Admissions hit 40-year high as studio ad spending rises

LAS VEGAS — The movie industry is spending substantially more to sell movies that are costing substantially less.

That’s the paradoxical situation explicated Tuesday by MPAA topper Jack Valenti in his annual report to the ShoWest trade show. But his capper was even more surprising: Despite the impact of Sept. 11 and the dicey state of film product, admissions hit their highest level since 1959, rising almost 5% over 2000.

Production costs on major studio pics dropped 13% to an average $47.7 million in 2001. But marketing expenses rose 13% to an average $31 million, figures that shed light on why many event movies in 2001 had such weak legs.

As a result, combined negative and P&A (prints and advertising) costs dropped 4% to an average $78.7 million.

“The movie companies are exerting fiscal discipline like they have never done before,” Valenti told the 2,600-plus exhibs and distribs gathered here for their annual confab.

At a press briefing, officials were asked to explain the rising level of marketing expenses relative to production outlays.

“It doesn’t take much money to make a Big Mac, and they market the heck out of that,” MPAA staffer Rich Taylor responded.

“Marketing will get people in that first weekend — but not after that,” Valenti stressed.

Marketing issue

But John Fithian, prexy of the National Assn. of Theater Owners, took issue with the latter claim. Exhibs believe distrib advertising is too front-loaded in theatrical campaigns, he said.

“There is a bizarre tendency toward everything being focused on the opening weekend,” Fithian said.

Meanwhile, domestic admissions rose almost 5% over the previous year to 1.49 billion, a figure that surpassed even a 1998 admissions peak from “Titanic” contributions that year.

“A lot of people thought that after Sept. 11 the movie industry would go into the tank,” Valenti said. “The opposite has happened. Instead of being confined in their homes (Americans) went out to be entertained.”

The MPAA admissions comparisons use a slightly higher B.O. total for last year — at $8.41 billion — than in some other calculations. But its average domestic ticket-price calculation of $5.65 is roughly in line with previous estimates.

Overseas admission gains

NATO’s Fithian noted many foreign territories also marked admission gains last year, with Japan seeing the highest number since 1986 at 160 million, and France and the U.K. marking gains of 10% and 9%, respectively.

“Exhibition depends on good movies and good movie houses, and not on the state of the general economy,” he said. “In a year of worldwide recession, a record number of movie tickets were sold in many territories. That trend is continuing in 2002.”

Fithian said a relative paucity of R-rated fare last year helped fuel the gains. None of five pics grossing more than $200 million domestically was R-rated, and only three of 20 taking in more than $100 million bore the restrictive rating.

“Part of the explanation for the success of 2001 comes from an important trend toward family-friendly films — a trend strongly supported by NATO,” Fithian said. “Year after year, the box office tells an important story for our friends in the creative community. Family-friendly films sell; R-rated features do not.”

But Valenti placed the emphasis elsewhere.

“I don’t believe in genres,” the Hollywood vet said. “Family films don’t necessarily mean a successful film — it’s the story. We don’t have a secret formula buried under Spago’s restaurant out there. One war film does well, another does not do well.”

Paramount’s R-rated war pic “We Were Soldiers” opened at a frame-record $20.2 million last weekend, as some observed that the Mel Gibson starrer might have been expected to produce even a bigger bow.

Fithian lauded a lower industry screen count in ’01 at a total 35,459 screens and roughly another 3,000 in Canada. That compares with a recent U.S. high of about 37,000 screens and a comparably higher number in Canada, as North American exhibs conducted a furious competish to roll out new megaplexes and expand individual marketshare.

“Admissions went up and screen count went down; taken together, those trends are fueling an economic recovery in American exhibition,” the NATO topper said. “Despite the record box office numbers and the improved financial condition of our companies, exhibitors must move forward cautiously. We must learn our lesson and not return to the days when we built on top of each other and failed to close older properties fast enough.”

Building binge seen as key

Fithian said the recent building binge did accomplish notable improvements to theater infrastructure, however.

“Stadium seating and great movie houses make it really exhilarating now to go to the movies,” Valenti agreed.

Figures show the Hispanic population is the heaviest in moviegoing, with per-capita viewing of 9.9 films that repped 15% of admissions. The black population saw 7.6 films per capita, forming an 11% constituency. And the white population viewed 8.1 films per capita, repping 68% of admissions.

Meantime, officials noted the increasing importance of other film-distribution platforms such as DVD, VHS and television.

“Only two in 10 films make their money back through theatrical exhibition,” Valenti said.

On other topics, the MPAA czar praised the industry’s charitable efforts following the September tragedies. And he took the usual time to address a couple of ShoWest keynote perennials: Piracy is still bad, and voluntary rating systems are still good, Valenti assured a receptive audience.

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