LAS VEGAS — With Hollywood slimming down, marketing costs for major studio films fell in 1999 for the first time in 20 years, while negative costs for pics saw their second consecutive dip, according to MPAA president Jack Valenti.
Speaking to reporters Tuesday at the ShoWest convention here, he also noted a whopping 8.3% jump in average ticket prices last year, clearly the main driver of 1999’s record $7.5 billion box office. Theater admissions eased 1.1% despite an unprecedented expansion of the exhibition business that has dotted the country with new multi- and megaplexes.
Marketing costs dipped by an average of $780,000 per film to end the year at $24.5 million. Negative cost fell $1.2 million in 1999 from the year before to an average of $51.5 million. That made for a total average cost per pic of $78 million. The figures indicate studios are getting serious about cutting costs along the road to a more profitable future. “It’s two years in a row that average negative cost is down — extrapolate that to three or four years out, and you’re going to see a major change,” Valenti said.
The numbers, Valenti said, come straight from the studios, which provide the MPAA with a list of films and their costs without identifying the pics by name. He said he had no details as to how studios are reducing their marketing expense, a surprising phenomenon given the heightened usage of increasingly expensive television advertising along with forays onto the Internet.
Less upbeat was news that costlier tickets drove box office receipts last year, not more folks flocking to theaters. Attendance, or admissions, eased ever so slightly in 1999 to 1.465 billion, while average ticket price surged from $4.69 to $5.08. That may sound modest — especially considering the hefty $9.50 New York City theatergoers have to shell out — but it represents the biggest ticket price increase in a decade and most certainly contributed to the decline in admissions from 1.480 billion to 1.465 billion.
In a speech sprinkled with statistics and literary allusions from the Bible to “Beowulf,” Valenti attributed lower admissions wholly to the “riptide rapture effect” of “Titanic” in 1998 that made for tough comparisons. That argument seems hard to justify since total box office rose 8.7% from year to year.
Ticket price averages include matinee prices as well as senior, student and other discounts.
The decline in admissions, calculated by dividing annual box office gross by average ticket price, was unexpected, especially after a building boom that has seen virtually every major theater chain bulk up on locations and screens. 1999 screen estimates are 37,185, up 3000 from 1998.
Some observers say there aren’t enough moviegoers to support all the new construction. Others note that attendance at older theaters has been falling off much more rapidly than expected as the new ones come online. Valenti pointed out that despite last year’s tepid performance, attendance has soared 25% over the past eight years.
Flanking Valenti and new National Assn. of Theater Owners president John Fithian at ShoWest’s opening ceremonies, former NATO topper William Kartozian urged theater owners not to be shy about jacking up prices. The spiffed up and expensive properties they’re now running, complete with stadium seating and other perks, are worth it. He and Valenti insisted that movie tickets are still the biggest entertainment bargain around.
Valenti said the MPAA’s box office figure includes neither the subsidiaries of major studios, like Disney’s Miramax or Time Warner’s New Line, nor DreamWorks, although the young studio will be added eventually. “It’s just a question of them having enough pictures in the pipeline,” Valenti said. Daily Variety and other publications reported the $7.5 billion 1999 box office figure earlier this year but included both DreamWorks and all major studio subsidiaries.
Valenti also sparred with reporters as he staunchly defended the current movie ratings system that he helped pioneer more than three decades ago. “Nothing lasts that long in this brutal” marketplace unless it serves a purpose in a major way, Valenti said of the MPAA system, which turns 32 in November. Some 76% of parents in the U.S. find it helpful (versus only 21% who say it’s useless), he said. “I know politicians who would kill their children to get a 76% approval rating.”
The ratings have come under fire for forcing filmmakers to cut or alter their work to muster an R rating to avoid being slapped with the hard-to-market NC-17 that some say should be reserved for pornography. The battle cry grew shriller last year when digital figures were inserted into Stanley Kubrick’s “Eyes Wide Shut” to partially obscure an orgy scene.
Valenti is quick to point out that any changes are voluntary on the part of filmmakers, who are welcome to shop their movies from theater to theater to try to sell them. “I can’t worry about 10 directors and 10 producers out there who are kicking up a fuss when there are millions of parents out there looking to us” for guidance, he said.
“We’re doing (a balancing act) between what Hollywood wants and what Washington wants,” Fithian said. In comments sure to warm the heart of any politician, Fithian called for more films rated G, PG and PG-13. Last year, he noted, eight of the top 10 grossing films earned one of those three ratings, although the great majority of all films released were rated R.
Regarding the exhibition industry’s much heralded transition to digital, Fithian said it won’t happen any time soon and called it “impossible” for struggling theater chains to pay for it. “When you read about exhibitors’ bottom lines, it should suggest to you that we cannot finance the transition,” he said, noting that talks with distributors and third parties are in the very early stages.
Other nuggets on the film biz:
- Last year, 677 films were rated by the movie ratings system. Some 461 films were released from both major studios and independent distributors. Major film companies released 213 movies in 1999, down eight from the year before.
- Moviegoers ages 12-24 account for 39% of tickets sold. Those 25-39 account for 30%, and the over-40 crowd comprises 31%. The MPAA does not keep track of filmgoers under 12.
- The fastest-growing moviegoing ethnic group is Hispanics, attending about 11 films a year and purchasing 15% of tickets sold.
- Three out of four people in the U.S. go to the movies at least once a year. About 33% of the U.S. population are frequent moviegoers — 12 times a year or more. That group makes up 80% of all ticket sales.
(Dade Hayes contributed to this report.)