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TOPIC: Studio Execs out of Excuses

Studio Execs out of Excuses 27 Oct 2005 14:28 #11184

  • sevstar
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http://www.boxofficeprophets.com/column/index.cfm?columnID=9238

Studio executives have officially run out of excuses

Kim Hollis: The overall box office was down 27% from this same weekend last year. For the entire 2005 calendar year, we're down 8%. A lot of Hollywood executives are throwing their hands in the air.

Tim Briody: This weekend last year had The Grudge, but still. That's just overly excessive.

Kim Hollis: Nikki Rocco, head of distribution for Universal says "I'm very concerned about the marketplace. There are so many movies out, so much to choose from, yet the marketplace continues to fall, and not just by little amounts." Warner Bros. head of distribution Dan Fellman says, "I've been telling people for a long time that I think it's content-driven. I don't think we had a film that jumped out for people this weekend."

Reagen Sulewski: There's no question the shift to DVD has a lot to do with this, but you'd think there'd be a few hits by accident.

Kim Hollis: So really. What's the problem?

David Mumpower: We've been hammering home this thought since Monday Morning Quarterback debuted, but I don't think it has fully sunk in yet. The reality is that the mega-blockbusters will still merit a drive out to theaters. It's the "I'd like to see it but if I don't, no big." films which are getting caught in the crossfire. If people have to wait a year to see Doom on video, it does $10 million more this weekend and $30 million more during its domestic run. If they can rent the DVD in 90 days or so, it does $15 million and leaves a very bright group of people at Universal scrambling to create explanations.

Dan Krovich: Also, this year is definitely down, but is it fair to expect box office to increase every year?

David Mumpower: Since there is ticket price inflation, I think that it's fair historically to expect at least 0% drop with regards to yearly ticket revenue.

Joel Corcoran: I don't think we should expect the box office to be up every year, Dan, but a close to 10% drop in a single year is worrisome, especially in the face of rising ticket prices.

Dan Krovich: Maybe they've hit the price point wall with ticket prices.

Kim Hollis: Maybe they have. You can buy the DVD to watch with a family for cheaper than it costs to go to the theater.

Tim Briody: You have to wonder when even Universal's head of distribution couldn't put a smiley face on Doom's opening, like they normally do.

Joel Corcoran: I don't think there is a problem with "too many" movies, Kim, but I think Dan Fellman nailed it - the quality of movies overall has dropped significantly over the past few years. Couple that with some very quickly and vastly expanding entertainment options for people, and of course the box office is going to drop. We aren't anywhere near the point where big screen movie releases will go the way of the buggy whip and the eight-track tape, but Hollywood has to be nervous.
Steven Soderbergh and Mark Cuban put the scare in studios

Kim Hollis: I think a lot of theater chains are going to be very anxiously watching to see how Steven Soderbergh's experiment with Mark Cuban and his conglomerate goes. The simultaneous release of Bubble on DVD, in theaters, and on pay-per-view has to be a super scary prospect, even if the film is experimental in nature.

Tim Briody: If they're willing to basically give up in their comments to the press, I can't fathom what's going on internally.

Kim Hollis: I think that's a well-taken point, Tim. They're starting to show signs of weakness on the PR side where previously they would do whatever to put a positive spin on it.

David Mumpower: Mark Cuban's quick offer to experiment further with the iPod Video/TV shows model demonstrates that he's one of the brightest people in the industry even though he's new to the marketplace. In fact, I think that might be his biggest advantage. Since he's not used to what once was, he's liberated to accurately evaluate the current situation.

Joel Corcoran: I don't see this being a simple "market correction." I think there are some deep fractures in the movie industry, and most of those fractures relate to quality of movies - the stories, the filmography, the overall care for the craft of film-making.

Kim Hollis: I can certainly say that I've been substantially more discriminating with my movie-going this year than in the past few. If something looks like garbage, I'm a little bit less inclined to go out and see it. I'll wait for DVD, maybe.

Joel Corcoran: If you give people a reason to go out to the movies, they'll go, as long as the experience offers something more than they can get at home in front of a home theater system.
You'd buy groceries online if given the opportunity, wouldn't you?
David Mumpower: An analogy I made the other day in an interview which I like involves groceries purchase. If Wal-Mart introduces a new home delivery line, wouldn't you expect it to do well? Why go out for groceries when you can stay in and have them delivered to your door?

Kim Hollis: Absolutely. We're becoming quite an insular society.

Joel Corcoran: But movies aren't the same as groceries, David. Unless you have an actual, big-screen movie theater in your home, there is something different about seeing Batman Begins at the theater versus seeing it at home, even on a widescreen plasma projection TV with full surround sound.

David Mumpower: Now then, from Wal-Mart's perspective, if those numbers don't count as part of their business, their numbers would go waaaaay down. Is the industry itself slumping? No. We're still buying the groceries. The difference is in the accounting process as well as in fewer employed cashiers at the Wal-Mart store. Studios are making more
money than ever. It's exhibitors who are the cashiers in this scenario.
Their livelihood is the one threatened.

Joel Corcoran: With film, the delivery medium does affect the quality of the product. But a bar of Ivory Soap is a bar of Ivory Soap, regardless of how it gets into my hands.

David Mumpower: There isn't to me, Joel. I accept that a lot of people say that going to see movies is special but I don't think that's the case most of the time. There are very few BIG films. The reality is that there aren't more than half a dozen of these a year. It's the rest of the films which become victims of circumstance. Those are the ones which get shut out.

Kim Hollis: It's different, sure. But by watching at home I can pause the movie if I need to do something real quick, I can avoid annoyances like cell phones or crying children or talking people, and I can be comfortable (I find movie theater seats to be astonishingly painful). I'll choose home if given the choice, and that's even on a special-effects driven film.
Without movie theaters, we might never leave the house

Joel Corcoran: I completely agree, Kim, but it's all a trade-off. And I'm certainly willing to sacrifice a heightened experience at the theater for more convenience and comfort at home for mediocre movies. Regardless of the special effects involved.

David Mumpower: People say that it's in a media consumer's nature to want to go out to watch a movie but I don't buy that. We watch more television than anything. It's free and it's a home delivery model. The only difference in movies comes with a Harry Potter, Star Wars or the like. Most of them aren't "special" enough to make more engaging in a theater than at home.

Dan Krovich: I find many movies that aren't obvious big special effects eye candy to be greatly enhanced in the theater compared to home.

Joel Corcoran: Maybe for you, David, but for most people, the experience is much different. Not every home has a $10,000 home entertainment system with Dolby or THX, a great DVD player, and TiVO. Most people have a 20 inch TV that's a few years old and a DVD player they got on sale at JC Penny or Costco. I fall into that category.

Kim Hollis: But do you need the big surround sound system to watch In Her Shoes? I think you'd have to say no. There's only maybe 10 films each year that truly merit the "big screen experience".

Joel Corcoran: But I'm not going to spend eight bucks on a theater ticket and another ten bucks on popcorn and a drink for just any movie. I will for some really good films, like Crash or Batman Begins. But for the mediocre, run-of-the-mill pabulum like Fantastic Four or Dukes of Hazzard, I'll just wait for the DVD.

David Mumpower: My "nicest" TV was $300 when I bought it. The experience doesn't change for me and I fervently believe that I am giving the mode answer here. Is a movie better in a theater? The answer would universally be yes. Is it so much better that it's worth putting up with cell phones, loud talking and commercials? The answer there has swung to no. Studios and exhibitors need to adapt to that changed market climate.

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Re: Studio Execs out of Excuses 27 Oct 2005 15:32 #11185

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Hell, if all else fails, BLAME IT ON THE BOSANOVA... Deep down, they already KNOW the reasons... They (and we) have created a market driven by pursuit of the fast buck and instant gratification... They have been making crap pictures geared to the mentality of a fifth grader, and we have been stiffing the ticket buyer at the boxoffice to see them... Before the echo of the final credits has died out, they have rushed 'em to the ancillary markets, lest they be quickly forgotten amoung all the other mundane crap already there... This exercise in greed and shortsightedness has finally caught up with the industry, and we are reaping the benefits... With the economy teetering on the brink of recession, it's almost certain to get even worse... Will the industry be able to woo back part of what we lost, with all of the electronic industry courting the same dollars?... Looks like an unpleasant learning experience is coming up soon for all...

[This message has been edited by outaframe (edited October 27, 2005).]
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Re: Studio Execs out of Excuses 27 Oct 2005 23:08 #11186

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OK, this is all very interesting, and I did enjoy reading Sevstar's post. However, one of the biggest truths in the whole article was at the end:
Is a movie better in a theater? The answer would universally be yes. Is it so much better that it's worth putting up with cell phones, loud talking and commercials? The answer there has swung to no.

I think it's a good point. Matter of fact, it's probably never been worth putting up with cell phones, loud talking and commercials, and there once was a time when the exhibitors would never have allowed it. However, short sighted as many of them seem to be these days, getting your money is more important than developing repeat business... and that might just be a chicken that's coming home to roost.

As for "stiffing the customer at the boxoffice"; that's a mentality that's always amazed me. There are darn few things you can do with your family that's cheaper than going to a movie. People get stir crazy and do need to get out of the house from time to time. Go to a professional sporting or stage event. Take your family to the county fair. For crying out loud... go eat anywhere but McDonald's, and you're going to spend more on the outing than it cost you to go to the theatre. The point is that people don't go to the movies once or twice a week anymore, and THAT'S what has to be adjusted for (aside from the crappy content). It costs $6.75 for a 12 oz bottle of Bud Light at the ball game, but you don't hear anyone bitching about that, and they DO buy it... a lot of it! For a lot of people, it's part of going to the game, and they intentionally buy into the experience. Don't like beer? Substitute peanuts... Dippin' Dots... hot dogs or cotton candy. Just about all of it is more expensive than you'll find at ANY theatre, and I hear NOTHING about it. But... charge $2.50 for a 24 ounce Coke, or ask $7.50 or $8 for an evening you've worked hard to build for your customers, and you're
accused of looting and pilliaging the countryside!

If the movie is decent and the rest of the experience is a positive one, it's an event. It should be viewed, and sold as such, with a commensurate price tag. Content aside, it doesn't seem all that unreasonable to ask for 7 or 8 bucks to see a movie that cost millions to make. Just dispense with the garbage that comes with it. Can the ads (except maybe for the slides), focus the picture, check the sound once in a while, put a little showmanship back into the presentation... and enforce some freaking discipline in the auditoriums, and more people might respect the product.


Have a happy day, y'all!
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Re: Studio Execs out of Excuses 28 Oct 2005 01:27 #11187

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JACK, no disagreement from here with your comments about controlling audience behavior, noise, irratating commercials and providing as technically excellent presentation of the film as possible... Even back in the days when movies cost two bits, the ticket buyers DEMANDED that, and have every right to still expect it today...

I'm not a baseball fan, but I do love football, and I won't shell out the $100 plus for a so-so ticket, nor buy any of those $5 hot dogs when I can watch it in comfort at home (even see more than those at the game) and snack for "peanuts," if I choose... Yes, even though TV has boosted sports interest considerably, several thousand times as many see the game on the tube as attend the game... The team owners share in the TV ad revenue (and cable fees) so they win both ways... If we don't bring 'em in the door, we get zip (naturally)...

Live theater tickets cost an arm and a leg today... MAYBE I'll go once every 5 years or so, and only then, to something super spectacular...

These, and your ball game, are not really comparing oranges-to-oranges alongside movies, however... These are one-time real time live events, while movies (and DVDs) are recordings which can be viewed in more than one location, and as many times as you wish... That movies are far superior when seen in a really good theater, as opposed to even the best home envoirnment is no contest... However, they can be seen at home with pretty good results, and for generally a fraction of the cost, at the viewer's convenience, and without ANY of the distractions you mention...

Supply and demand determine prices (within limits) and there is a huge supply of movies (in theaters and available on DVD) so demand for movies in theaters suffers...

Pick a year of your choice from the movies' golden age, multiply the ticket prices from then by the inflation factor since that time, and today's ticket prices are GENERALLY too high, let alone the fact that the picture we are selling will be available at Blockbuster & Wal-Mart within a very few weeks... Ticket buyers know that...
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Re: Studio Execs out of Excuses 28 Oct 2005 10:43 #11188

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The product we have to offer is what drives the business. And if it's lousy or so so it will sell that way. Wether it's movies in theaters or video stores if it's not that good sales will reflect that. Just as not so good tv shows will have low viewership and be cancelled soon.

I have never considered live major events a comparison at all. Since they are for the most part not daily or weekly events, like movies. And high prices are more accepted, since most are tours or on the road one time real time events. So the money has to be made quickly. Little or no chance to make it up next week.
As for football games I always wondered how the concessionaires felt about all the tailgate parties cutting into sales.

We are a long long drive from most of these major events. We do feel the dip in business in the fall from Football Fridays at the local high schools. Also when the schools drama classes put on their performances. But I still can't compare them to going to the movies. They are once a year events or seasonal and come to their end.

People will go to them. And if they miss the current movie at the theatres, no big deal they will catch it later on DVD, etc.

Movies use to be an event to the public. Like going out to dinner at a more upscale Restaurant vs McDonalds. Just looking at how the public dresses says something about how the public perceives what they are doing and going to. 25 years ago I would see many more patrons at the theatre dressed like they were really on a night out. Now it's much more like they are stopping in at MickyD's. So it looks like the public's overall perception of movies and seeing them has also changed over time. It's no longer and event. It's like fast food for the brain and it's everywhere. So this is where the publics thinking about prices and their complaints come in. Are we charging upscale Restaurant prices, but the public perceives us as more MickyD's? Plus our product is now also eventually available for take out on DVD.....

I'll end this going back to the beginning. And that has to do with the product we have to sell. You can have the most elegant Restaurant, great staff and service. But if the food your serving is so so or even bad. The public is not going to patronize you...

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Re: Studio Execs out of Excuses 28 Oct 2005 11:10 #11189

This all should really be in the "Are The Movies Dying?" thread.

A few things about the sporting event and theatre comparisons:
-The theatres use to be single screened. Everyone was there to do just one thing, like at the sporting events.
-Now, the theatres keep getting bigger and people may be connecting the size of Wal-Mart, as in, its so much bigger so we save money.
-There currently is no Wal-Mart of theatres.

I think its about time to make admission prices a loss leader.
Since 1987
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Re: Studio Execs out of Excuses 28 Oct 2005 12:22 #11190

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Outaframe makes a good point, in that sporting events happen once. I used those examples mainly as illustrations that people will be somewhat less picky about the money they spend, if they feel the overall experience is worthwhile. I mainly picked those examples out of the air, also to show the curiosity that a dinner at anything more upscale than a McDonald's or Burger King will be more expensive than a movie, and will be gone in 4 hours.

Why is the movie-going experience not viewed as the event that, as Sevstar says, used to be a 'dress-up' occasion? Oversaturation, maybe? There's a gigamagoogaplex on every street corner these days. Seemingly next to that is a video store. Every film you'd ever want to see is on some cable channel these days. The radio band is full of channels. There's a magazine, or tabloid, or blog to cover literally every interest, religion and political persuasion you could possibly imagine... and thanks to the internet, peer-to-peer downloading and the forces of competition, much of this content is either free or very cheap... Everyone has a cell phone, maybe an iPod or mp3 player, and this generation is growing up seeing all of this as being normal.

So... aside from the content issues, how does the movie theatre pull itself out of the fray?
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Re: Studio Execs out of Excuses 28 Oct 2005 14:55 #11191

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Everyone who's posted so far has made valid points... We ALL know what's wrong, we just don't know EXACTLY how to fix it... Perhaps there is no magic PANACEA, but rather a lot of lesser things, which if repaired TOGETHER may cure our dying industry...

The references to McDonalds & Wal-Mart are relevant, though not EXACTLY parallel to the movie biz... I remember a time when the cost of a movie ticket was so insignificant that no one even considered it, and the movie theaters were USUALLY full... Of course, this was also a time when Life Magazine cost a dime, daily newspapers cost a nickle, candy bars and soft drinks (in glass bottles) or at drugstore soda fountains cost a nickle, there was NO TV yet, and people DID dress a lot more formally, even for a trip to the grocery store (or the "new" supermarkets)... The first McDonalds came along shortly after that time and sold their regular hamburgers for 15 cents and fries for a dime, while the normal burger joints sold theirs for a quarter... There were a lot of other local burger chains around already, but what set McDonalds apart was their clever adverizing campaign that created an image of inexpensive, "good," and "fun."... KFC and others did the same with other food lines... Wal-Mart eventually did the same, but with being the store that sold everything for "less."... This was not a new concept, but had been started in the 1890s by Sears & Roebuck with their catalog that sold "everything in the world at the cheapest prices."... In the real world much of this is more illusion than fact, but the public bought it then, and still do... Amazingly, McDonalds still has a burger available for about 30 cents, but it's the size of a poker chip and buried amoung all the high profit items on the menu...

The point of all this is that price enters into the equation, and to say that movies in theaters are the biggest bargain in entertainment today is NOT selling in the minds of the potential ticket buyers, and that's where it matters...

Thanks for listening, more later...



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