Australians spent $801.7m (A$895m) on going to the movies in 2007, making it the second best year on record in terms of annual gross box office.

The Motion Picture Distributors Association of Australia (MPDAA) released the figure today and said it represented a 3% rise on the previous year. Only in 2004 did the country's 21 million people reach deeper into their pockets: the gross back then was $812.6m (A$907.2m).

Only twice in the last two decades has annual gross box office fallen year-on-year, although admissions have jumped around more than that.

The top three films of the 315 released in 2007 were sequels on their third outing: Harry Potter And The Order Of The Phoenix , Shrek The Third and Pirates of the Caribbean: At World's End. All sold more than $26.87m (A$30 m) worth of tickets, as did another big brand, The Simpsons Movie.

Only one film last year and two films in the previous year performed this well. The top 10 in 2007 grossed $235.70m (A$263.22m) compared to $194.26m (A$216.94m) in 2006. The fourth sequel on its third outing, Spider-Man 3, lagged behind in sixth position. All were released to coincide with the US, which made them winter films in Australia.

'These stellar results are due not only to the diverse and excellent line-up of last year, but also to the heavy investments in media and promotional campaigns put together by the distributors, the ongoing commitment from exhibitors to expand and enhance cinemas, and the efforts of local producers and talent in creating appealing films for a wider audience,' said incoming MPDAA chair Marcos Oliveira, managing director at 20th Century Fox.

While films are increasingly difficult to categorise by genre simply, making audiences laugh was a significant factor for at least a dozen of the 20 biggest earners, which together grossed $379.07m (A$423.7m). The other animated comedy hits besides The Simpsons Movie were Ratatouille (14th in the chart) and Bee Movie (19th). Mr Bean's Holiday (11th), comedy musical Hairspray (12th) and crass comedy Knocked Up (13th) were also in the mix but the surprise hit among them was Death At A Funeral (16th), Icon's top title of the year.

'I think the industry got it right in 2007,' said Mike Baard, who heads the new Universal office. 'There were few big failures and it is indicative that the studios and producers were able to tap into what people wanted to see. We remain a populist medium. The customer would rather spend ten dollars on a safe bet rather than take a chance.'

What was no laughing matter was the poor performance from homegrown films, the big exception being Happy Feet, which earned a total of $28.47m (A$31.78m). The $18.55m (A$20.7m) worth of tickets sold in 2007 - it was released on December 26 2006 - was a significant slice of the $32.25m (A$36m) earned by all 25 new Australian films, including five documentaries. This represented only four per cent of total box office.

The second most popular film was Romulus , My Father although The Bra Boys did well for a documentary.

As usual it was the Australian-owned distributors taking the risk on most of these films. Apart from Roadshow, which distributes Warner Bros films in Australia, they are poorly resourced compared to the US studios. Paramount did pick-up the small Australian film The Final Winter but it attracted very little interest. Sony had better luck with Gabriel, a stylised action sci-fi film that stood out from the small dramas Australia often produces.

The MPDAA would not confirm the marketshare of the big distributors but a source said that Roadshow had acheived about 24% of the annual gross, followed by UIP (19.5%), Fox (13%), Walt Disney (12%), Sony (10.5%) and Universal (7%). All are within their usual range of the last five years except Walt Disney, which fell short. Sony and Fox is at the low end of that range.

The UIP figure includes Universal films released before the new Universal office officially opened for business on July 1. Its stand-out films were The Bourne Ultimatum and Knocked Up. The disappointment was Elizabeth: The Golden Age.

Splitting UIP into Paramount and Universal has increased competition in the marketplace although the MPDAA never releases figures on what its members spend on prints and advertising. Both Paramount managing director Mike Selwyn and Universal's Baard are talking up their interest in Australian films, spurred on by the 40% rebate now available on the cost of making Australian films. Time will tell if action follows.

Oliviera said he was confident about the future and suggested that there would be considerable growth in digital screens - exhibitors are spending heavily to keep cinemas up to scratch but are tight-lipped about the specifics of their digital roll-out. They are quick to point out the boost that 3D has given screen averages.

There were no particular external forces exerting a presence last year but if interest rates continue to go up, or if Prime Minister Kevin Rudd's new Labor Government has a negative effect on the economy, this could effect next year.

Top 10 films in 2007

1 Harry Potter And The Order Of The Phoenix (Warner Bros) July 11 - $31.84m (A$35.53m)

2 Shrek The Third (Paramount) June 7 - $30.22m (A$33.73m)

3 Pirates Of The Caribbean : At World's End (Walt Disney) May 24 - $29.66m (A$33.10)

4 The Simpsons Movie (Fox) July 26 - $28.17m (A$31.44)

5 Transformers (Paramount) June 28 - $25.02m (A$27.92)

6 Spider-Man 3 (Sony) May 3 - $21.54m (A$24.02m)

7 The Bourne Ultimatum (Universal) Aug 30 - $19.69m (A$21.96m)

[Total was $19.74m (A$22.01m)]

8 Happy Feet (Roadshow) Dec 26 2006 - $18.56m (A$20.70)

[Total was $28.51m (A$31.79m)]

9 Night At The Museum (Fox) Dec 26 2006 - $15.77m (A$17.59m)

[Total was $21.57m (A$24.05m)]

10 Wild Hogs (BVI) March 8 - $15.46m (A$17.24m)

Top 10 Australian films in 2007

1 Happy Feet (Roadshow) Dec 26, 2006 - $18.56m (A$20.70)

[Total was $28.51m (A$31.79m)]

2 Romulus , My Father (Dendy) May 31 - $2.33m (A$2.6m)

3 Rogue (Roadshow) Nov 8 - $1.61m (A$1.8m)

4 Bra Boys (Hopscotch) March 15 - $1.52m (A$1.7m)

5 Razzle Dazzle: A Journey Into Dance (Palace) March 15 - $1.43m (A$1.6m)

6 Clubland (Palace) June 28 - $1.35m (A$1.5m)

7 Gabriel (Sony) Nov 15 - $1.22m (A$1.36m)

8 Noise (Madman) May 3 - $0.81m (A$0.9m)

9 Lucky Miles (Dendy) July 19 - $0.61m (A$0.68m)

10 December Boys (Roadshow/Becker) Dec 20 - $0.57m (A$0.63)

Source: Motion Picture Distributors Association of Australia (MPDAA)