The impact of video recorders on cinema attendance

Abstract

Cinema attendances in the United Kingdom and the United States have been subject to severe declines in the post-war period. Fairly strong evidence (Belson, 1958) exists that the arrival and development of television contributed powerfully to the initial decline. As televisions now populate almost every home we would expect this influence to have worked itself out. The 1980's have seen the arrival of videos as a new threat to cinema takings. Analysts of the industry have been suggesting (Docherty et. al., 1986), (Variety, 1985) that the threat is more apparent than real with demographic factors and/or poor films being the cause of more recent audience declines. These claims derive from casual inspection of ticket receipts (Variety, 1985) or one-off surveys of consumer attitudes (Docherty et. al., 1986). To date there has been no concrete evidence offered for or against the impact of video. Such evidence is hard to gather because of data limitations. This is particularly the case for the U.S. where there is the added complication of diffusion of pay TV. The U.K. is free from this complication as pay TV is still extremely rare and monthly price and attendance figures are available until their publication ceased in May 1985. In this note we use a demand equation to discuss what ticket sales would have been in the period (January 1983 onwards) when video access began to gather impetus. Comparison of the equation results with actual ticket sales suggests a marked reduction which may tentatively be attributed to the VCR.