Mirroring its lead in domestic boxoffice shares (VARIETY, Jan. 7), Buena Vista led the race in rental market shares in North America last year. That’s the distrib’s second win in three years and in the five years since it began competing head-to-head with the historical majors.
As measured in film rentals – that is, the distributors’ share of boxoffice gross – BV earned 16% of all film rentals generated in 1990 from the North American (U.S. plus Canada) boxoffice.
Paramount was a close second with a 15% share of rentals. Universal and 20th Fox tied for third position with 14% each, just ahead of Warner Bros, at 13%.
As a group, those five majors collected a whopping 72% of the North American theatrical rental action. As noteworthy as their respective final rankings are, it’s also evident that all five were fairly competitive. This compares with some prior years when one distributor would so dominate the market that all others looked feeble in comparison.
Each year at this time VARIETY compiles North American theatrical rental market shares. A 21-year comparative data table, covering the years 1970 to 1990, presents the latest and all prior results (see chart, page 12).
These exclusive annual surveys use as a time base the calendar year, unlike some of the distribs, which have different fiscal years for financial reporting. Specific rental data are obtained, picture by picture, to compute the share data.
Film rental is the crucial measure of a distributor’s performance, because that’s the revenue that pays the costs of film production, promotion, prints and participations.
In contrast, boxoffice gross – the patrons’ ticket money – is the best comparative measure of a particular film’s performance. But exhibitors retain on a statistical basis half or more of the b.o., in order to sustain that branch of the industry.
In recent years VARIETY has also reported, on an intrayear basis, the cumulative boxoffice market share rankings of key distribution companies. Such rankings at year’s end are generally comparable to the rental market shares, but they are not always identical.
The reason is that boxoffice is generated in real time, while film rentals are paid to distribs in periodic payments, offset by delays of 30 to 60 days or even more from the point at which the underlying boxoffice gross was first generated.
Part of the distributor’s art is the structure of the license by which the exhibitor pays for the film. And part of the distributor’s performance depends not only on a film’s boxoffice gross but also on the time it takes to generate that gross.
For example, a moderately popular film might generate North American b.o. of $40 million. If it took 10 weeks to do so, the rentals might be $20 million; if it took 20 weeks, rentals might be $17 million; if it took 30 weeks, perhaps $15 million. Time is definitely not on the distributor’s side, especially in any era when borrowing costs are high.
As to other 1990 rental market shares, Tri-Star ended the year in sixth position with 8%; Orion followed at 6%; Columbia eighth at 5%; MGM/UA 10th at 3%.
Uniquely, New Line Cinema – on the strength of its fortuitous acquisition of “Teenage Mutant Ninja Turtles” – finished in ninth position with about 4% of the North American rental market. This is the first time in a decade and more that one of the minor distribs has earned that much. (One has to go back to the old days of American Intl. Pictures or Embassy to find the last occurrence.)
Hard to repeat as champ
Looking at the data table on page 12, some observations are evident. First, in a year when one company takes 20% or more of the market, it’s usually due to one of the megahits that towers above all other films.
Next, it’s very difficult for a distrib to repeat as number one in two consecutive years. Only Paramount has done it, and it has done it twice: 1971-72 and 1986-87.
Also, in the year following a distributor’s leading position, the company typically slips back significantly. This demonstrates that market share in the film business depends solely on the collective popularity of its films. Put another way, there’s no company or brand loyalty, only picture loyalty.
The table also gives mute evidence to the flailing performance of companies beset with management upheavals and corporate churning – Columbia and MGM/UA to be specific. Also, Orion and Tri-Star manifest the struggle of relative newcomers to get strong momentum, even when experienced management is in place.
As for Buena Vista, it never operated as a major distributor until the current Walt Disney Co. management took over late in 1984. But when Disney cranked up to be a full-service production-distribution company, its fortunes soared, from 1986 onward.
At 20th Fox, current management began hitting its stride in the feature film division last summer. Its 1990 rental market share was the highest since 1983.
Finally, if there’s proof that upper management stability and cohesion pay off, it’s the fact that Par and WB have each been the leading North American distrib six times in the past 21 years.