Canadian cinema attendancedropped 4.6% in 2003-2004, the first reduction in ten-year upward trend, accordingto an industry survey released by Statistics Canada.

More crucially, profits wereoff by 15.8% despite a rise in average admission price, which rose 2.5% toC$7.45. Part of the downturn may be a reflection of the SARS scare in Torontoand Vancouver in the spring of 2003, as well as a reduction in the number ofblock-buster titles in distribution in the period. An increase in theavailability and selection of DVDs is also considered a factor.

Cinemas sold 118.2 milliontickets and drive-ins 1.5 million tickets. during the period. Smaller oldercinemas (those built prior to 2002) experienced the steepest decline inattendance, off nearly 20% from the previous year. But all cinemas, regardlessof age or size, recorded a drop. The survey also noted that theatres werelosing ground in terms of capacity utilization, with the proportion of seatsfilled on average falling from 21% to 18%. The industry recorded anoperating profit of$54.7million in2003/04, a15.8%decline. The profit margin of movie theatres overall also fell from5.3%to4.5%.

The survey comes as theCanadian exhibition industry experiences its largest-ever consolidation.Earlier this month, the nation's largest circuit, Famous Players, with 787screens, was sold by parent Viacom to the nation's second-largest circuit, Cineplex Galaxy (775 screens) for$400m. Canada's Competition Bureau has decreed that Cineplex Galaxy must selloff cinemas in key markets.

The Motion Picture TheatresSurvey included574movie theatres and54drive-ins that provideddata for the fiscal year April1,2003toMarch31,2004.