Earlier today the MPAA released its 2012 Theatrical Market Statistics Report, presenting a global snapshot of the box office, attendance, and film release trends for the film industry in 2012. As Senator Dodd pointed out in today’s release, both global and domestic box office are up compared to last year, driven by increased attendance. 2012 was a great year for moviegoing. For a deeper dive and access to the full report, click here.

This year, for the first time, we offer some additional analysis that sheds light on which states have the most eager moviegoing audiences. We analyzed the behavior of those who saw one or more movie(s) in 2012, referred to as “moviegoers”, in the 10 most populous states in the country.  We looked at the 10 most populous states in order to ensure that the sample is large enough to provide reliable data.

We found that among those 10 states, Illinois has the highest percentage of moviegoers, at 74% of their population, well above the national average of 68%. In second place is California, with 73% of their population earning moviegoer status and closely following, is Texas with 72% of the Lone Star state population going to the movies at least once last year.

Among the 10 most populous states, these particular three states have the highest percentage of frequent moviegoers, as well. Frequent moviegoers are defined as moviegoers who attend one or more movie(s) per month. The California population in this case ranks the highest, with 22% of Californians qualifying as frequent moviegoers, followed by Illinois at 21% and Texas at 18%. All three are well above the national average, which is 13% of the population.

Finally, we analyzed which states have the highest total number of moviegoers overall. California, by a significant margin, tops this category with 26.8 million moviegoers in 2012. Texas is second at 17.9 million and New York is third at 12.6 million. The graphs below detail all of the information we have just described and more, providing valuable context for these figures.

This year’s additional state information serves as an important reminder that the film and television industry has far reaching economic and cultural implications. Hundreds of thousands of people from across the globe contribute to creating the finished produced seen by billions, and as today’s report confirms, a wide variety of people in different places across the country love going to the movies.  

An abstract released recently by researchers in Europe has gotten some blogger attention for suggesting that box office revenue for some films may be down since Megaupload shut down in January.  Today, Julia Jenks, head of research here at the MPAA, is breaking down some of the serious methodological gaps in the abstract and notes that its flimsy findings raise far more questions than they answer. 

Assessing the Evidence: “Piracy and Movie Revenues: Evidence from Megaupload”

Researchers at the Munich School of Management and the Copenhagen Business School¹ recently posted a two page summary abstract on the Social Science Research Network entitled “Piracy and Movie Revenues: Evidence from Megaupload” that has caught the attention of some bloggers.  While independent review of the academic literature has shown that the vast majority of it, particularly the literature published in the top peer reviewed journals, finds evidence that piracy harms media sales (for more on that literature, see: “Assessing the Academic Literature Regarding the Impact of Media Piracy on Sales”),²  some bloggers have focused on a seemingly contrary conclusion from this new abstract, regarding box office revenue in time periods before and after the Megaupload website shutdown in January 2012. 

The reality is that it is impossible to evaluate the validity of the approach or the reliability of the conclusions based solely on the abstract, which does not fully present the methodology or results of the study. In fact, in its present form, this summary abstract raises more questions than it answers, including:

Are the conclusions being presented and interpreted correctly? From the two page abstract it is unclear, for example, which results are or are not statistically significant, what are the definitions for the variables in the statistical tables, and whether and how the results differ for the films that showed on more than 500 screens, which the authors suggest experienced a positive box office effect post the shutdown.  Specifically, the regression tables seem to indicate that the Megaupload shutdown caused an increase in box office revenue for movies that were shown on more than 500 screens (which is a large number of films), but the tables are unclear and could also be interpreted as also showing an increase in sales for all films after the Megaupload shutdown.³  

Which system was used for “matching” like movies? The abstract’s conclusions rest on the assumption that it is possible to create a “matched” control group of movies from the time period prior to January 2012 (pre shutdown), which accurately predict the potential box office performance of similar movies in the post January 2012 time period (post shut down) had the Megaupload shutdown not happened.  This is an extremely difficult proposition, even with the most sophisticated econometric techniques, particularly for specialty films⁴ – or there would be no box office surprises.  In this case, it’s impossible to assess the validity of the control group without information about the matching technique and methodology, and the actual matching factors.  The only potential factor visible, genre, is very weak.  In fact, it is well known in both the industry and peer-reviewed academic literature that box office revenue is affected by a myriad of both observable and unobservable characteristics (e.g. audience taste).

How does the research account for box office trends independent of the Megaupload shutdown? The “matching movies” approach taken seems to assume that the only thing that changed in terms of box office for films in the time period, covering the last five years, was the Megaupload shutdown. The authors do state that they did some testing of alternative shutdown dates, but they provide no information on how this was performed or whether this adequately accounted for other changes in box office revenue over the last five years that are unrelated to the Megaupload shutdown.  Box office trends not accounted for in the estimation and independent of Megaupload being shut down would lead to a different set of conclusions.

As currently presented, the conclusions in this abstract are not clear or compelling.  We hope that when the final paper is released, these and other related questions are addressed, and a detailed methodological description provided, so that it will be possible to interpret the conclusions presented, and evaluate their reliability.  

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¹Christian Peukert, a Ph.D. student at Ludwig-Maximilians-University Munich, Institute for Strategy, Technology and Organization, and Jörg Claussen, a post-doctoral researcher at Copenhagen Business School - Department of Innovation and Organizational Economics.

²The abstract erroneously cites the academic paper “Assessing the Academic Literature Regarding the Impact of Media Piracy on Sales,” as stating that “privacy [sic] negatively impacts sales.” 

³Films that are shown on more than 500 screens are a large and important universe.  According to Box Office Mojo, the data source used, all 100 of the top 100 films, and more than 150 films in total, released in the U.S. in 2011 were shown on more than 500 screens.* Given that the total sample of movies in the study (1,344) works out to about 270 films per year, this suggests that in certain years films that were shown in more than 500 screens may actually be a majority of the sample, more than 50% of the total.  *Box Office Mojo actually presents “theaters” not “screens,” but since the Munich paper uses Box Office Mojo and presents the information as “screens” we’re using the same nomenclature. 

⁴e.g. Films showing on 500 or fewer screens.

The worldwide demand for online video is enormous and ever-increasing.  The digital measurement company comScore recently reported that 176 million U.S. Internet users watched online videos on their computers in May, engaging in a total of 5.7 billion viewing sessions. Unfortunately, much of the viewing of movie and television content is occurring on illegitimate websites, but today, there are more options than ever before to get movies and TV shows online safely and legitimately – the list just keeps getting longer – and many of them are now among the most popular online viewing destinations.

These services offer every type of viewing, whether ad-supported, rentals, download-to-own purchasing or subscription viewing – and they are offered by many different providers, including technology companies like Apple and Roxio; television networks like ABC, CBS, Fox, NBC, PBS, and The CW and cable networks like Bravo, Cartoon Network, Comedy Central, Disney Channel, and FX; pay television channels like Epix and HBO; television providers like Dish; telecommunications companies like AT&T and Comcast; retailers and rentailers like Amazon, Blockbuster, Netflix, and Sears; video gaming companies like Sony PlayStation and Microsoft Xbox; and new ventures devoted entirely to this space like Crackle, Fandor, Hulu, mSpot, and Vudu (which is now owned by Wal-Mart). Internet company YouTube, the top viewing site based on comScore’s measurement, recently announced that it has reached agreement with studios to add more movies to its streaming movie rental service.

Providers are racing to embed their online services – in some cases with High Definition video – into the majority of Internet-enabled electronics, including high definition televisions, Blu-ray players, set-top-boxes, and gaming consoles, which means they are available not only to those watching on their computers, but people watching on their home television screens. And studios are working to ensure that downloading is a simple, uniform experience, where digital video purchased at any outlet can be played anywhere, as they work with technology companies and online providers to develop services such as UltraViolet and Disney Studio All Access.

This all goes to show that when technology, innovation, and a little movie magic come together, the world gets more entertaining for all of us. If you enjoy watching videos online, there’s no time like the present.