The likes of NetFlix, HBOGo, VideoOnDemand and free and easy downloading of content from the Internetwere all supposed to spell doom for the brick and mortarMovie Theater, right?
Not so fast. The performance of the movie industry this year indicates that the demise of the box office has been far overblown. With studio hits like The Avengers, Men in Black 3, and Snow White and the Huntsman all bringing in major business to movies houses across the country, year to date box office sales are up a remarkable 16.5% over 2011, posting the strongest ticket sales in six years. With large-scale productions like The Amazing Spiderman and The Dark Night Rises due out this summer and literary hits like The Hobbit and The Great Gatsby set to hit screens before the holiday season, one would expect the strong earnings trend to continue.
The rebound in the industry has been reflected in stock prices and has been noticed by international investors as well. Regal Entertainment, the largest movie chain in the United States, has seen its stock price rise twenty percent in 2012, far outperforming all benchmarks. Additionally, just yesterday The Wanda Group, the largest theater developer in China, announced plans to spend $2.6 billion to purchase AMC, the second largest chain in the United States, and an additional $500 million to improve its theater-going experience.
Although all indications point to strong performance continuing through the year, now may not be the time to invest in the movie industry as assets have already experienced a recent and rapid increase in value. However theater companies deserve credit for turning things like social media into effective tools for marketing their products and have emerged as a relatively cheap outlet for family entertainment during still uncertain economic times. This year has proved that movie going is alive and well and any projections to the contrary were premature.