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Huge Upside and Ominous Underbelly From a Big Weekend Box Office

Tuesday, 31 May 2011 | 4:43 PM ET

The good news: After fumbling earlier this year, the box office is back on track, thanks to a massive holiday weekend. This was a record-setting Memorial Day weekend — attendance hit 35 million, more than 10 million higher than a year ago, as Americans spent $280 million on movie tickets over the weekend, beating the record set in 2007 of $255 million.

Hangover 2
Source: Warner Bros. Pictures
Hangover 2

Warner Brothers "The Hangover Part II" is to thank - it grossed over $137 million over the long weekend - Thursday through Monday. That's the biggest ever opening weekend for a live-action comedy as well as a record for the biggest R-Rated movie ever. These numbers are particularly impressive considering just how negative reviews were - the film drew just a 35 percent rating on Rotten Tomatoes. And the fact that the movie is R-rated also put it at a disadvantage - that dramatically cuts down the number of potential moviegoers.

The second-largest film of the weekend was Dreamworks Animation's "Kung Fu Panda 2," grossing $66.7 million in the US and a total of $124 million worldwide. This is a solid showing, though it failed to live up to the standard set by the first Panda flick, despite the fact that this 'Panda' was available in higher-priced 3-D. But Panda should have room to run, since it'll be another several weeks before the next animated family film opens.

Now, the bad news:

Moviegoers are fed up with paying a premium for 3-D. Only about 45 percent of 'Panda's' box office gross came from 3-D, while big 3-D films usually sell over 60 percent of their tickets in the higher priced format. The numbers are even more striking when you look at attendance - only 36 percent of people opted to go to the movie in 3-D. This isn't the first movie this summer to suffer from this downward trend - Disney's "Pirates of the Caribbean: On Stranger Tides" sold 47 percent in 3-D.

This is particularly bad news, considering that studios ant heater chains alike are betting on an unprecedented number of 3-D films - double the number last year and another dozen left to go this summer.

Richard Greenfield, BTIG's media analyst says "exhibitors are simply not listening to their customers." Bottom line - cinema chains like Imax and Regal need to lower their prices and offer more 3-D movies in 2-D. 3-D films cost an average of $3 more per ticket - so everyone's hoping consumers will acquire more of a taste for 3-D as the summer progresses. The question is whether theater chains will have to lower prices to make that happen.

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.