How Social Media May (Paradoxically?) Be Contributing to Booming Business For Movie Theaters

Even before the record-breaking box office hauls of The Hunger Games and The Avengers, the US theatrical grosses for all movies were up at the start of 2012 - and total US box office currently is up almost 20% year-to-date over 2011.

Now comes word that China's Dalian Wanda Group has acquired the US's second largest movie theater chain, AMC Theaters, for $2.6 billion - with plans to invest another $500 million.

In an insightful May 21st, 2012 post to the President of Tribeca Enterprises, Jon Patricof, explains how motion picture revenue - in particular theatrical box office - is growing because of (and not in spite of) the audience's addiction to social media.

It's undeniable that theatrical revenue is going up for films that are buzzed about on social media. It may also be true (but harder to prove) that profitability for the studios may soon be improving. That's because the cost of marketing films - if the distributors become savvy about using social media and stop spending millions in ads on their affiliated broadcasting outlets - could be coming down. Fabian Nicieza, Jeff Gomez and I have already written about how social media was used to goose the US opening of The Avengers. And Jon Patricof writes that Lionsgate gambled and won - spending much less (between 30% and 50% less?) on traditional media than their usual TV buys for the March 12, 2012 release of The Hunger Games - relying instead on cheaper tools like social media. The experiment worked: The Hunger Games' first weekend earned over $150 million at the domestic box office, the best box office debut on record for any non-sequel non-summer film.

UPDATE: On August 10th, 2012 Bloomberg Business Week reported that - despite their use of social media to market The Hunger Games - Lionsgate has reported a loss for the first quarter of 2012.

While the 2012 improvement over 2011 may have something to do with the bad movies released last year and the recent stunning performance of The Hunger Games and The Avengers, it's fascinating to consider how social media and other seeming threats to Old World movie-going may actually be contributing to a resurgence in the movie theater business. Will the connection between social media and recent box office successes help the motion picture studios to see the benefits of adapting to the New World? Or will the MPAA continue to see the internet as a threat - and continue their over-the-top attacks on how information is shared in the 21st century?

Thanks to Nick DeMartino for the link.

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