Monday, June 21, 2021

ANALYST URGES STUDIOS TO TAKE LARGER CUT IN TICKET SALES

March 2, 2011 by · 1 Comment 

Richard Greenfield

With ticket and DVD sales declining and home theaters, piracy, and the saturation of 3D films taking their financial toll, movie studios have no choice but to force theater owners to take a smaller cut of overall revenue, according to BTIG analyst Richard Greenfield. Currently the split between studios and theaters averages 50-50. However, the veteran analyst observed Tuesday, while studios are seeing revenue declining at a worrisome rate (total revenue is down 21 percent for the year), “exhibitors are talking up increased capital return through dividends and the benefits of 3D, which they have invested very little capital in relative to the studios.” Bottom line, he said: “Studios should force film rentals north of 60 percent. Exhibitors will hate the idea, they will complain, threaten to stop showing trailers for movies, etc., but at the end of the day theaters will acquiesce — they have no choice. Theaters will still exist, they will simply be less profitable (and probably have to pay smaller dividends).” And the best time for the studios to begin doing so, he added, is during the summer, when they begin releasing their usual slate of blockbusters. He concluded: “The studios create the content — exhibitors have nothing if they do not have studio content. In turn, studios one-by-one need to start pushing splits higher. With the film business changing, industry norms can no longer be relied upon — everyone needs to start thinking differently.”