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Art Brodsky

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Movie Flops Are Driving Internet-Killing Bills in Congress

Posted: 01/12/2012 10:05 am

In the next couple of weeks, Congress will come back to Washington to start debating, once again, legislation that would severely limit innovation online, limit free speech and weaken cybersecurity, all in the name of protecting the big content companies. Yes, those are the dreaded Stop Online Piracy Act (SOPA) in the House and Protect Intellectual Property Act (PIPA) in the Senate.  These are bills that have companies large and small, venture capitalists, respected Internet engineers, human-rights activists and many others up in arms over an irresponsible overreach on behalf of one industry.

It's almost certain that in the course of the debate, Senators and Representatives will get up in their respective chambers and/or meeting rooms and bemoan the current state of the movie industry and argue that "pirates" are responsible for the sad state of the movie business. Yet, experts with diverse views on why the industry is in the doldrums were together in the one factor that never came up -- except as a non factor -- the dreaded "piracy" which is the reason for the Draconian bills. No, the causes are much more mundane and in no way justify the drastic efforts Congress is taking on behalf of the Big Media Megaliths.

Congress needs these bills as much as Mars Needs Moms.  How do we know this?  Entertainment Weekly's The Bullseye summarized 2011 in movies pretty succinctly in its Jan. 13 issue:  "Movie-theatre attendance plunges to lowest level in 16 years.  'What did I ever do to deserve Mars Needs Moms?' sighs 2011 on its deathbed."  For the record, Disney's MNM, which led The Hollywood Reporter's list of box office flops for the year, cost $150 million to make and grossed $39 million at the box office -- worldwide.

Attendance was down to about 1.28 billion tickets sold, the lowest figure since 1995.  So was the box office -- down about 4 percent for 2011 from 2010, selling about $10.2 billion worth of tickets.  Surely pirates must be responsible for this keelhauling of our film industry?  Surely?

Surely not.  If the movie biz wants to continue a destructive campaign of some sort, it should start by looking in the mirror, and then at the movie theaters and then at the other activities that also compete for the time, attention and money of moviegoers.

It wasn't only the popular press that noticed the lackluster slate of movies in 2011.  Influential industry analyst Eric Wold of B. Riley noted the obvious in a Jan. 3, 2012 report, "Rationalizing Recent Box Office Doldrums -- and Potential for a Reversal in 2012":

Unfortunately the movie industry has always been a hindsight industry for the most part. While individual movies as well as an entire year's movie slate could look impressive ahead of time and be expected to generate strong box office results, studios and exhibitors are always at the mercy of the consumer (which can sometimes be extremely fickle... especially in times of social media and the easy transmission of reviews in real-time).

In the widely quoted report, Wold summed up 2011 by saying:  "In our opinion, the reason for the disappointing domestic box office all comes down to one thing: consumer demand for the movie slate (in hindsight, of course). While there were a handful of 'sleeper hit' movies that did outperform initial expectations (e.g., The Help, Bridesmaids and The Smurfs), there were a lot more movies that disappointed compared to initial expectations."  Or as The Wrap put it less delicately, "more consumers would have gone to the movies last year if Hollywood hadn't released so many dogs."

At mid-year, The Wrap quoted one key analyst, Vincent Bruzzese, president of the Worldwide Motion Picture Group:  "For moviegoers this age, it's not the ticket prices, it's not streaming or piracy, it's that there was nothing they wanted to see. Studies show that low on the list of reasons people don't go to the movies are alternative forms of entertainment."  Or, as he put it more bluntly, "It's the product, stupid."

The seven top-grossing movies of 2011 were sequels; the 8th and 10th were based on comic books.  Only one movie in the top 15 came from an original concept:  Bridesmaids.  Industry figures show the sequels were down 16 percent from their predecessors.  In past years, the decline has either been less, or as in 2009, sequels outperformed their original.

Beyond the dubious quality of the movies, the only thing on which the industry observers and analysts agree is that there are lots of reasons for the industry finances to fluctuate as they do.  One factor typically cited: ticket prices are too high, fueled by a 3-D craze which drives up production costs but doesn't pay out in a better film.  Hall-of-Fame movie critic Roger Ebert, in his evaluation of the year's results, said simply, "Ticket prices are too high. People have always made that complaint, but historically the movies have been cheap compared to concerts, major league sports and restaurants. Not so much any longer. No matter what your opinion is about 3D, the charm of paying a hefty surcharge has worn off for the hypothetical family of four."  (He also agrees that the "absence of a must-see mass-market movie" contributed.)

Wold disagrees.  If ticket prices were the cause, then all the results would have been dragged down. Instead, box office records were set this summer in the 2nd and 3rd quarters.  He noted:  "With the box office only declining during two of the four quarters, we believe this would indicate more period-specific issues (i.e., the movie slate) as opposed to consumers cutting back on movie-going attendance throughout the year."

Social trends are another factor.  MPAA data found that males and females in the age 12-24 age group aren't going to the movies as much.  They bought 32 percent of the tickets in 2010; that same group bought 60 percent in 1975.   The Wrap quoted a "studio marketing chief" as saying, "We have failed to make going to the movies an emotional experience for them, meaning something that they invest in and get pleasure from. I think they care about content, but they don't care so much about the delivery of it."  The marketer added:  "Middle-age people can chart the emotional beats of their lives through going to the movies. I do not think kids under 25 have that same kind of emotional connection with movie theaters."

Social media can play a role in the drop of interest by that age group, as reviews are spread more quickly through more people, so that the target audience knows sooner what are the hot trends, what's in and, as importantly, what's not. 

That's when the competition from technology and other pastimes comes into play.  Potential moviegoers can decide to wait until a film is available on DVD or on streaming, or simply to do something else.  Ebert noted that Netflix accounts for 30 percent of Internet traffic in the evening:  "That represents millions of moviegoers."  The rise of On-Demand availability also plays a role, as some films are released that way before they hit the big screens, and some after.  As Entertainment Weekly noted,  "with tablets selling like wildfire and people becoming accustomed to watching entertainment whenever-however they please, On-Demand seems like a format the industry will have to confront in a very real way soon -- even if it, as feared, may continue to chip away at theatrical attendance. After all, on-demand is in-demand."  Then there are "new digital diversions like video games and Facebook," the Los Angeles Times observed.

What else?  The theatre experience isn't what it used to be, as studio executives blamed "poorly maintained theatres," and Ebert said older theatre-goers (over 30) "are weary of noisy fanboys and girls."  He also says that refreshment prices are too high and that there isn't enough choice in films with too few independent, foreign or documentary films available.

And in reaction to all of these trends, the studios are fighting back, not by offering new or innovative films, or lower prices, but by making things inconvenient for film fans.  Warner Brothers just announced it would delay the rental of new DVDs, to lengthen the sale period from 28 days before rental to 56.  Netflix agreed, Red Box didn't.  The movie biz wants to protect another shrinking income stream, DVD sales.  Meanwhile, HBO will no longer sell DVDs to Netflix at wholesale prices.

The "pirates" at whom all this legislation to disappear websites from the Internet and weaken the security of the Net's virtual phone directory also have a role in this equation, but not the one the studios see.  Ispos MediaCT, a market research firm, found in 2009 that the people who the industry sees as pirates (whether for music or video) can be seen in another light:  as fans. 

Their study found that, "Again on a monthly basis, those using unofficial sites are more likely than average to also use official sites (90 percent vs. 53 percent), pay to stream or download (82 percent vs. 55 percent) or buy DVDs in a store (67 percent vs. 44 percent)."  Ispos recommended that "the industry needs to find ways to meet the needs of the valuable audience."

"Studios and theater chains can cling to the hope that the coming year's sequels, reboots and book adaptations will be bigger hits than last year's, but the trend lines spell trouble for the status quo," the L.A. Times said.

 Now the latest from Hollywood:  MGM/Screen Gems is going to remake Carrie, Brian DePalma's classic 1976 horror flick which starred Sissy Spacek as the tortured girl with telekinetic powers.

 

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