The industry dictum that it’s a “product-driven marketplace” hit home with a vengeance last week. Three high-profile releases – Buena Vista’s “The Scarlet Letter,” Paramount’s “Jade” and Fox’s “Strange Days” – debuted with embarrassing results at the box office. They had stars, they had big campaigns, they had action, drama, sex – and no commercial oomph.

“What’s been lost sight of is the vitality of our primary business – theatrical movies,” observes a senior studio exec. “Because there are so many other revenue streams, from cable and cassette to soundtracks and merchandising, I believe there’s been a collective, subconscious shift of focus that’s had a negative impact on the product.”

As the bad news was filtering in, studio and exhibition honchos were boarding planes last week to attend the ShowEast convention of the National Assn. of Theater Owners in Atlantic City. The immediate mood at the confab was alarmingly similar to that of ShoWest in March.

Theater owners continued to seethe about weak fall and spring release schedules as the majors lined up showcases of strong summer and year-end movies. One exhib likened it to a political platform with the message: “Forget the past, good times are just around the corner.”

However, a lot of sectors are beginning to wonder how much trust they should place in an upturn. From the podium, NATO president Bill Kartozian called for radical surgury to save the patient. He repeated the rallying cry that there are too many blockbuster titles being scheduled for the summer and lateyear holiday period at the expense of the rest of the calendar. And he had the results of a national survey of filmgoers to back his contention (see story, this page).

3rd qtr. lags

While summer box office provided overall growth of barely 1%, third-quarter results finished 4.5% behind 1994 and the current year so far is not quite 1% ahead of last year’s record pace.

Domestic theatrical growth has seen consistant annual increases of 3%-5% during the past decade. Barring Herculean efforts and unprecedented response to late-year releases, that scenario simply won’t occur in 1995. It’s bad news for exhibition, which has been building new multiplexes on the assumption that comparable growth would be maintained.

It’s also bad news for most of the major distributors. Though the theatrical gross has experienced a slight bump this year, that has occurred with a 12% increase in the number of wide releases. On average, the theatrical return per picture has diminished while production and marketing costs have escalated. Profit margins for the majors are likely to experience their greatest shrinkage since the homevideo boom of the 1980s.

While some contend that ancillary markets are dictating many production choices, it’s still box office performance that substantially determines commercial life beyond movie screens.

A collective shudder went through the industry as a result of the commercial rejection of all three of last week’s freshmen pictures. It represented the breaking point for a season singularly lacking in hits.

Sweeping aside the quality of the new films, angry epithets were being flung at the decisionmakers and strategists. Theater operators wanted to know why last week’s trio were all R-rated at a time when there was no paucity of restricted fare on screen. Not only do Rs, by definition, cut out the significant under-17 crowd, they historically haven’t played well outside of major urban centers. And, hand in glove with that, why was it that no one had the wherewithal to foresee a need for more family-rated pictures prior to American Thanksgiving in late November?

The picture darkened further in light of three more R-rated releases that opened Oct. 20 – MGM/UA’s “Get Shorty,” TriStar’s “Never Talk to Strangers” and Gramercy’s “Mallrats.” Even the presence of a PG in the mix – New Line’s “Now and Then” – provided no solace as it’s not expected to generate significant B.O. heat.

From an exhibition standpoint, there’s not only an imbalance of adult-appeal movies, there’s just too many disposable titles altogether. Where are the blockbuster titles, now that they’re needed the most?

Everyone wants better pictures. The problem is usually that “good films” are defined on the basis of “I know one when I see it.”

Demi couldn’t save it

An exhibitor at ShowEast wasn’t sure he would have given a thumbs-up to “The Scarlet Letter” had he been polled prior to it receiving a greenlight. “I guess I’d want Demi Moore in ‘Scarlet Letter,’ but not the version they made. I’d want the version that worked for an audience,” he noted.

Universal exec VP Nikki Rocco said the company plans a mix of different types of pictures, season by season. “There’s no clearinghouse and no guarantees,” she says. “But we did identify that there was going to be a lot of adult-themed and maleappeal films this fall, and that was probably just the added incentive that ‘How to Make an American Quilt’ needed.”

“I think the business is in a state of crisis for a lot of reasons,” said one studio distribution exec. “I don’t see a lot of hot young talent coming up, and I see too much biz and not enough show. It’s become very assembly line and about hitting key release dates. I suspect that if you went into any studio and swept out its 20 top executives and replaced them with 20 qualified people, the hit-miss ratio wouldn’t be significantly different. It’s a pretty frightening thought.”

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