Whether you see the industry from a studio or a theatrical viewpoint — or from somewhere in between — it’s a safe bet that your segment’s fortunes are affected by factors from across the business. Veteran entertainment journalist Robert Marich tracks these variables in his upcoming book “Marketing to Moviegoers: A Handbook of Strategies Used by Major Studios and Independents” (from Focal Press in April). Here he offers up suggestions for exhibitors, distributors and others concerned with the industry’s current status and future prospects.
1. Don’t overbuild: A driving factor in the exhibition slump between 1999 and 2001 –when 13 cinema chains landed in bankruptcy — was overly aggressive expansion. The U.S. screen count spiked 58% to 38,000 during the 1990s. By the end of 2004, after several trying years, the number of screens had slipped to 36,652, according to the National Assn. of Theatre Owners. That decline actually helped shore up battered theater profits and stabilized the business.
But now there are signs of another growth period in the offing — which worries many in the industry. “The growth in screen count is beginning to be a concern again,” said John Fithian, NATO president.
If box office slumps while exhibition is expanding, theater operators will face another round of financial travails.
Dennis McAlpine, an entertainment/media research analyst, notes that most of the industry’s antiquated theaters –those with four screens or less at one location — have already closed. Which means any future downsizing won’t be a painless affair.
2. Subscribe to cable: Distributors need to finally accept that their old advertising mainstay — network television — is no longer a marketing panacea. It’s time to hold the line on skyrocketing movie ad expenses by shifting more spending to cable. “Cable is more efficient than network, especially in the younger demographics,” says Roger Schaffner, president of ad buying agency Palisades Media Group, which specializes in movie campaigns.
Marketing expenses for the average major studio release (which includes the cost of trailers and publicity expenses) soared 59% from 1999-2003, according to the Motion Picture Assn. of America.
Over the same time, the average negative cost to produce a major studio film rose just 24%. But in the face of runaway prices, Schaffner is heartened that some distribs are beginning to get it. “Cable is getting a larger and larger portion of buys,” he says.
3. Get the ‘Net: The Internet is a relatively inexpensive way to corral geographically scattered audiences, which is just one of many reasons distributors and exhibitors should expand their marketing via this medium.
Movie ads can be placed that will conspicuously float across the screen, or impact subtly as background wallpaper. They can entice with peel-back ads in the corner of a screen. Or, in the newest innovation, they can put a small video image inside a standard banner ad, allowing consumers to watch a moving picture (with optional sound) without being asked to click through. And by using targeted strategies, they can reach the coveted well-heeled consumers who surf Web sites via high-speed connections.
4. Phone it in: The industry needs to further develop cell phone text messaging and other new-media opportunities that send targeted emails to consumers. Once a consumer signs up, exhibs can email play-date details about films of interest — target marketing that’s already playing well on mobile phones across Europe.
5. Keep it fresh: Exhibitors must push advertisers to create stylish ads for onscreen advertising, rather than re-purposing their hard-sell TV blurbs. “People did pay their $10.50 to see the movie, so to have them watch a variation of the TV campaign is almost insulting,” says Susan Nunziata, executive editor of the Entertainment Marketing Letter. Use of onscreen advertising is surging, and even the distribs who once said it diluted the moviegoing experience have muted their complaints.
6. Remember the Code: The MPAA’s 12-point marketing code of ethics is more important than ever for distributors.
Created in 2000 after the Federal Trade Commission documented examples of distributors targeting audiences that were inappropriately young for movies with restrictive ratings, the code helps curb abuses that could give the whole industry a black eye. Just as significant, it keeps the feds from imposing draconian regulations.
Tom Sherak, partner at Revolution Studios, says the voluntary arrangement is working well. Distributors need to keep that in mind, and maintain compliance.
7. Keep the window open: It’s in the best interest of distributors to retain a sensible window of exclusivity for theatrical release.
Theatrical is that rare “per-capita” window in the film release chain because a sale at this stage results in only one consumer viewing, unlike the TV and video media. By finding a comfortable balance among competing needs, distributors and exhibitors can protect the theatrical side while putting out timely video product that undercuts DVD pirates.
8. Just say no to digital — for now: Hold off on refitting with digital cinema. The technology is still evolving, and there are no industry standards in place yet. Existing mechanical projectors still provide great quality, which means exhibitors would be better served by waiting until digital projection can justify higher ticket prices with visibly better quality.