The explosive growth of the Internet, which has siphoned shoppers from shopping malls and given rise to new technologies like video-on-demand and movie file-sharing, has given the nation’s theater circuits plenty to worry about.
But when “Star Wars: Episode III — Revenge of the Sith” opened May 19, online retailing also provided a big boost to exhibs’ bottom line.
Fandango and MovieTickets.com sold $30.5 million worth of tickets, or nearly 20% of the pic’s gravity-defying opening weekend gross.
That’s a big shift even from “Episode II” three years ago, when the companies were just a couple of years old, accounting for only 10% of opening weekend B.O.
“Sith’s” blockbuster status makes the opening weekend’s numbers atypical. Online ticketing of your average new movie, says MovieTickets.com co-chairman Mitchell Rubenstein, is just 6% or 7% of the overall B.O.
But the trend marks a major shift in the moviegoing habits of the public. Based on the “Star Wars” pics, Fandango and MovieTickets.com have approximately tripled their sales in the past three years and doubled their combined share of the gross.
Online buyers pay an extra $1 per ticket for the convenience of a guaranteed seat and Netcos pass on a portion of that fee to the theater.
For “Star Wars,” even assuming online ticketing’s strong representation in urban markets means higher prices, the two companies made well above $3 million in just the first four days.
Fandango is owned almost entirely by a group of exhibs, including Loews, Regal, Carmike, Cinemark, United Artists, Edwards and Century, while MovieTickets.com is majority owned by AMC and National Theaters, with Hollywood Media and several smaller investors controlling the rest.
That means the rest of the surcharge indirectly works its way back to exhibs. The increasing amount of advertising both sites are getting, primarily from studios, also finds its way into the bottom line of AMC, Loews and their competitors.Advance ticketing got started in 1989, well before anyone but scientists were on the Internet and a decade before Fandango or MovieTickets.com, the market’s two players, existed. That’s when Moviefone, known to many moviegoers as 777-FILM, launched.
Started in Manhattan by Andrew Jarecki (who went on to direct “Capturing the Friedmans”) as a solution for audiences in the crowded borough tired of having to show up hours early to get a movie ticket, Moviefone eventually spread to dozens of cities and became an institution (if only for the famously enthusiastic voice of Mr. Moviefone).
Moviefone was acquired by America Online in 1999 for $388 million in stock and launched on the Internet, where a way to find information about and pre-purchase tickets for movies was an even more logical fit. But it also found competition there, as exhibs decided to launch their own services, rather than continue giving the business away to AOL.
By last year, Fandango and MovieTickets.com had pushed Moviefone to third place. Rather than try to catch up, AOL decided to focus its energy on improving the content on the site in a bid to draw more advertising and signed over its ticketing operations to MovieTickets.com.
The two remaining players have since become fierce competitors, dueling for market share much in the way that the New York Post and Daily News battle for readers.
Both sites typically only acknowledge the other’s existence when accusing them of distorting market share and revenue figures or gleefully passing on negative tips (one even offered to send a screenshot of the competitor’s site crashing at a crucial moment for this report).
On the whole, Fandango boasts slightly more screens: 12,900 worldwide compared to MovieTickets.com’s 10,000, and thus more sales (Fandango sold $16.5 million worth “Sith” tickets in the U.S., while MovieTickets.com sold $14 million).
But MovieTickets.com generates more traffic, thanks in part to links from AOL and a name that’s not quite so exotic.
It also has a fast-growing overseas presence, with strong operations already in Canada and the U.K. (Fandango has several hundreds screens in Canuck and none elsewhere).
Both netcos are seeing healthy growth, though, with dramatic increases for blockbusters like “Star Wars” or “Spider-Man” that send nervous moviegoers online to ensure they’ll have opening weekend tickets.
“What really drives our business day-to-day is convenience, but what grows it on a large scale basis is perceived demand,” notes Fandango CEO Art Levitt.
The rivalry isn’t always convenient for moviegoers, however. When Moviefone was in the mix, it shared listings with MovieTickets.com. If a theater had a deal with MovieTickets.com, users could also find it on Moviefone.com, and vice-versa.
But today, if you find a movie’s playing at the Grove in West Hollywood, there’s no way to buy that ticket on Fandango, nor can you purchase tickets for Universal Citywalk on MovieTickets.com. And while everyone agrees cross-listing would benefit both sides, neither seems ready to make a deal with the enemy.
For studios, a sale is a sale, and there’s no evidence yet that online ticketing is creating incremental growth in attendance.
In fact, revenue from ticketing could become secondary to the sites’ marketing potential. The services have become important outlets for movie advertising as the public increasingly gets movie news and showtimes online instead of from newspapers.
And as they become bigger players, both companies are becoming a more important resource for studios. They conduct market research, participate in promotions, and position themselves as valuable advertising outlets.
Marketing revenue is a particularly valuable growth area, companies note, as the overall online ad biz is booming. While it’s still relatively small, online ads nearly doubled last year as a share of overall film marketing spending. According to the MPAA, online marketing accounted for 2.4% of the average campaign last year, or about $750,000 per pic (and well into the millions for tentpoles).
Rubenstein says his company is seeing advertising revenue grow significant faster than ticket sales, at a rate where it may soon become the majority of MovieTickets.com’s business.
Paramount Interactive Marketing VP Amy Powell observes that her studio uses the sites the week before a pic opens to drive last-minute sales, but also earlier to get aud’s attention when a similar pic is opening — thus she made an unusually early buy on the ticketing sites for “War of the Worlds” around the opening of “Star Wars.”
The majority of the millions of people who go to Fandango and MovieTickets.com aren’t there to buy their weekend ticket, but to look up showtimes and information.
Studios are intrigued by these shifts. As the Internet generation ages and ticketing sites, along with portals like AOL and Yahoo, become the de facto place to find anything and everything about movies, studios want to find their place in a world where the Net could encompass everything up to walking into the theater with a ticket printed at home.
“Online ticketing is the tip of the iceberg that you can see,” observes Gordon Paddison, exec veep of integrating integrated marketing at New Line. “But we still have to figure out the real power of these services.”