Summer recently ended and with it finished the biggest season for the U.S. Box Office. This time period is generally considered to run between the first weekend of May and the end of Labor Day weekend. While this spans only a third of the year this summer season contributes close to half of the total annual U.S. box office. Unfortunately the amount of tickets sold this summer was the least since 1997. Based on total gross revenues however, this summer was above 2009 by a scant 0.2%. Comparing the entire year of 2010 so far to 2009 (up through the end of week 36) revenues are up a more decent 4%. The better cumulative performance is thanks mostly to Avatar, Alice in Wonderland and other movies that drew strong crowds during the first 17 weeks of the year.

The fact is that the time between January and May hold the greatest potential for growth given its lower historical performance. Double-digit year-over-year growth occured during the first 9 weeks of 2009 and again during the adjoining 7 week “Spring” period of 2010. Hollywood has been slowly and steadily releasing more bigger budget titles during this period, and over the next five years there may be a smaller difference between the business generated here and during the summer season.

Still, the summer is where the action is and this summer also had some high expectations to live up. Just two years ago The Dark Knight was released (see the large spike during week 29 of 2008) and made the biggest opening weekend of all time. There were also strong titles during the summer 2009 like of X-Men Origins: Wolverine and Star Trek which provided a strong start to the season (note the large spikes around $200 million between weeks 18 and 21 of 2009). In comparison the 2010 summer had a very poor start, puncuated by the worst Memorial Day weekend in 15 years (note week 23 of 2010 on the graph for the complete aftermath of that debacle).

I believe that this pitiful performance over was due to the low-quality of films released that weekend: Sex and the City 2 and Prince of Persia: The Sands of Time have already faded from memory if not from their studios’ balance sheets. I still think that if Fox missed a big opportunity by not releasing The A-Team, a underrated action movie with a recognized brand on Memorial Day weekend- “four soldiers of fortune” is about as appropriate as it gets. I guess research indicated that B.A. Barracus wouldn’t stand up to Carry’s fanclub and videogamers. The real challenge for the studios is to drive a low-quality movie in front of bad reviews which are gaining more steam every day from internet chatter (site reviews, Facebook comments, bad Tweets, etc.). It’s so easy to get word-of-mouth circulating these days that I wonder how a studio can market against it.

For now the safer bet may be just to push releases towards the outer edges of summer and harboring only the strongest titles during Memorial Day and Labor Day weekends. The tougher solution would be to fixing bad titles during production instead of during marketing.

During 2008 and 2009 the domestic box office grew by double digits, outpacing the overall annual growth. This trend is likely to repeat this year as first quarter results passed $2.4 billion, 10.2% over last year and over a third bigger than where it was in 2006.

This strong start should provide a good base for 2010, probably allowing Hollywood to break past $10 billion once again.

In a March 2009 post I referenced that a Variety article that described the first quarter ‘box office boom’ as being propelled by the distribution of movies with large production budgets during that period. In follow-up post I graphed the biggest budget releases by month between 2005 and 2009. The results indicated that March budgets were indeed gradually growing whereas budgets for January and February releases had stagnated.

The following graph is updated for this year’s releases. During the first quarter of this year, the highest budgets average out to $143 million, 67% higher than the 2009 releases.

Of course, a good portion of this year’s box office, around 18%, is due to Avatar, which was released in December of 2009, so not all of the 2010′s first quarter box office growth can be attributed to bigger budget releases during that period. In any case this year’s success will likely incentivize studios to continue placing bigger movies early in the year.

James Cameron’s latest film Avatar has had yet another strong weekend at the box office, making $50.3 million and breaking the record for biggest four weekend gross, previously held by Cameron’s penultimate film Titanic.

Despite having not such a spectacular opening weekend, Avatar has maintained dropped off less than most movies and has already made more than $400 million, faster than any other movie except The Dark Knight in 2008. If Avatar continues along a similar pace it will overtake that movie and possibly become one the highest domestic grosser of all time.

A great deal of Avatar’s box office performance can be attributed to how many customers have decided to see the movie in 3-D Imax theaters, where tickets are significantly more expensive (40% more in my market). The more expensive Imax tickets have cushioned Avatar’s box office performance and constitute about 13% of weekend sales.

This is all proof that 3-D signficantly increases the value of video content. Other media companies have reached a similar conclusion and last week there were also many announcements last week of new 3-D initiatives:

• ESPN and Discovery Communications unveiled plans to launch the first 3-D networks, both of which would be partly subsidized by Sony.
• DirecTV announced also announced plans for a 3-D channel, although it would be pay-per-view and backed by Panasonic.
• Walt Disney Studios and Sony announced plans to release 3D movies on Blu-ray discs.

Although less than 1% of television sets in the United States can display 3-D content, expect to hear about more 3-D ventures in the near future, and to be wearing weird glasses in front of your television. Perhaps Ray-Ban will design some more stylish shades.

Avatar, James Cameron’s new film, premiered to the public late last night. Since James Cameron’s last movie, Titanic, is currently the number one domestic grossing movie of all time, in the long term Avatar is expected to do well and a lot of articles are appearing that are trying to predict and compare its potential success. The Economist published a chart yesterday comparing the top domestic grossers, ranked by inflation-adjusted dollars as well as accounting for multiple theatrical releases. Under these parameters Titanic drops to the sixth position. The following graph lists the same movies, based on number of tickets sold instead of inflation-adjusted dollars, which is basically the same metric.

Based on this information, it is arguable that Gone with the Wind was a more popular movie than Titanic based on this graph. Incidentally, for Avatar to match Titanic’s domestic performance it’s sales would have to be $900 million, well past the $533 million mark of last year’s top domestic grosser, The Dark Knight. Regardless, this wouldn’t be a balanced comparison since it doesn’t take into consideration a few factors.

First of all, media entertainment options are much more abundant than they were in 1939 and the potential for a mass hit which attracts the same numbers of individuals is much rarer today. While movies can be deemed to be blockbusters by today’s relative standards, they do not live up the moniker as determined by standards of Gone with the Wind, Ben Hur and Jaws.

Secondly, theatrical exhibition windows are much shorter now than in 1939 or even 1997. This is due to competition from more entertainment options, and in part due to pressures to push movies towards other release windows like home video and TV.

Lastly, and closely related to the second point, a movie’s success is not measured now by merely domestic box office performance. This was pretty much the only standard in 1939 but today blockbusters make as much revenues or more in international markets, as well as in ancillary areas such as home video and broadcast television rights. Titanic made $1.2 billion in home video sales and rentals, more than double its domestic theatrical sales.

Therefore while Avatar may not sell as many tickets in the U.S. as Gone with the Wind, or while it may not gross as much internationally as Titanic, it may still end up generating more business than either title based on home video revenues, video game sales and other secondary businesses. Unfortunately it is very hard to procure such detailed information so true performance comparison will ever be made, at least publicly.