant!
Trends - Number of Screens, Sales Per Screen
Another interesting analysis looks at number of screens and sales per screen. In 1992, the US Census Department did
a marvelous analysis of the movie exhibition industry and actually gave us all their secret data on national movie
admission revenue.
Number of screens increased as follows for the 1960 to 1996 period:
Year Number of Screens
1960 12,291
1970 13,750
1980 17,675
1990 26,588
1996 29,505
It is extremely interesting to note that the average annual increase per period was around 900 per year in the 1980 to
1990 decade, and for the one year 1995-1996, annual screen additions is estimated at 1,700! Let's hope this doesn't
become an average for the next decade!
The 1992 Census gave us a unique look into total admission revenues and revenues by size of complex. In 1992,
percent revenue by size of establishment was as follows:
Percent Total Cinema
Number of Screens Admission Revenue
Single Screen 7.6%
2 Screens 7.9
3 to 4 19.4
5 to 6 43.3
9+ 21.8
Total 100.0
Receipts are proportionally higher for the cinemas of 5 screens or more, accounting for 65% of annual admission
revenue, but only 31% of establishments. Average revenue per establishment is necessarily highest among the larger
cinemas.
Sales Per Screen, Number of Screens
As number of screens has increased over the past 36 years, average sales per screen have declined. In 1960, when we
had only 12,000 screens, average revenue was approximately $408,000 in constant 1996 dollars. By 1996, when we
had 29,000 screens, average revenue per screen had dropped to half of that, at $200,300 per screen.
An interesting juxtaposition of sales per screen versus number of screens shows us that the national appetite for cinema,
as evidenced by expenditure has not changed much over the past 36 years.
PER CAPITA MOVIE CONSUMPTION
What's happened to the national appetite for movies in the last 36 years? From 1960 through 1996 the trend is shown
as follows:
Average Annual Per Capita
Year Movie Trips
1960 7.1
1970 7.3
1980 4.5
1990 4.7
1996 5.1
In 1960, the average American went to the movies more than 7 times annually. By 1980, the average had decreased to
4 and a half, and has slowly moved up, to a little over five trips to the cinema annually in 1996.
Per capita appetite for movies has declined 26 percent in the period, in constant 1996 dollars. In the period 1990
through 1996, adjusted per capita expenditure for movies has declined 9 percent.
THE LOS ANGELES MARKET
Always on the forefront of entertainment development, Los Angeles is already showing the signs of overscreening. In
the 1995 to 1996 period, three new stadium seating mega-plex cinemas were opened including the Magic Johnson
12-screen in the Crenshaw district, the 16-plex AMC Promenade in woodland Hills, and the 16-plex AMC Norwalk
Cinema. Annual admission revenue at several major movie houses in the region (including the Cineplex Odeon at
Universal and the AMC Century City 14) have dropped from 5 to 20 percent, while the rest of the country has shown
a 7 percent increase in admission gross in the year.
SUMMARY
People are neither going to the movies more, nor spending more on the movies than in the past. They are, however,
showing a preference for the larger screen, stadium seating movie palaces. The industry will surely undergo a shakeout
in the next decade, and the winners will be those chains able to quickly capitalize on consumer preferences and with the
staying power to ride out the storm.