LAS VEGAS — Overseas exhibitors are ready to push into such giant untapped markets as Russia and China, but a group of them insisted Monday they won’t move forward unless distributors lower film print rental costs to make expansion economically viable.
“I think the big opportunity is Asia,” said Joe Peixoto, CEO of United Cinemas Intl. Local infrastructure is poor, there is a large population and a huge appetite for film — while economies from South Korea to Malaysia have strengthened, he said during a discussion of the international exhib biz at industry confab ShoWest.
Talk ranged from the building frenzy that’s migrated from the U.S. to Europe to foreign exhibs’ strong desire for a shorter window between U.S. and overseas releases and the advent of digital cinema. On all points, the message to distribs was simple: You need us as much as we need you, and we don’t want the short end of the stick.
Peter Dobson of Warner Intl. Cinemas said, “China is just sitting there, waiting for the taking.” There’s also plenty to do in Japan and Latin America, plus huge potential in Russia and Eastern Europe, but given the cost of new construction and the necessity of low ticket prices in developing markets, the exhibs said they need some help.
“Film rental is a real issue,” said Cinemark Intl.’s Tim Warner. “Exhibs have to go in there with brick and mortar. I personally don’t feel that distribution is doing enough to encourage the growth of the marketplace.” He also didn’t see changes in China or Russia happening without a break on rental to about 40% of box office. It currently ranges from about that level (in very few cases) to 60% or more.
“The average ticket prices in Third World countries are much lower than in the U.S. and probably will never increase to the U.S. averages,” Warner said. But admissions are high and likely to mean profits in the long term if exhibs and distribs work together, he added.
Exhibs, meanwhile, aren’t shy about claiming credit for expanding the film market with their new multi- and megaplexes. “What would the state of the industry be if we hadn’t built?” Warner said.
According to ACNielsen EDI, there’s been a 40% jump in screen count overseas in the past five years, with attendance up 31%. Distribs have done their part with new product, as the film supply has grown by 50% over the same period, giving moviegoers in international markets an unprecedented range of choices in any given week.
Of course construction costs money. “At $100,000 a screen, that’s $450 million. At $200,000, it’s a billion dollars,” and so on up, said Nielsen EDI’s Ton Borys.
One observer, Joost Bert of Brussels-based exhib Kinepolis Group, said that while overseas players could and should be wary of overeager development after witnessing the financial pain and massive debt loads of their U.S. counterparts, the international crowd isn’t taking the hint. “I see it as an exhibitors’ disease,” he said. “No lessons will be learned. It’s happening in Germany. France is next. It’s very sad to see, but it’s a fact.”
Taking advantage of their moment in the sun, the group sent out a few other messages to Hollywood:
- Please cut down on the U.S.-centric sports movies. American football is only in America. Also ease up on U.S. politically themed pics.
- Spread out the releases. Distributors have a tendency to bulk up on genres during holiday seasons, limiting each film’s success. If a pic is given breathing space in off-season distribution, it may well generate worthy box office. In the meantime, genre pics will again square off this summer when “The Road to El Dorado” and “Dinosaur” face off overseas.
- Close the window between release dates in the U.S. and Europe, for everyone’s sake. Piracy is a major problem, Dobson and others said, and bad buzz travels overseas fast. Look at “The Beach,” which had a very short window and did so-so biz in the U.S., but cleaned up overseas. “I wonder what would have happened if there was (a) 100-day wait,” he said.
A little late
Peixoto noted that “Stuart Little,” out last December in the U.S., won’t hit foreign markets until this summer. “The bloom might be off the rose,” he said.
The exhibs noted that the rise of digital cinema, which will make global film launches a snap, may address that particular problem.
Peixoto said he believes digital cinema will become more widespread in two to three years. Overall, the exhibitors believe that distributors — who would save on shipping costs and film restoration — will reap most of the benefits the soonest, but that there’s something in it for them as well — advertising for one: It will be cheaper and easier and more highly targeted.
“We can show whatever we want — the screen will never be empty,” Bert said. Grade schools, universities and a number of other institutions are interested, he added. After a bad experience in one of his locations, however, where fans nearly ripped the place apart, he may stay away from soccer — since movie theaters have no problems with alcoholism, hooliganism and drugs just now. “We don’t have it, and we have to avoid it,” he said.