Director Peter Jackson’s widely-hyped "King Kong" movie earned a less-than-expected $66 million at U.S. and Canadian box offices in its five-day debut, highlighting film industry woes and changing audience habits in a year when ticket revenues are now expected to fall more than 5 percent.

Hollywood executives have been racking their brains this year trying to determine if the popularity of DVDs, video games and the Web have combined with bad movies and complaints about a poor theater experience to send the industry into its slump.

The answer is not clear, and "Kong" was seen as a key test for box offices. The $200 million-plus movie is a major event of the holidays — the second biggest movie-going season behind the summer — and the film has been strongly reviewed.

Its backer Universal Pictures expected "Kong" to earn about $75 million for the five days, which is roughly equal to Jackson’s "The Lord of the Rings: The Fellowship of the Ring," the first of his Oscar-winning trilogy.

Box office tracker Exhibitor Relations Co Inc now predicts 2005 total ticket revenues of around $8.9 billion vs. $9.4 billion last year. Attendance at theaters is seen down 7.26 percent at 1.4 billion people for the third straight year of decline.

"2005 is a year we do not want to repeat," said Exhibitor Relations President Paul Dergarabedian. "There are lot of lessons to learn, and it may be we are at a tipping point where everyone has to take a hard look at what’s going on."

CLOUDS OVER HOLLYWOOD

Industry experts attribute the box office decline to many factors, and new installations of digital cinema systems in 2006 only add to questions facing the industry.

Because studios are cutting the time between cinema and DVD releases, movie fans now have to wait less before getting to watch a film at home and that also hurts attendance.

In October, Adams Media Research forecast total DVD sales of about $17.3 billion in 2005, up 12 percent from 2004. Adams expects DVD sales to rise 9 percent in 2006.

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