For the past two years, the momentum in the film marketplace has favored exhibition, but that appears to be changing – bringing broad grins to the faces of distributors, especially those with potential B.O. juggernauts looming on the horizon.
What’s behind the shift?
Expansion. Every major chain is digging deep holes for major multiplexes, which will rise in the next six to 30 months. The largest circuits have immediate plans for 200 new screens each (in the process, retiring some older sites).
The net result will be at least 1,000 additional state-of-the-art sites, all of which will need product. And the distribs will be happy to provide the fuel for the new screens… at a price.
But exhibs think the price will be reasonable because there may be as many as five new major suppliers in the near future.
Castle Rock is primed to enter the ranks in 1996 when its distribution deal with Columbia expires. It’s unclear, however, whether Castle Rock parent Turner Entertainment will allow it and New Line to support expensive distribution machines to carry out the same business.
Another possible distribution startup is DreamWorks, but it may initially be serviced by a major (with the prime candidate being Universal). Similarly, there’s the Mike Medavoy-spearheaded Phoenix; it’s being rumored as the replacement supplier for Castle Rock over at Sony. Another possibility is Morgan Creek, presently handled by Warner Bros, on the domestic front.
Rysher, now distribbed by Savoy, could ironically wind up with a distribution operation handling its own product as well as Savoy’s. At least that’s one scenario that’s gaining credence, with speculation that Savoy needs a theatrical hit in order to maintain a viable distribution wing.
As one studio chief notes, the conjecture about new suppliers could wind up as pure vapor: He believes startup operations haven’t truly examined the $16.5 million average marketing costs on top of production – a truly daunting figure for a new company.
No matter what happens on that front, the new screens mean that the present balance is sure to shift, with theaters looking harder for product and major distribs in less of a squeeze for screens.
Sydney Levine, who operates the production tracking service Film Finders, confirms that the number of English-language movies being made outside of the majors is down significantly. But that doesn’t mean a greater demand for product. In calendar year 1994, Levine listed 121 indie films unattached to a sales agent. At the recently concluded American Film Market, the number had risen to 274 movies seeking a broker.
“Of course, the business in cyclic,” notes Levine. “This is the trough period you get about every five years. Films aren’t getting made now because European television outlets like Germany’s ZDF and Channel 4 in England aren’t investing, and people aren’t acquiring because the slack is being picked up by the emerging international presence of companies including Polygram and Castle Rock.”
Confronted with these grim statistics and a domestic box office growth of roughly 4% – slightly better than inflation but lagging behind the annual increase in national population – many analysts are at a loss to explain the zeal for new screens.
“Part of it can be explained simply because most of the chains haven’t been rebuilding or refurbishing sites,” observes Joe Peixote of Viacom-owned Famous Players. “New theaters do better and one has little choice but to build or perish.”
Chain booker Ed Pemika says distribution and exhibition both tend to respond to – rather than anticipate – changes in the marketplace. He feels that a lot of older theaters were retained too long simply because there was a glut of product. Soon, those sites will no longer be viable and new multiplexes are viewed as a means of staving off sharp declines in attendance.
But the proliferation of new screens would appear to be a rationale only in theory. Such areas as Woodland Hills, Calif., Las Vegas and North Dallas are repeatedly used as examples of war zones that are being staked out by three or four major chains. Woodland Hills will have about 100 new screens by 1996 and, like many other areas, will grow from being under-screened to an exhib battle site that will end up somewhat slightly bloodier than Gettysburg.
One theater exec insists that prudent growth is essential in the coming years. The truth is that bottom-line profit for theaters is low, even though they may have enormous cash flow.
Profits are likely to shrink even more in the struggle to gain market share. Already there are indications of major chains going head to head with weak regional outfits in all-or-nothing contests that will be very expensive. Pemika anticipates that in three to four years, older venues will constitute an elephant’s graveyard that spreads across the continental U.S.
That prospect, coupled with a perceived box office upswing, could see someone step in and literally acquire a national chain at salvage cost.
“As zones get smaller and more competitive, it naturally follows that grosses will get thinner,” says Landmark Theater president Steve Gilula. “Some will adapt by holding pictures longer and others will attempt to carve a distinct programming niche to lure customers.”
A downturn in product and an increase in screens, most agree, will result in a longer theatrical play period. But one studio distribution exec cautions that it may have no perceptible impact on box office because of the speed films travel from large to small auditoriums in multiplexes.
More upbeat is evidence of growth for “distinctive pictures” – the new moniker being applied to films formerly called “specialized” or “arthouse.”
Pemika says he can already see that “little” pictures, which used to be shoehorned into theaters, now have to be played out of necessity.
“The Madness of King George,” “The Last Seduction” and “The Secret of Roan Inish” are commonly mentioned pix that not only are working in the niches but spreading out and doing business in areas that had never previously responded to other than mainstream fare.
What has turned around almost overnight are crucial attitudes about the marketplace. Rather than a prevailing belief in its expandability, one hears from exhibition and distribution about consistency of a core audience. And, each one knows in his heart, his operation is just a little bit more consistent than the competition.