In an era when entertainment options seem boundless, the excitement of the box office continues to prove resilient. The box office remains the linchpin of the media and entertainment industry—films produced for movie houses are just the tip of the iceberg as studios leverage their box office successes to diversify revenue streams across various media platforms.

In the face of rising ticket prices for concerts and sporting events, going to the movies is still an affordable and accessible source of entertainment. Even in the wake of pandemic-induced setbacks that sent shockwaves through the entertainment industry, the box office has displayed remarkable resilience, paving the way for promising studio consolidation, especially in the middle market.

The box office has seen a significant jump in revenue following pandemic-induced lows. While it is unlikely to reach the pre-pandemic figure of $11 billion annual gross revenue until 2025, the outlook is encouraging. With an impressive list of blockbusters in 2023, there is optimism that the industry could achieve a year-end total of $9 billion, even with the industry challenges related to the actors and writers strikes.

These strikes have had a significant impact, suspending several major movie productions, including notable examples like "Gladiator" and "Deadpool 3.” Additionally, the number of film releases remains significantly lower than pre-pandemic figures, as reported by IMDbPro’s Box Office Mojo; this can be attributed to a number of factors, including the strikes and the growing trend of studios embracing hybrid models that prioritize streaming channels over the box office.

Franchises and offshoots

Studios occupy a central and commanding position within the media and entertainment industry due primarily to the multifaceted revenue streams generated by their cinematic releases. The studios' influence isn’t confined to movie theaters but spreads across various mediums, creating a vast landscape of opportunities.

This influence extends to the realm of video games, where blockbuster movies frequently act as catalysts for immersive experiences. The transition of iconic franchises like “Star Wars” from the theaters into gaming showcases the studios’ ability to captivate audiences in various mediums. For example, according to Statista, Star Wars: Galaxy of Heroes has generated nearly $960 million in global revenue since 2015. The studios' influence also extends to theme parks, where movie franchises transform into captivating attractions. The “Jurassic Park” franchise evolved from the silver screen into a global theme park attraction exclusively owned by Universal Studios.

In recent years, the pandemic prompted a significant shift in the box office landscape, driving consumers toward streaming platforms due to theater closures. Although theaters eventually are expected to recover fully, studios have embraced a hybrid model by releasing films both in theaters and on streaming services to adapt to evolving media dynamics.

However, the success of blockbusters in the post-COVID-19 era is paving the way for a return to quality entertainment on the big screen. For example, more major industry giants are shifting gears by actively exploring entry into the traditional box office. As reported by Bloomberg, Apple and Amazon have shared that they will commit at least $1 billion per year in theatrical releases for the box office. In addition to their successful studios, tech giants are even purchasing theaters; Amazon opened their first movie theater in Culver City, California, in late 2022. In March 2023, The Intersect also reported that Amazon was investigating a purchase of AMC, the world's largest movie theater chain. 

The takeaway

Independent studios seeking to release content now find themselves operating in a more crowded environment. They face competition not only from established large studios but also from incumbent streaming companies. As a result, studios, including those in the middle market, may be increasingly open to consolidation or acquisition to compete effectively with the other players in the industry. As of the end of August, 92 mergers and acquisition (M&A) transactions have occurred in the media and entertainment, broadcasting, film and TV space, with an upward trend since the beginning of the year.