Studios reel after worst holiday sales since 2001

Hollywood pins hopes on summer revival as Memorial Day weekend proves a flop

The bank holiday weekend in Hollywood echoed to the sound of frozen turkeys hitting the sidewalk. Thwack. Ticket sales for Sex and the City 2 collapsed after the word went out among girlfriends that it really wasn't worth the trip. Thwack. Prince of Persia: The Sands of Time, a Disney adventure film, failed to capture anyone's imagination.

Movie studio executives are starting at the worst Memorial Day weekend takings in nine years, the worst attendances in at least 15 years, and the possibility that the record takings of 2009 were an aberration, not the start of a lucrative trend. That means pressure is rising on bankers such as Toy Story 3, coming here in a few days, and the likes of Tron and Gulliver's Travels later in the year, to justify the industry's increasing reliance on fewer hyper-expensive but mass-appeal movies.

Memorial Day weekend is one of the most closely-watched of the year in Hollywood, when Indiana Jones and Star Wars sequels have been unleashed on the world in previous years. This time, with Sex and the City 2 managing just $37.1m (£25m) in the US and Prince of Persia just $37.8m, it was the fourth instalment of the Shrek series which topped the box office by default in its second week of release, with receipts of $55.7m. Brandon Gray, the president of Box Office Mojo, which collates box office data, pins the blame squarely on terrible film-making.

"The movies have been a consistent draw and shown they are recession-proof," he said. "The current doldrums are attributable to the films themselves – and not just the stories which are being told, but the marketing campaigns for them, too. These campaigns seem to amount to: 'Hey, it's Shrek again, come see it; hey, Iron Man's back, come see him.' People go to the movies to be told good stories, and this May, Hollywood came offering only a retread."

The Memorial Day bombs are not one-offs, however, and box office takings have slipped significantly since the end of March, after audiences for Alice in Wonderland and Avatar, hold-overs from the end of last year, tailed off.

Charlotte Jones, analyst at the London-based research firm Screen Digest, said that North American box office receipts for the first three months of the year had been running up 11 per cent on the same time in 2009. By the end of the weekend, that figure had eroded to 4.8 per cent. Audience figures which had been ahead of last year now look like they are down more than 2 per cent. For the time being, though, Screen Digest is holding to its predictions of another record year, with North American takings over $11bn, after topping $10bn in 2009 for the first time ever. "Looking ahead to the rest of the year, more expensive 3D titles will be critical," Ms Jones said.

Cinema audiences peaked for modern times in 2002 but Hollywood has managed to squeeze higher revenues by selling tickets for 3D versions of its blockbusters at premium prices. Perhaps the most alarming signal from the box office disaster of the past few days was that the percentage of people seeing Shrek Forever After in 3D declined. At anything up to $20 per ticket, family budgets might not be able to cope.

Mr Gray warned that we may be starting to see "the 3D fad" taking its natural course, where it will only really be a major draw for event movies such as Avatar.

And he raised other reasons to be fearful. "Things are not exactly going gangbusters, so these other pictures will really have to pick up the slack if the year to gross as much as last year. The worry is that things feed on the momentum of the market, people get into the habit of going to theatres, they are exposed to future films through trailers and posters. If they get some decent movies out, they could get things bustling again, but there is a lot resting on Toy Story 3."

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