The bad news: Box office was down last year, according to a state of the industry report given at the Showest convention yesterday. Precisely, domestic box office dropped 6% in 2005, to $8.99 billion, and worldwide box office took a bigger hit, decreasing 7.9% to $23.24 billion.
2006 TO BE A MAKE OR BREAK YEAR FOR HOLLYWOOD
Movie Industry Grapples With Box Office Declines and In-Control Consumers
Fewer people went to the movies across America -– 1.4 billion admissions were reported last year, an 8.7% dip from the year before. Ticket prices continued to increase, though consumers have cited the price as only one of the reasons they've stayed away from the multiplex.
Three years in a row
The average theater attendance per person was down for the third year in a row, said Dan Glickman, CEO of the Motion Picture Association of America, during the opening Showest address.
The good news?
Executives with the MPAA and the National Association of Theater Owners insist there's plenty. Most of it centers on consumer research that found 70% of moviegoers feel that the big screen is the only way to see a film. Costs to produce and market films have flattened, while a record eight movies grossed more than $200 million, according to the MPAA.
The windows -– the space between a feature release and its DVD -– did not close as much as some industry watchers had feared. On average, there are four months and 16 days between the two releases, down four days from the prior year of four months, 20 days.
A year of reckoning
2005 was a year of reckoning for the movie industry, and this year will present a turning point, analysts have said. Mr. Glickman, a former U.S. secretary of agriculture, spent part of his keynote speech talking about the virtues of moviegoing to the assembled crowd of mostly theater operators. He said he does not believe that moviegoers are a dying breed.
Theaters could, and should, do a better job of giving consumers value for their dollar and spreading the word that going to the multiplex is a good value. Those businesses depend on Hollywood for good product. Last year's film crop took a critical beating, and even some inside Hollywood blamed the quality of the movies for the drop in consumer interest.
Exhibitors, in response to the decreased box office, have started to test out new added-value features, and Mr. Glickman said more need to follow suit with such amenities as loyalty programs, concierge services and wireless ticketing.
"Are we giving the customer the most bang for their buck?" Mr. Glickman said. Along with researching consumers to find out what motivates them, or doesn't, Mr. Glickman said the exhibitors could consider image campaigns meant to boost the business as a whole.
"We spend hundreds of millions promoting individual movies," he said, "but we spend virtually nothing promoting the experience of going to the movies."
He likened the situation to the beef, milk and pork industries, which he worked closely with in his previous government job, and said generic ad campaigns intending to lift those industries did just that.
Such a movie-centric campaign is under consideration, though nothing formal has been decided, executives said.
Several film organizations are working together to ask Congress to pass a resolution for next spring that would encourage people to go to the movies. It's tentatively dubbed National Film Week.
Aside from the strictly ceremonial, executives said they have been working on improvements that are intended to appeal to entertainment fans and draw them back to theaters. Digital cinema, which will improve the picture quality and give theaters greater flexibility on how they program their venues, is starting "right now," said John Fithian, president of NATO, "and it couldn't come at a more important time."
The digital quality in theaters can't be replicated in home-theater systems, Mr. Fithian said, acknowledging that sophisticated in-home systems have taken a major bite out of the theater business.
Other improvements are necessary and, Mr. Fithian said, in the works. Theaters have worked to liven up the pre-show ad packages with entertainment and exclusive information, created public service announcements about in-theater behavior and cellphone use. Increasingly, ushers are trained to sweep the theaters of rude patrons.
Downplaying multiple platform releases
Predictably, executives downplayed the recent experiment from filmmaker Steven Soderbergh, who released a low-budget independent film across the big screen, DVD and high-definition TV all at once. The film, "Bubble," has grossed some $5 million across platforms, and Mr. Soderbergh plans to release several more films in the same pattern. His partners in the venture, Todd Wagner and Mark Cuban, are committed to the new distribution, having their own specialty movie chain in which to show such films. Other theater operators have repeatedly refused to show movies that are available on multiple platforms.
"The tiered model works best for the cinema industry, the movie industry as a whole, and the consumer," Mr. Fithian said.
The collapse of the release windows would "homogenize the product," he said, with cinema becoming "little more than a movie of the week."
It's up to the film industry to safeguard the value of the product, he said.
It has yet to be seen if moviegoers, or lapsed moviegoers, will respond.