Despite Harry Potter, movie studios fail to make magic in 2011

The movie business is a funny one. Hollywood executives and movie makers have noted that attempting to figure out what will make box office gold basically amounts to one huge gamble. (No one has said it better than William Goldman: When it comes to the movie business, “nobody knows anything”.)

Much has been written about the fickle audiences, the competing sources of entertainment, the technological challenges, and the economic factors that are a constant source of aggravation for the studios.  As such, 2011′s box office results are not too surprising. Let’s take a look at the details.

Early reports for the year reveal the news is not good. Movie sales are down an overall 4.5% from 2010.  Projections for the North American box office say the annual sales figure for 2011 will be about $10 billion, down from about $10.58 billion in 2010 and 2009′s record year of $10.59 million.

So what do these results mean for the industry?

A shock to no one, it’s a safe assumption that sequels will continue. Sequels made up the top seven highest-grossing films worldwide for 2011. The #1 movie of the year was Warner Bros.‘ Harry Potter and the Deathly Hallows – Part 2, which earned a whopping $1.3 billion. That figure makes it the third highest grossing film of all time, behind Avatar and Titanic.

Meanwhile, a heavy reliance on 3D did not help the year’s total box office figures. The number of 3D releases increased by 50% in 2011, to about 40 total, causing the individual ticket price of a portion of films to increase by as much as $3 to $5. Still, the overall box office figure declined for the year. This does not bode well for the format. Roger Ebert has much to say on the subject.

The year also saw a glut of family-friendly films. Usually fairly reliable as a genre, children’s films were not all successful in 2011. Disappointments included Arthur Christmas and Adventures of Tintin. The award for biggest flop goes to Disney, whose film Mars Needs Moms earned only $21 million but cost some $150 million to make. Even golden child Pixar had trouble. Though sales of Cars 2-related merchandise was nothing to sneeze at, the movie was Pixar’s single worst box office result to date (taking into account inflation).

We additionally learned from 2011 that star power isn’t what it used to be. Harrison Ford, Daniel Craig, Julia Roberts, Tom Hanks, Eddie Murphy, and Ben Stiller all failed to bring in top dollar. (See duds Cowboys & Aliens, Larry Crowne, and Tower Heist.) And New Year’s Eve, which the New York Times described as “essentially a string of star cameos”, was not exactly a hit with audiences.

A “sure thing” will never exist in the movie business — the recently released Sherlock Holmes: A Game of Shadows and The Girl With the Dragon Tattoo, both of which failed to meet expectations, are examples of this rule. However, the industry will continue to be faced with pleasant surprises, such as Midnight in Paris, which in 2011 became Woody Allen’s highest-grossing film in 25 years, and Bridesmaids, which cost about $33 million to produce and took in an impressive $169 million.

Such bright spots are what keep producers in the business of making movies. Despite all the challenges that continue to face the industry, the allure of the glitz and glamour of Hollywood is strong. Movie fans can rest assured: Cinematic output — both good and bad – will continue to flow in 2012 and beyond.

Amy Schein

Amy Schein is an Industry Specialist at First Research, where she covers various aspects of the media industry. She earned her BS and MA in media studies at the University of Texas at Austin. Follow Amy on Twitter.

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