Radical moves loom amid tech-tonic shifts

2005 is sure to go down as a turning point for showbiz, a year in which Hollywood’s longstanding methods for targeting the masses gave way to iPods, TiVos and Xbox 360s.

What’s the most important lesson for 2006? NBC Universal TV chairman Jeff Zucker perhaps said it best: “The overall strategy is to make all our content available everywhere.”

Zucker was speaking on Dec. 6, just hours after announcing a deal to put Peacock programming on video iPods, part of a watershed reversal by broadcasters in 2005: After spending a half-century guarding their primetime perches, they finally conceded that the era of telling viewers when they can watch shows is over.

But for all of their nifty new technologies, the challenges facing film and TV companies in 2006 are old ones: how to grapple with years of shrinking box office admissions and splintering TV ratings; how to capture a mass audience that’s fragmenting into millions of niches.

Film and TV companies 10 years ago had a fix on their audience. There were just four broadcast networks, the Internet was in its infancy and exhibitors had a monopoly on the movie biz.

DVDs helped change everything, producing a windfall both for the studios and for consumers, who suddenly had a wealth of new entertainment options. In 2005, it became clear that the DVD boom was tapering off. In its place has emerged an unfamiliar new entertainment landscape, one in which the old rules of media consumption no longer apply.

Take the example of “The Polar Express,” released on DVD in early November, yet now playing to packed houses on 66 Imax screens in 3-D.

The film has confounded every convention. It was pronounced D.O.A. after a lackluster opening weekend in 2004, but it’s gone on to gross more than $170 million in the U.S. alone, including an additional $8 million in the last few weeks.

In a year of shrinking windows, the film’s Lazarus-like box office performance has clear implications: Consumers treat the theatrical and home entertainment windows as discrete experiences — and one doesn’t necessarily cannibalize the other.

Studios are eager to capitalize on the fault lines opening up in the old distribution system, but their track record in 2005 was spotty, as they struggled mightily to connect with consumers.

Moviegoers turned out en masse for the latest installments of “Harry Potter,” “Star Wars” and “Saw” but yawned at sequels to “The Mask” and “Zorro.” All-ages remake “Charlie and the Chocolate Factory” was a slam-dunk, but “Herbie: Fully Loaded” wasn’t. Wannabe franchises like “Batman Begins” and “The Chronicles of Narnia” found big audiences, but “Stealth” and “XXX: State of the Union” couldn’t.

One quirky single-camera TV comedy, “Arrested Development,” floundered, while another, “My Name Is Earl,” was an instant smash.

“We are at a crossroads in entertainment today,” Warner Bros. Entertainment prexy Alan Horn says, “and it’s too soon to know which routes into the future are the decisive paths.”

Warner Bros., he notes, is “looking at the greenlight process with an eye to the tastes of audiences around the world, both in subject matter and in cast” and “looking at new ways of reaching consumers — and new styles of communicating with then — as a response to changing trends in media consumption.”

All these changes are energizing social scientists who make a living measuring consumer behavior.

According to a recent Nielsen Media Research report, Americans spent record amounts of time parked in front of the tube during the 2004-05 television season: 8 hours and 11 minutes of television per day, a 2.7% increase from last year and the lsrgest amount since measurement began in 1949.

Media researchers at Ball State U. in 2005 spent several months shadowing people in Indianapolis and Muncie, Ind. Their findings: The average American spends 30% of waking hours devoted exclusively to consuming media, and 30% of those hours are spent consuming more than one medium at a time.

In other words, the media have never been more ubiquitous, but getting people’s attention has never been harder.

The broadcast networks seemed to come up with a new, unconventional gambit practically every week of 2005 to reach their viewers.

Disney made its groundbreaking deal with Apple in October. One month later, CBS and NBC pacted with Comcast and DirecTV to make shows available on demand (something HBO has been doing for years).

The WB premiered frosh drama “Supernatural” not on TV but online, streaming the show’s pilot on Yahoo! UPN went so far as to hand out a million free DVDs containing the first episode of new comedy “Everybody Hates Chris.”

“We want to be where the viewers are,” CBS Paramount Network Television Entertainment Group prexy Nancy Tellem said a few days ago — while announcing a deal to put repeats of two CBS laffers on Yahoo!

Nowhere is TV’s on-demand future happening as quickly as it is in news, where viewers expect information about the world to reach them on their own time and their own terms. Unlike entertainment and sports, the networks own the rights to news content and, short of their deals with local affiliates, are free to repackage it for the web, cable or mobile devices.

“It’s the most exciting time in journalism in 100 years,” says CBS digital boss Larry Kramer, who brought his vision of a “cable bypass” strategy to the Eye; it allows surfers to build their own newscasts by selecting from available online clips. The idea is that CBS doesn’t have a 24-hour cable news channel, but it can connect directly with consumers by pushing video, text and audio from its 1,500 journalists to the Web, phones or other portable devices.

The drive toward on-demand programming and plans for the eventual merging of the TV set with the computer also shaped the cable and satellite biz in 2005.

Brian Roberts, chairman of Comcast, the biggest cable operator in the business, boasts that 9.4 million of his 21.4 million subscribers have bought digital boxes, and together they’ve ordered a billion programs on demand, mostly movies and cable series, most of them for no extra charge.

Supplementing video on demand in these homes is the digital video recorder, which allows people to build up their own menu of programming for viewing at their convenience, fast-forwarding like banshees through the commercials. More than 3,800 movies and TV programs are available to Comcast’s digital subscribers.

Once digital outstrips analog as the TV viewing norm, not the exception, cable operators will start linking up with the Microsofts, Yahoos and Googles to offer a seamless melding in every home, wirelessly, of television and all of the services provided by the Internet.

Operating a remote control the size of a computer keyboard, the cable customer could shift on a dime from the umpteenth version of “CSI” to a daily newspaper’s Web site to the latest “Harry Potter” sequel.

Roberts’ vision of the future is seductive. But it’s causing great consternation at the other end of the entertainment spectrum, as studios and exhibitors grapple with shrinking box office and the ongoing decline in movie attendance.

After reaching a high-water mark of 1.63 billion tickets sold in 2002, attendance has shrunk by about 14% through the end of 2005.

Exhibitors are quick to attribute the shortfall to the lackluster quality of studio films and the shrinking DVD window. But recent market research studies lay the blame elsewhere: Factoring in tickets, popcorn and parking, consumers say, it simply costs too much to go to the movies. (In the same three years that attendance has dropped 14%, the price of a movie ticket has gone up 10%.)

Exhibitors hope new technologies will provide some leverage in a consumer culture that’s rapidly spinning apart. Even 3-D, which burst onto the scene a half-century ago when television first began to erode movie attendance, is making a comeback. There’s also the long-held dream that in a digital world, theaters could serve as a venue for things other than movies — simulcasts of live sporting events and concerts, for example.

But in the short term, exhibs are pursuing new revenue streams, namely in-theater advertising. In addition to placing promos in the lobby, most theaters in the country now are now part of two large pre-show advertising networks, Screenvision and the National Cinemedia, a joint venture between Regal, AMC-Loews and Cinemark.

Even as box office dropped 5% in 2005, bigscreen ad revenue was booming. At Regal, the nation’s largest chain, during the first three quarters of 2005, concessions and ticket sales accounted for 92.4% of its total revenues, but growth was flat. Meanwhile, the money it made through advertising grew at around 10% to $138 million.

It’s one of the great unforeseen consequences of our topsy-turvy media age: The more the movie audience splinters, the faster box office admissions fall, the more moviegoers are stuck with the very content they once went to the movies to escape: advertising.

(Josef Adalian, John Dempsey, Michael Learmonth and Gabriel Snyder contributed to this report.)

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