The extremely short shelf life of movies

Movies are very perishable. They make the bulk of their money in the theater in the very first week, around half of the total gross. After the first week, the revenue drops off rapidly. I like to look at the website Box Office Mojo and it's very instructive to see just how rapid this dropoff is.

Just for fun, let's look at the Hobbit: Battle of the Five Armies. To date, its domestic US gross is $255 million. In the first week, it grossed $113 million.

The decay rate from week to week keeps relentlessly trending downward. That's why there's so much pressure to have a good opening. If the movie doesn't open big in the first week, it never recovers. As the revenue drops, fewer and fewer theaters will keep showing the movie.

One of the trends is that interval between the time the movie goes out of the theater and when it comes out on DVD is becoming shorter and shorter. The Hobbit: BOTFA came out on Dec 17, 2014 and according to amazon the DVD Release Date is March 24, 2015. So only about 3 months between opening in the theater and hitting DVD.

The interval between film opening and hitting DVD/Blu-ray (and before that VHS) used to be far, far longer.

If we look at the original LOTR, it was about 9 months.

December 19, 2001 (USA)
The Lord of the Rings: The Fellowship of the Ring, Release date
August 6, 2002
The Lord of the Rings: The Fellowship of the Ring, Initial DVD release

It's interesting that the bulk of the revenue is being made outside of the US. Domestically, BOTFA grossed $255 million but 3 times that overseas, something like 700 million for a $955 million gross.

I'm sure that the death of the movie theater has been predicted many, many times but with Redbox and internet streaming services I wonder how the theaters will survive. Why go to the theater when 60 inch televisions, 7.1 stereo systems, and soon 4k TVs are commonplace?

If you're patient, the movie that just hit the theater will be on DVD in 3 months, and Redbox in 4 months. And Redbox charges $1.50 versus $8 per ticket (searching google for "cost of movie tickets").