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.

The second installment of the “Twilight Saga,” New Moon, had an extremely successful opening last weekend, grossing $142,839,137 domestically, which is the the third highest weekend opening of all time. Unfortunately, the following weekend the movie made substantially less substantially less, only $42,870,031, a drop of over 70% which is much greater than what most movies experience. On average, for the top 100 grossing movies of 2008, titles dropped 50% on the second weekend. Out of the top 100 openings of all time, only New Moon has dropped over 70%. So how or why did New Moon lose its shine?

One factor is surely reviews. Looking at the top 100 second weekend drops it is clear that many of the movies were simply bad. Scathing reviews from critics and bad word of mouth from opening weekend customers can obviously deter people from seeing a movie. An approximation for this relationship can be seen by graphing a movie’s box office (BO) drop to its Rotten Tomatoes (RT) score, a well known index that  averages critics’ reviews into a simple average. Titles that mark above 60% are deemed ‘fresh’ while those below are ‘rotten.’ Taking the titles that had BO drops of over over 70%, in terms of average gross per theater, and plotting them against their RT scores yielded the following graph.

The two biggest drops  of 83% and 82% were  Gigli and Captivity, who both scored less than 10% on the Tomatometer. New Moon was in the upper left-hand quadrant of the group, with a 30% RT Score and a 70% box office drop. While most of the movies that dropped more than 70% were ‘rotten’ there was still a low correlation in this group between RT scores and BO drops. Certain movies with good reviews, like Hellboy II, Jackass Number Two and Borat, still dropped a lot during their second weekend. At the same time most “rotten” titles don’t drop over 70% or even 60% after opening weekend so it’s clear that there must be something else to explain the demise of New Moon.

The other factors that explain BO drops are not quantifiable and are related to its target audience. Earlier this year I studied the top 100 movies of 2008 in terms box office gross and I noted that certain titles were ‘sprinters’, quickly losing box office steam after the first weekend, while others were ‘marathoners’, keeping a steady earnings pace for much longer stretches. I also noticed that most of the ‘sprinters’ like Cloverfield, Saw V and Meet the Spartans were targeted towards teens or young adults. It makes sense that heavily hyped movies draws immense traffic from teens on opening weekend. Other titles, especially horror or science fiction franchises, while not exclusively aimed at teens, still fit the ‘sprinter’ modus operandi, since they attract extreme loyal niche audiences who have to see the movie during its opening weekend.

New Moon is clearly a ‘sprinter’ since it’s in the horror/fantasy genre, it’s aimed mostly at teens and young adults, and it has a loyal fanbase. Given these circumstances it should not be surprising that it dropped so much during its second weekend, even if there were no major openings this past Thanksgiving weekend- an oversight perhaps of other studios who overestimated the potential competition from Twilight’s second coming.

The summer ended today and it seems to have been a mediocre season for Hollywood. The total U.S. box office gross between Memorial Day and Labor Day was $4.3 billion, which is 1.4% less than 2008 but 4% above 2007 per Variety. At the beginning of the summer the box office was 24% above last year but it now stands less than a third.

So how did the year-over-year growth drop so much over 36 weeks? First of all Hollywood had an unusually strong first quarter and it was simply difficult to maintain such a large difference given the inherent volatility of movie attendance. Secondly the summer season is much more important; the average summer weekly gross is 40% more than other seasons. The summer is when the industry makes it or breaks it.

Lastly the 2008 summer was simply hot, with more stronger releases like The Dark Knight, grossed over $500 million domestically, as well as Iron Man and Indiana Jones and the Kingdom of the Crystal Skull which both made more than $300 million. So far this summer only one movie, Transformers: Revenge of the Fallen, has passed the $300 million mark. Looking forward the total 2009 box office is $7.4 billion which is 7% above last year so it should still be a strong year for Hollywood.

Update: Check out a Kim Master’s posting at The Daily Beast, “Hollywood’s Fake Math”,  which is a bit more negative in its assessment of the summer theatrical movie performance since it bases the comparison on tickets and not dollars.

This weekend Quentin Tarantino’s new movie Inglorious Basterds opened up in the U.S., making $38.1 million over the weekend, giving it the glorious distinction of highest-grossing opening for a movie released in the second half of August. This opening is also the highest of any Tarantino movie, both on an overall and per-theater basis, and far greater than of other movies of a similar genre. Perhaps most importantly for Tarantino this opening is a tremendous improvement over his last movie, Grindhouse, which had a horrific opening of $11.6 million.

By applying appropriate ticket prices for each of the release years, however, it becomes apparent that Saving Private Ryan had a bigger opening weekend, selling about 23% more tickets than Inglorious Basterds.

In any case, given its strong start, and mostly positive reviews (88% on the Tomatometer), Inglorious Basterds can be expected to largely well over the long run. How well you may ask? Excluding Reservoir Dogs, Pulp Fiction and Jackie Brown, on average these movies made 30% of their total U.S. box office during their opening weekend. This correlates with the rough third I found with the top 100 movies of 2008. Therefore, Inglorious Basterds should make around $122 million. Of course, if other hit movies don’t appear to show up Basterds, the movie might turn out to have serious “legs” similar to Tropic Thunder, a 2008 August release whose opening weekend of $25.8 million resulted to be only 23% of its final tally of $110.5 million. Legs this long would allow Inglorious Basterds to gross $165.5 million, which may end up placing it among the top 10 movies of 2009. That would be glorious indeed.

This week The Hangover became the all time top R-Rated comedy in terms of domestic box office. It also currently ranked as the #57 domestic grossing movie of all time. This is a big achievement, since comedies don’t normally attract large audiences. Perhaps moviegoers simply prefer to pay $10 to see an big-budget action movie or a movie with lauded Hollywood actors. In any case the ticket sales speak for themselves. Out of the top 20 domestic grossers of all time, none are comedies. Out of the current top 100 domestic grossers of all time, not including any animated movies, only are nine comedies:

1. Meet The Fockers (#39)
2. Bruce Almighty (#54)
3. My Big Fat Greek Wedding (#57)
4. The Hangover (#58)
5. Beverly Hills Cop (#60)
6. Mrs. Doubtfire (#72)
7. The Wedding Crashers (#85)
8. Austin Powers in Goldmember (#82)
9. Austin Powers: The Spy Who Shagged Me (#88)

Out of this list of top comedy performers, only three are R-rated: The Hangover, Beverly Hills Cop and The Wedding Crashers- an R-rating inherently limits the potential audience of any title. Given this ratings barrier and the genre’s historical performance, top-rated R comedies can almost be considered overachieving misfits.

Note that although The Hangover has surpassed Beverly Hills Cop in terms of gross revenues, it has yet to reach half of the latter’s ticket sales. The Hangover has had the benefit of higher ticket prices, Beverly Hills Cop had the benefit of a longer theatrical run.

(Side note: See how Scary Movie was the strongest opener, but lost steam quicker than others? This fad effect is typical of movies targeted at teens.)

Beverly Hills Cop was in theaters for over 33 weeks, selling almost 70 million tickets. Given today’s ticket prices, to surpass this The Hangover would have to gross just over $500 million; this is highly improbable given that the top R-rated grosser, The Passion of The Christ, has sold only $320 million.

The difficulty in comparing these two titles reflects how much the movie industry has changed. In 1984, when Beverly Hills Cop was released, there were less entertainment alternatives, theatrical release windows were much longer, and less consumers opted to wait for titles to be released on home video. Still, the 69.9 million tickets that Beverly Hills Cop sold is an undeniable achievement of how many people saw the movie and a more true comparison of box office performance. More impressive still would be to gauge the amount of tickets sold as a percentage of the population, which was drastically lower 15 years ago.

In any case both movies are very funny. Go watch The Hangover if you haven’t already. You won’t regret it.

Two weeks ago I noted how the U.S. domestic box office has been outperforming on a year-to-date basis (YTD). Figures through mid July tally ticket sales at $5.9 billion, up 15% YTD.

Looking at the cumulative ticket sales a large growth occurred during the first part of the year. Up through the first “third” of this year (the first 17 weeks right before the summer season as of the first week of May), ticket sales totaled $3.1 billion, about 22% more than the same period last year.

However, looking at the just the summer, between weeks 18 and 28 (highlighted in yellow below), the performance has been less outstanding. For this period, 2009 ticket sales stand at $2.8 billion, about 7.8% more than last summer’s sales at the same point.

It is possible that Hollywood had a stronger first quarter because of stronger titles or stronger demand. In another post I’ve noted how few big budget films open up during the first quarter and how this may be an opportunity for Hollywood. During the beginning of the year there was speculation that the recession was creating a need for “escapism” and thereby driving greater movie attendance.

In any case it seems that attendance growth is dissipating and that the rest of the summer will continue along the same trend. Although this past weekend Harry Potter and the Half Blood Prince opened up strong to $77.8 million, this is half of the $158.4 million The Dark Knight made during the same weekend last year during its opening. Comparing total ticket sales for the top 12 performers during the same weekend, 2009 also undperforms 2008: $152.2 million to $253.6 million. Considering that The Dark Knight went on to be the number one movie in 2009, grossing $441.6 million domestically, it may be difficult for Harry Potter and the rest of the pack to keep up. Given that I don’t see any with true blockbuster caliber in the pipeline during the next seven weeks of this summer, it is probable that the lead 2009′s box office has over last year will lessen.

As I mentioned in a March posting, 2009 is certainly looking like a banner year for Hollywood. The domestic box office continues to perform strongly, indicating that it will make more than $10 billion this year. So far the U.S. box office has made $5.47 billion, about 11% more compared to the same point in last year.

Taking into account all of the past four years, the average take at this point has been 50.5% of the total annual domestic box office. Applying that average as a multiple to the current take of $5.47 billion, the final box office tally of 2009 would be $10.847 billion, a bit north of the $10.77 billion that I estimated in March.

After looking at the top money makers for Memorial Day weekend I got curious about how much more money is made on holiday weekends. After all so many high profile movies are released on holiday weekends; they must make significantly more money than the average weekend.

I complied the total weekend grosses posted at Box Office Mojo (for the top 12 movies each weekend) and counted only the grosses between Friday and Sunday for holiday weekends. This required some ratios and discounting for data before 2000 since those before then only four day grosses were available.

On average the big winner is Memorial Day weekend, making around 33% more on average than regular weekends. In second place was Martin Luther King weekend, with a 14% lead. What was most surprising was that Labor Day weekend made around 18% less than the regular weekend; perhaps people prefer going to barbecues their last summer weekend. President’s Day weekend was about even.

Perhaps most interesting is that during the last two years the grosses have dropped for Memorial Day weekend while they’ve gone up for Martin Luther King weekend. They also been rising somewhat for President’s Day. These are both indications that the theatrical release market is growing during the first quarter, and coupled with the fact that Hollywood does not release high budget movies in the first quarter, is possibly an opportunity.

This past Memorial Day weekend was surprising in more ways than one. Although the total U.S. box office take, at $221.8 million was slightly higher than last year’s $219.4 million, the top movie, Night At the Museum: Batle of the Smithsonian, had a total gross of $70 million, much lower than last year’s winner, Indiana Jones and the Kingdom of the Crystal Skull, which took in $126.9 million during the same weekend.

Utilizing the ticket sales information posted at The-Numbers.com I derived the average ticket prices between 1995 and 2009 and then ranked the 16 #1 Memorial Day weekend movies during those years according to tickets sold.

Pirates of the Carribean: At World’s End, from 2007 won both in terms of ticket sales and the total weekend gross. However in the second place ticket sales position stands a much older movie, The Lost World: Jurrasic Park, which was released over 10 years ago and denotes just how popular that movie really was. BTW, this year’s top movie, Night at the Museum 2, sold under 10 million tickets which places it in the #15 spot.