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Long term viability of cinema in jeopardy as attendances shrink

Long term viability of cinema in jeopardy as attendances shrink
September 9, 2015

Average cinema ticket prices in Australia have risen by more than 22% since 2009 to a 30-year high while attendances have fallen by about 14% in the past 10 years.

Exhibitors are compensating for the decline in admissions by raising prices and through 3D and premium cinemas, but a new study, Counting the cost: Exploring the impact of cinema ticket prices in Australia, warns the cinema industry may face long-term problems.

Deakin University academics Bronwyn Coate and Deb Verhoeven analysed the gross box-office trends from 2000 to 2014 and found the average annual fluctuation is 0.1%, which suggests that box office income has stagnated.

The report states "the introduction of new premium class cinema offerings as well as the proliferation of 3D as a popularised viewing format have in part driven up ticket prices.

“This form of variable pricing appears to be premised on the belief that although less tickets overall may be sold, the higher revenue per ticket will more than compensate cinema operators for lost ticket sales.

“This view is problematic in that it places far more importance on short-term company profits and does not address how the exhibition sector might retain, let alone cultivate, increased audiences for cinema."

The study acknowledges that in the first quarter of 2015 attendances rose by 11% while box-office revenues jumped by 18%.

However, it calculates ticket sales fell by 14% in the past 10 years to an estimated 78.5 million last year, and, factoring in population growth, the number of admissions on a per capita basis declined by more 28%, from 4.6 in 2004 to 3.3 in 2014.

The report adds "if cinema audiences shrink much further, particularly amongst young adults, then the long term viability of cinema is less than certain."

In 2014 the average ticket price reported by Motion Picture Distributors Association of Australia was $13.68, up 22% since 2009, while the Consumer Price Index went up by about 15%. But since 2006 top ticket prices have skyrocketed to double that of an average ticket price, the study says.

However, measured in the number of minutes required to work on an average earnings to buy a cinema ticket, at 40.7 minutes Australia is close to the OECD average of 41.9 minutes.

The report concludes “the international evidence refutes the idea that we are paying much more in Australia to see a film at the cinema compared to elsewhere in the developed world.

“ Indeed, the trend towards increasing cinema ticket prices has been a global phenomena.”

Bronwyn Coate is a Research Fellow with the School of Communication and Creative Arts at Deakin University, where Deb Verhoeven is Chair and Professor of Media and Communication.




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