Two of my favorite business areas to think about are the music and movie industries. I like thinking about them, because for years they've had a strangle hold on the content they produce, but now they're being challenged on every level.

If you haven't heard, the summer of 2005 has been a down year for the movie industry. It says something about a consumer industry when sales numbers fall 10% and everyone acts like it's the end of the world.

The box office for the summer will be down about 9% and ticket sales will be down 11.5%. If you take last year's total box office of 9.4 billion dollars and 1.5 billion tickets sold, you're looking at final 2005 hollywood business at 8.5 billion dollars and 1.3 billion tickets sold. That's still nice.

According to historical yearly business numbers for Hollywood, the last time the total box office was under 8.5 billion was 2001 and the last time that few of tickets were sold was 1997.

Interestingly enough, the total movies released in 2005 should come out at 485 and the last time that number was so low was 2002.

So what we're looking at is a drop that looks like the following:

• Total box office revenue looks like 2001.
• Total ticket sales looks like 1997.
• Total movies released looks like 2002.

If you look at the reaction from Hollywood you would think their business is falling apart.

There are four main reasons that Hollywood's box office business is off:

1. The advent of home theater systems.
2. The cost of going to a movie.
3. The dearth of original movies.
4. The other movie options in people's lives.

Tomorrow, we'll look at the solutions that Hollywood needs to make the movie experience something that the industry and consumers can be happy with.

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