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The box office indicator

When times get tough, consumers beeline to the movies.

By Michal Lev-Ram, reporter
Last Updated: August 22, 2008: 3:44 PM EDT

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SAN FRANCISCO (Fortune) -- With "The Dark Knight" setting a record for highest-grossing opening weekend and "Pineapple Express" and "Step Brothers" also doing well, 2008 is on track for a record box office summer - suggesting once again that the movie business may be countercyclical to the economy.

The Great Depression, the September 11 terrorist attacks, and the recessions of the early 1980s and 2001 all did wonders for Hollywood coffers. Turns out, in trying times we like things to be cheap and we like to be transported from the headlines - movies do both, say box-office analysts.

"People need an escape from their daily troubles in times of economic woe," said Paul Dergarabedian, president of box-office tracker Media By Numbers. Movies, of course, also have to be good and aggressively hyped, added Dergarabedian, but the state of the economy and wars juice sales too.

That's why Depression-era hits like "King Kong" and "Gone with the Wind" (the highest-grossing movie of all time when adjusted for inflation) broke U.S. attendance records in their day. That's also why, the summer after 9/11, Americans took refuge in the ultimate hero, "Spider-Man." While the economy teetered and unemployment rates reached 6%, the Sony Pictures (SNE) film raked in $403.7 million domestically, and helped sell nearly 1.6 billion tickets in 2002 - a feat not achieved since the 1950s or even in the last five years.

This year is also shaping up to make movie history. Plagued by troubles in the housing market, $4-a-gallon gas prices, and rising unemployment, Americans once again are looking for ways to tune out. Coupled with higher ticket prices (the national average is $7.08), that puts this summer on track to beat the $4.2 billion record ticket sales for the three-month period.

The season's runaway blockbuster, "The Dark Knight," reaped more revenues on its opening day and weekend than any film in Hollywood history. The flick, released by Warner Bros. (which, like Fortune and CNNMoney.com, is owned by Time Warner (TWX, Fortune 500)), reached the $400 million mark faster than any movie before it (18 days vs. 43 days for "Shrek 2" in 2004). Its popularity was helped in part by the 4,366 theaters nationwide that premiered the movie, which also made it the widest movie release ever.

"The Dark Knight was extraordinarily well-positioned," said Brandon Gray, president of Box Office Mojo, a Web site that tracks box office receipts.

Comedies and epics tend to do really well at the box office during economic downturns, says Gray. For example, "The Dark Knight" and its theme of overcoming adversity, explains Gray, plays perfectly into today's doom-and-gloom zeitgeist. Similarly, lighthearted summer flicks like Universal Pictures' (GE, Fortune 500) Mamma Mia!, Sony Pictures' "Pineapple Express" and "Step Brothers," and, more recently, DreamWorks Pictures' (VIA) bawdy comedy, "Tropic Thunder," have all been hits.

The box office doesn't always soar when the economy slumps. The recession and Persian Gulf War of the 1990s did nothing for the box office as studios released far fewer movies - and duds at that ("Teenage Mutant Turtles II: The Secret of the Ooze," anyone? How about "Bill and Ted's Bogus Journey"?)

Of course, the theory of box-office booms during market busts can also play out in reverse: 2005 was the middle of the bull market, but a down year for Hollywood - the year of clunkers like "Monster-in-Law," the Jennifer Lopez-Jane Fonda comedy, and Warner Bros.' "The Island," a thriller starring Scarlett Johansson and Ewan McGregor.

Painful as that year was, investors might want to hope for a sequel. To top of page

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