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The wicket truth: O’seas rules B.O.

ShoWest thanks overseas saviors

LAS VEGAS — The robustness of overseas markets and comparative sluggishness of the U.S. box office emerged as a theme at the opening of the ShoWest exhibitors confab Monday.

“Many American movies were basically saved with their higher gross revenues” in foreign markets, Motion Picture Assn. of America prexy Dan Glickman said in the first of his two keynote addresses, noting that foreign B.O. exceeded domestic for the first time in 2004.

Andrew Cripps, prexy-chief operating officer of distrib UIP, speaking at a breakfast awards presentation at the four-day event, said that admissions increased in nine out of 10 top foreign markets in 2004. Leading the boom was a 19% gain in Mexico, while gross dollar revenues — boosted by the sagging dollar — were up in all 10 territories, led by France with a 28% increase.

In the U.S. and Canada, by comparison, last year’s total grosses crept forward by 0.5% while admissions sunk 2.5%, following a 5% drop in 2003.

But it was Ray Boegner, senior VP for theater equipment supplier Strong Intl., who put things in the bluntest terms, telling international execs during the breakfast, “When last year’s domestic market was in the toilet, you guys kept us alive.”

While the U.S. exhib market has gone through periods of overbuilding and contraction, Russia, Southeast Asia and China are still cause for enthusiastic expansion. “We’ve just scratched the surface in Russia,” said Cripps. “There’s a lot of opportunity out there.”

Execs at foreign exhibs said Hollywood was paying more attention to their input during production now that they play a bigger role in a film’s financial life.

“Big in Japan” is a reality not a Hollywood punchline, according to Junichi Sakomoto, prexy of Shochiku, one of Japan’s largest exhib circuits, which has an exclusive deal with Warner Bros.

Studios such as Warners are consulting the exhib earlier and earlier during development and marketing. The results have been big earners in Japan and overseas for Warners, including “The Last Samurai” and “Troy.”

While the U.S. industry is striving to hold onto the moviegoers it already has, foreign exhibs talk of expanding.

Sakomoto said there are about 2,800 screens in Japan. “Soon it will be more than 3,000,” he added.

To fill the new seats, the chain wants to bring in new demos beyond the twentysomethings that are the most avid moviegoers. “After we target the senior market” — a line he draws at age 50 — “we want to target the juniors” — that is, teens.

While some at ShoWest discussed growing existing markets, others were touting plans to build industries in virtually untapped markets.

MegaStar Cineplex, for example, announced recently that it had received government approval to build the first megaplex in Vietnam as a joint venture between Envoy Media Partners and Phoung Nam Corp. Envoy CEO J. Edward Shugrue, a former Loews exec, noted Vietnam has a population of 82 million but has less than 100 theaters. “And most of those were built by the French,” he said.

Starting from scratch in many overseas markets has allowed foreign exhibs to leapfrog their domestic counterparts in theater quality, said 20th Century Fox Intl. prexy Stephen Moore. “Many international markets have the advantages of starting later in the cycle,” he said.

Even so, many of the concerns that vex the domestic side of the biz are present internationally. In a presentation, Moore highlighted the ferocious competish the theatrical biz faces for people’s entertainment time and money.

According to Fox’s consumer research studies in territories including Spain, Italy, the U.K., France and Germany, movies are the No. 2 entertainment choice behind music, just ahead of the Internet. But in terms of how consumers spend their money in foreign markets, movies rank fourth behind cell phones, music and DVDs. For instance, Fox found that Japanese consumers fork over an average of 40% of their entertainment spending on mobile telephone service, 29% in Spain.

Homevid is also an increasing threat to theatrical markets overseas. “In our research, over 30% say watching DVDs at home has negatively impacted their moviegoing,” Moore said.

In Germany especially, movies seem to be losing ground. The No. 1 entertainment option there, Moore said, is staying at home with friends; movies ranked last.

In an interview afterwards, Moore added that it was teens who were the least interested in film. “We have to be careful of dropping off the younger kids’ entertainment agenda.”

In his presentation, Coca-Cola’s Barry Jones, who heads the company’s cinema distrib, argued that exhibs needed to learn from Starbucks and work on selling an entire atmosphere rather than a product. He pointed to Spain, where the company’s research found that 34% of moviegoers don’t pick a movie to see until they arrive at the theater. “There’s a big call, especially in Western Europe, to provide places to eat, meet and socialize,” he said.

In his address, Glickman highlighted familiar themes of piracy’s threat to film and called on international exhibs to lobby their governments for stricter rules, especially on camcordering in theaters. “It’s a cancer threatening our ability to produce new content,” he said. “We have to work together to promote this extraordinary art form.”

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