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Who needs an Oscar? Hollywood basks in industry's comeback

LOS ANGELES (Reuters) - The moguls of Hollywood might engage in more backslapping than usual at Sunday's Oscars, and it won't necessarily be over those golden statuettes.
/ Source: Reuters

LOS ANGELES (Reuters) - The moguls of Hollywood might engage in more backslapping than usual at Sunday's Oscars, and it won't necessarily be over those golden statuettes.

The tuxedoed movie studio chiefs can boast about an unusually large number of blockbuster films in 2012 that lifted ticket sales for the first time in three years and stemmed a seven-year free fall in sales of DVDs and other home entertainment products.

But they can also show crucial progress on their home entertainment strategy, digital downloads and social media, plus lucrative long-term content deals with new players on the scene.

Tinseltown might just be striking the right balance between making what people want to see, getting it to them in a way that works and letting them share their buzz over social media.

Hollywood is a famously cyclical business that can hit a slump even in the best of economic times. But the recent spate of hit-making has put the industry on a high.

Take "The Avengers," a mashup of Marvel comic super heroes released by Walt Disney Co, that pulled in $623 million in domestic sales and was one of the five 2012 movies with ticket sales of more than $300 million, an industry record, according to the box office unit of The movie cost about $220 million to make.

Two other films - Warner Brothers' first Batman movie in four years "The Dark Knight Rises" and Lionsgate Entertainment's "The Hunger Games" -- each topped $400 million, more than any film released in 2011.

These three films won't get much attention at the Academy Awards on Sunday and only "The Avengers" garnered a nomination, for Best Visual Effects. But in a another sign of Hollywood's winning year, six of the nine competitors for Best Picture hauled in at least $100 million apiece at U.S. and Canadian theaters.

James Bond also returned from a four-year absence with a vengeance and snagged five Oscar nods. "Skyfall," made jointly by MGM and Sony Pictures, grossed $304 million in domestic ticket sales and $1.1 billion internationally - the most of any of the 24 Bond films tracked by Box Office Mojo, and nearly twice as much as the second-ranked film, "Quantum of Solace," in 2008.

"It was a terrific year," said Universal Pictures Chairman Adam Fogelson, whose studio made "Ted" and Dr. Seuss' "The Lorax," both with box office sales over $200 million. "Give consumers something that's interesting and you can still get them to come out of their house."

U.S. and Canadian movie theaters sold more than 1.3 billion tickets in 2012, a 5.3 percent hike and the second time in five years that ticket sales increased. That propelled the box office to a record $10.8 billion, up nearly 5.8 percent.


The hit parade wasn't enough to turn the tide on the prolonged slide in DVD sales, which fell another 10 percent last year. But in a sign that studios and consumers are synching up on digital offerings, movie downloads, video on demand and streaming services like Netflix saw an increase in sales of 28.5 percent to $5.1 billion, according to the industry's Digital Entertainment Group.

The digital growth pushed the overall revenue figure for DVDs and home entertainment up by 0.2 percent, a step in the right direction.

"Consumers are getting comfortable with digital technology and are using it more," said David Bishop, president of Worldwide Sony Pictures Home Entertainment.

And Hollywood's studios seem to be feeling the same thing.

News Corp's Fox increased sales of digital downloads of its movies on services like Apple's iTunes and, dropping the price from $20 apiece to $15, and making them available two weeks ahead of sales of the same movies on DVD.

"We're making it easy for the consumer who says, 'I didn't see the movie or forgot to get a DVD' to just push a button," Fox studio Chairman Jim Gianopulos said.

"The result is that we had twice as many downloads of 'Taken 2' and 'Prometheus' than we did of 'Rise of the Planet of the Apes'", he said, the latter a 2011 film that had much higher box office sales than other of the two.

Then there were advances in getting the word out.

Lionsgate boosted ticket sales for "The Hunger Games" in what analysts say was Hollywood's most aggressive online marketing push. The studio stoked interest among the film's core younger audience by starting a year early with a near-constant use of Twitter and Facebook, a Tumblr blog, a YouTube Channel, and live streaming of the premiere on Yahoo.

The studios also saw a new cadre of bidders like Google, Amazon, Apple and Netflix lining up for rights to bring Hollywood movies into the living room. In December, Disney landed a deal with Netflix to stream its movies to television that could bring in an estimated $350 million in revenue a year, more than its current contracts.

Despite all of the advances of recent years, it is hardly certain that Hollywood can keep its winning streak going.

"It boils down to whether the industry can continue to make hit movies," said Stephen Prough, co-founder of investment bank Salem Partners who oversees the firm's media and entertainment investment banking.

"To answer that, ask me next year."

(Editing by Mary Milliken and Lisa Shumaker)