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Costs Rise and Box Office Drops

March 6th, 2003

President of the MPAA, Jack Valenti addressed attendees of ShoWest yesterday (March 4th) about the state of the movie industry. And while there were some good news, there was some dire news as well.

The Good:

· Total Box Office was up more than a billion dollars to $9.5 Billion, up 13.2%
· Total Admissions up 150 million to 1.64 billion, up 10.2%
· International admissions up 500 million to 7.3 Billion, up 7.5%

The Bad:

· Total Screen Count down nearly 1500 to 35,280, down 4%
· Average Box Office per MPAA movie dropped $2.3 million to $32.5 million, down 6.6%
· Average ticket price up 2.7% to $5.81 compared to national inflation rate of only 2.4%

The Ugly:

· Average production cost per MPAA movie increased $11.1 million to $58.8 million, up 23.2%
· Total number of theatres decreased by almost 1000 to 5635, down 14.6%
· With the increase in costs and the decrease in box office, it now cost $56.9 million more to make and advertise the average movie than the average movie makes at the domestic box office. That gap is up 29.6% from last year.

There are a few ways the movie industry can fix this problem.

They could go the James Bond route and sell product placements. However, most films couldn’t make a fraction of the $70 million Die Another Day made this way, because they couldn’t showcase high-end goods that James Bonds can. And some movies are just too controversial for advertisers. Can you imagine and company allowing their chainsaw to be featured in the upcoming remake of Texas Chainsaw Massacre. Also, the producers and advertisers risk alienating viewers by showing too many products, or showing them in too obvious a way.

Go with more ‘lessor known’ talent to save on salaries. John Travolta reported demanded $27 million to do The Outlaws, as a result no studio picked up the project. The three stars of Charlie’s Angels 2 will make nearly $40 million combined, almost double what they got the first time. Lack of superstars didn’t hurt My Big Fat Greek Wedding’s box office. The same can be said for The Ring. While a big name can generate attention, it doesn’t mean box office success. A bad movie with a superstar is still a bad movie.

Make fewer movies; think quality and not quantity. When there are an average of nine movies released a week of course most are going to fall between the cracks. Granted, many movies produced are never intended for wide release, but having 3 or more movies open wide in a single weekend is very common. And that kind of competition virtually guarantees at least one of those movies bombs.

What they can’t do is dramatically raise ticket prices, or increase the number of ads shown before movies, and demand larger percentages from exhibitors. That would only drive more people to alternate entertainment sources (TV, DVDs and Videos, or god forbid, Books) in a very crowded marketplace.

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Source: Screen Daily