The US Theater Industry Outlook to 2016

TABLE OF CONTENTS

1. The US Theater Industry Introduction 2. The US Theater Industry Size, 2006-2011 2.1. By Box Office Revenue, 2006-2011 2.2. By Number of Theatres and Screens, 2006-2011 2.3. By Number of Admissions and Ticket Prices, 2006-2011 3. The US Theater Industry Segmentation 3.1. By Analog, Digital and Digital 3D Screens, 2006-2011 3.2. By Screens Per Venue 2007-2011 3.3. By Type of Audience 3.3.1. By Gender, 2011 3.3.2. By Age Group, 2011 3.4. Box Office Revenue, Movies and Admissions by Genres, 2006-2011 3.5. Box Office Revenues and Admissions by Ratings, 2006-2011 4. 2D Movies Market Introduction and Size, 2006-2011 5. 3D Movies Market Introduction and Size, 2006-2011 6. Trends and Developments in the US Theater Industry 6.1. Theaters Being Positioned as Entertainment Destinations 6.2. D-box Seats: New Seating Style for Real-Life Experience 6.3. XD-Extreme Definition and Dual Projection- alternates to I-max 6.4. Luxury Theaters: Theaters With a Difference 6.5. Rising Number of Mergers and Acquisitions for Competitive Advantage 7. The Theater Industry Value Chain in The US 8. Porter’s 5 Forces Model for The US Theater Industry 9. SWOT Analysis 10. The US Theatre Industry Competitive Landscape, 2006-2011

10.1. By Major Theater Operators/Owners, 2006-2011 10.1.1. Major Theater Operators/ Owners by Concession Revenue 2006-2011 10.2. By Major Production Houses, 2006-2011 11. The US Theatre Industry Future Outlook 11.1. Cause and Effect Relationship between the US Theater Industry and the Independent Factors 12. The US Theatre Industry Future Projections, 2012-2016 12.1. By Box Office Revenue, 2012-2016 12.1.1. Future Areas for Growth 12.2. By Number of theatres and Screens, 2012-2016 12.3. By Number of Admissions and Ticket Prices, 2012-2016 13. Company Profile of The US Theater Industry 13.1. By Theater Operators/Owners 13.1.1. Regal Entertainment Group Company Overview Business Strategies Financial and Operational Performance 13.1.2. AMC Entertainment Inc Company Overview Business Strategies Financial and Operational Performance 13.1.3. Cinemark Theatres Company Overview Business Strategies Financial and Operational Performance 13.2. By Production Houses 13.2.1. Warner Bros

Company Overview Business Strategies Financial and Operational Performance 13.2.2. Walt Disney Pictures Company Overview Business Strategies Financial and Operational Performance 13.2.3. Sony Pictures Company Overview Business Strategies Financial and Operational Performance 13.2.4. Paramount Pictures Company Overview Business Strategies Financial and Operational Performance 14. Macro-Economic and Industry Factors: Historical and Projections 14.1. The US Households Median Income, 2006-2016 14.2. Expenditure on Entertainment, 2006-2011 15. Appendix 15.1. Market Definition 15.2. Abbreviations 15.3. Research Methodology Data Collection Methods Approach Variables (Dependent and Independent) Multi Factor Based Sensitivity Model Final Analysis 15.4. Disclaimer

LIST OF FIGURES

Figure 1: The US Theater Industry Size by Box Office Revenue in USD Billion, 2006-2011 Figure 2: The US Theater Industry Size by Number of Theaters and Screens in Units, 2006-2011 Figure 3: The US Theater Industry Size by Number of Admissions in Million and Ticket Prices in USD, 2006-2011 Figure 4: The US Theater Industry Segmentations by Type of Screens on the Basis of Theater in Percentage, 2006-2011 Figure 5: The US Screens by Type of Venue in Units, 2007-2011 Figure 6: Gender wise contribution to Population, Moviegoers and Tickets sold in Percentage (%), 2011 Figure 7: Age Group Share of Total Population, Moviegoers and Tickets Sold, in Percentage, 2011 Figure 8: Frequent Moviegoers by Age Groups in Million, 2009-2011. Figure 9: Number of 2D Movies Released in Units and Growth Rate in Percentage, 2006-2011 Figure 10: Number of 3D Movies Released in Units and Growth Rate in Percentage, 2006-2011 Figure 11: Theater Value Chain in the US Figure 12: Porter’s 5 Force Analysis of the Theater Industry in the US Figure 13: The US Box Office Estimated Revenue in USD Billion, 2012-2016 Figure 14: Estimated Number of Screens and Theaters in The US in Units, 2012-2016 Figure 15: Estimated Admissions in Billion and Ticket Prices in USD, 2012-2016 Figure 16: Attendance in Theaters, Sports events and Theme Parks in Million, 2011 Figure 17: Number of Theaters and Screens in the US, 2006-2011 Figure 18: Total Revenue of the Regal Entertainment Group in USD Million, 2006-2011 Figure 19: The Admissions, Theater locations and Screens Operated by Regal Entertainment Group, 2006-2011 Figure 20: Total Revenue of the AMC Entertainment in USD Million, 2006-2011 Figure 21: The Admissions, Theater Locations and Screens operated by the AMC Entertainment INC. 2006-2011

Figure 22: Total Revenue of the Cinemark Theatres in USD Million, 2006-2011 Figure 23: The Admissions, Theater Locations and Screens operated by the Cinemark Theaters, 2006-2011 Figure 24: Total Revenue of the Warner Bros in USD Million, 2006-2011 Figure 25: Total Revenue of the Walt Disney Pictures in USD Million, 2006-2011 Figure 26: Total Revenue of the Sony Pictures in USD Million, 2006-2011 Figure 27: Total Revenue of the Paramount Pictures in USD Million, 2006-2011 Figure 28: The US Median Household Income in USD, 2006-2016 Figure 29: The Average US Expenditure on Entertainment per Capita in USD, 2006-2016

LIST OF TABLES

Table 1: The US Theater Industry Segmentations by Type of Screens on the Basis of Theater in Units, 2006-2011 Table 2: Movies in Production in the US by Genre in Units, 2006-2011 Table 3: The US Box Office Revenue Earned by Genre in USD Million, 2006-2011 Table 4: The US Theaters Admissions by Genre in USD Million, 2006-2011 Table 5: Theater Admissions in the US on the Basis of Movie Rating in Units, 2006-2011 Table 6: The US Box Office Revenue Earned on the Basis of Movie Rating in USD Million, 2006-2011 Table 7: SWOT Analysis Table 8: Revenue of Major Operators/Owners of the US Theater Industry in USD Million, 2006- 2011 Table 9: Major US Theater Chain Operators/ Owners’ Theatrical Admission Revenue in USD Million, 2006-2011 Table 10: Market Share of Major Operators/ Owners of the US Theater Industry on the Basis of Percentage, 2006-2011 Table 11: Major US Theater Chain Operators/ Owners’ Concession Sales in USD Million, 2006- 2011 Table 12: The Revenue Earned by Production Houses in USD million, 2006-2011 Table 13: Cause and Effect Relationship between the US Theater Industry and the Industry and Macro Economic Factors Table 14: FDI Guidelines in China Table 15 Correlation Matrix of the Theater Industry of the US Table 16: Regression Coefficients output for The Theater Industry of the US

THE US THEATER INDUSTRY SIZE, 2006-2011

BY BOX OFFICE REVENUE, 2006-2011

The US theater industry is the largest in terms of revenue earned. In 2006, the box office revenue was USD ~ billion and in 2011 the box office revenue was USD ~ billion. The box office revenues have grown at a CAGR of ~%. The growth rate over the last 5 years can be attributed to the commercial success of the 3D movies, franchise movies and adaptations of movies from books and novels. Other factors that can be attributed for the rise in box office revenues can be the increase in the number of screens across the country, increase in the average ticket price, use of I-Max technology and XD projection, sequels of popular franchise movies….

Figure: The US Theater Industry Size by Box Office Revenue in USD Billion, 2006-2011 11.0

10.5

10.0

USD Billion 9.5

9.0

8.5 2006 2007 2008 2009 2010 2011

BY NUMBER OF THEATRES AND SCREENS, 2006-2011

…In 2006, the number of theaters in the US was ~ which had increased to ~ in 2011 at a meager CAGR of 0.2%. The number of theaters in the US registered a negative growth in 2008. In 2008, the number of movies released was less. As a result, the entire industry took a hit in terms of revenue and growth. In 2008, the theaters registered a negative growth of ~%. In 2009, with a positive growth in the release of 3D movies, theater chains across the US increased their capacity

(screens per theater) and expanded geographically. The growth rate of theater industry in 2009 was ~%... …The theater industry has shown an increase in the digital projection technology for the screens. The conventional analog screens are being phased out slowly. The theater chains are differentiating themselves on the basis of projection techniques being used. This is one of the main reasons for the phase out of the analog screens…

Figure: The US Theater Industry Size by Number of Theaters and Screens in Units, 2006- 2011

5,650 39,800

5,600 39,600 39,400 5,550 39,200 5,500 39,000 In UnitsIn In UnitsIn 5,450 38,800 38,600 5,400 38,400 5,350 38,200 5,300 38,000 2006 2007 2008 2009 2010 2011

Number of Theaters Number of Screens

THE US THEATER INDUSTRY SEGMENTATION

BY ANALOG, DIGITAL AND DIGITAL 3D SCREENS, 2006-2011

…In 2006, the percentage share according to the type of screens was ~ % for analog screens, ~ % for the digital non 3D screens and it was ~ % for the 3D screens…

Currently there are as many as ~ …The number of Analog screens has decreased to ~ % of screens across the US using I- the total number of screens in the country in 2011. A Max technology negative growth rate of - ~% was registered by the Analog

Screens in the last 5 years. The decline in this screen can be attributed to the increasing use of I- Max in the theaters… …The Digital 3D screen segment has shown a similar growth from 2006-2011. This increase has been due to more 3D films releasing over the last 5 years. In 2006 the number of 3D screens was 206 and in 2011 the number had risen to ~ at a CAGR of 127.74%...

Table: The US Theater Industry Segmentations by Type of Screens on the Basis of Theater in Units, 2006-2011

Particulars 2006 2007 2008 2009 2010 2011

Analog screen

Digital non 3D screens

Digital 3D screens

Total

BY TYPE OF AUDIENCE

BY GENDER, 2011

The total movie audience of the theater industry was ~ million in 2011. The audience has shown a fluctuating trend in the last 3 years. The audience of 2009 was ~ million; this had increased to ~ million by 2010. In 2011 the number of people visiting theaters was ~% of the total population of the US……The average ticket sold per person was ~ in 2009, which was reduced to ~ in 2010 and ~ in 2011… …In terms of frequency of visits, male population was more frequent in visiting theaters as compared to the female population… …The frequent moviegoers account for only ~% of the population but they bought half of all the movie tickets sold in 2011 (~ million ticket sales)…

BY AGE GROUP, 2011

The age group that has contributed the maximum admission to the theater industry is ~ years. This age group comprises of the families as well as the working class of the US population. The theater industry has got ~% of the total admissions from this age group itself… …Over the last 5 years this is the age group that has given maximum number of admissions to the theater industry. In 2010 this age group had contributed ~ million admissions which were ~% of the total admissions… …There were ~ million frequent moviegoers in the age group of ~ years in 2011. The frequent moviegoers in this age group have been increasing in the last 3 years. The increase in the average expenditure on entertainment of the US is one of the main factors which have resulted in this increase. This age group is one of the main growth drivers for the theater industry.

3D MOVIES MARKET INTRODUCTION AND SIZE, 2006- 2011

The cinema market of 3D movies has grown at a rapid rate as compared to the conventional 2D movies. This is the order of the day as the experience of these movies is commendable… ... In the following year 2010, seven 3D titles accounted for ~% of the domestic box office. The movies that have made a huge impact are Avatar, Toy Story 3, and Alice in Wonderland, The Twilight Saga: Eclipse, Despicable Me, Shrek Forever After and How to Train Your Dragon…

…Complimenting this, the theatres have also started adding up 3D screens to their existing screens, this can be inferred as the 3D screens accounted for a total of ~% of the total number of screens in the US. Theatrical revenues would increase if 3D movies are commercially successful because of high ticket price...

…The number of 3D movies made in 2011 has increased at a CAGR of 41% from 2006. In 2011, ~ 3D movies were made whereas only ~ 3D movies were made in 2006.

Figure: Number of 3D Movies Released in Units and Growth Rate in Percentage, 2006- 2011

50 160% 45 140% 40 120% 35 100% 30 80%

In UnitsIn 25 60% 20 40%

15 20% Percentage(%)in 10 0% 5 -20% 0 -40% 2006 2007 2008 2009 2010 2011

3D movies released Growth Rate

THE US THEATRE INDUSTRY COMPETITIVE LANDSCAPE, 2006-2011

BY MAJOR THEATER OPERATORS/OWNERS, 2006-2011

The theater industry is a highly competitive market in the US. The major players in this industry are the Regal Entertainment Group, AMC theaters, Cinemark, Cineplex theaters, Marcus theaters, Carmike, Rave cinemas and many small theater groups… ..The theater chains are competing with each other on the basis of location, stadium seating arrangement, quality of projection (analog and digital projection), and appeal of concession products. The theater chains are also competing with each other over the leisure time of the public... …Cinemark cinemas registered the best growth over the last 5 years with a CAGR of ~%. The revenue increased from USD ~ million in 2006 to USD ~ million in 2011.

Table: Market share of Major Operators/ Owners of the US Theater Industry on the basis of Theatrical Admission Revenue in USD Million, 2006-2011

Years Regal Entertainment group AMC Entertainment inc Cinemark Carmike Cineplex

2006 ~ ~ ~ ~ ~

2007 ~ ~ ~ ~ ~

2008 ~ ~ ~ ~ ~

2009 ~ ~ ~ ~ ~

2010 ~ ~ ~ ~ ~

2011 ~ ~ ~ ~ ~

BY MAJOR PRODUCTION HOUSES, 2006-2011

The movies made by the leading production houses are the key source of revenue for the theater chains. The leading production houses of the US film industry are Warner Brothers, Walt Disney, Sony Pictures, Paramount, Universal and Fox Searchlights. The competition within the industry is intense. The production houses are facing major threats from piracy and maturation in the DVD/ Blue ray market… …The distribution window for the production houses in theaters and other formats such as video on demand (VOD), television broadcasts has been reducing to curb the impact of piracy and may continue to reduce further in future… Over the last 5 years the Paramount pictures has shown the highest CAGR of ~%. The revenue of Paramount pictures was USD ~ million in 2006 which had increased to USD ~ million in 2011, thereby becoming the largest production house in the same year.

Table: The Revenue Earned by Production Houses in USD million, 2006-2011

Years Warner Bros Walt Disney Sony Paramount Fox Universal Pictures Searchlights

2006 ~ ~ ~ ~ ~ ~

2007 ~ ~ ~ ~ ~ ~

2008 ~ ~ ~ ~ ~ ~

2009 ~ ~ ~ ~ ~ ~

2010 ~ ~ ~ ~ ~ ~

2011 ~ ~ ~ ~ ~ ~

THE US THEATRE INDUSTRY FUTURE OUTLOOK

CAUSE AND EFFECT RELATIONSHIP BETWEEN THE US THEATER INDUSTRY AND THE INDEPENDENT FACTORS

Table: Cause and Effect Relationship between the US Theater Industry and the Industry and Macro Economic Factors

Industry Factors Market Impact Comments

New Mergers/ . Cause: Alliances . Effect:

Mobile applications . Cause: . Effect:

3D Movies . Cause: . Effect:

Pay per click sites . Cause: . Effect:

Video on Demand . Cause:

. Effect:

SOPA/PIPA act . Cause: . Effect:

THE US THEATRE INDUSTRY FUTURE PROJECTIONS, 2012-2016

BY BOX OFFICE REVENUE, 2012-2016

The box office revenues have shown a CAGR of ~% over the last 5 years. The future box office revenues depend upon the commercial success of the franchise films, 3D movies and on screen adaptation of bestselling books across the world… …The theater industry of the US is estimated to grow at a CAGR of ~% for 2012-2016. The industry is estimated to reach USD ~ billion by 2016…

Figure: The US Box Office Estimated Revenue in USD Billion, 2012-2016

12.5

12.0

11.5

11.0 USD Billion 10.5

10.0

9.5 2012E 2013E 2014E 2015E 2016E

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