MCN Columnists
Leonard Klady

By Leonard Klady

Admission Slips

The mantra at ShoWest – the annual conclave of film exhibition – emerged as “we have to look at the long term.” And, on the surface, that’s not an altogether unreasonable statement.

Let’s refrain from making snap judgments. What occurred six months ago may not be indicative of what we will see moving forward a decade. Things might improve markedly and they might become more dire.

National Association of Theater Owners president John Fithian observed that the nature of the business he represents is cyclic. Historically, it has downturns but over the long haul it’s held its own against every competing diversion from radio and television to home video and, hopefully the iPod.

I’m not sure there’s much of an argument in the movie vs. television department. Americans used to go to the movies a lot more often prior to the 1950s and it would require a considerable number of caveats to maintain there was a more dominant popular entertainment than that piece of furniture in most people’s living rooms, dens and bedrooms.

In Fithian’s address to the troops, he claimed that over the past four decades admissions have increased about 200 million in the U.S. per decade. He didn’t make note of bumps in the general population. However, at a post-event press conference he provided percentage boosts that compared the two curves and in general terms admissions grew between 2% and 3% per decade. That data would confirm as those that have taken the long term perspective have noted that the theater business is a slow growth industry.

Trends and statistics are a kind of safe harbor for people like myself that crunch numbers and do analytic pieces. Numbers have an undeniable veracity but how they are interpreted has infinite possibilities.

There was an excellent example of this at a panel that focused on the international marketplace. One reality of the arena that popped up throughout the session was film piracy in its myriad manifestations. In the movie industry the theft of intellectual property has a negative economic impact and, in discussing the issue, UIP topper Andrew Cripps made note of the situation in Russia with specific reference to the bandit’s ability to acquire master material and make top quality illegal DVDs as opposed to the generally fudgy-looking camcorder efforts.

Cripps’ feeling was that the wise policy was to delay movie releases in Russia as a means to forestall illegal clones. However, later in the same panel Mark Zoradi of Buena Vista International also got around to the subject and the Russian situation. His conclusion was that it made sense to release movies in the former Soviet bloc as close to day-and-date with the domestic arena to slow down the process of rampant piracy.

Now, as to what is the most effective policy cannot be concluded until different approaches are tried and the results can be assessed over time. The interesting situation right now is that two intelligent, experienced distributors looking at the same problem have come to diametrically opposed conclusions.

The following day I ran into John Malone, a former FBI officer that runs the Motion Picture Association of America’s anti-piracy operation. He maintained a sense of humor about the two men’s views and without favoring one side, offered that he could argue effectively for either scenario. Malone also made note that each approach would not put an end to piracy and one would be delusional to assume the problem could be completely erased. His mandate was simply to make it more difficult to realize.

I know a little bit about the long term realities of piracy. I’ve seen economic impact studies on the industry that go back 30 years and the conclusions decade-by-decade are that it ranges between 6% and 8%. It’s obviously grown, but only proportionally to the increases within the industry. In the current reality of annual global revenues between $45 billion and $50 billion, current estimates of $3 billion of theft per year fall within that range and attest to the MPAA’s effectiveness at holding the line.

A Russian exhibitor told me that piracy has become so lucrative in his nation that it is no longer the dominion of the Russian mafia and has fanned out to include a diverse range of entrepreneurs. He made mention of the fact that a number of theaters are located on military bases and there have been instances in which senior officers have been bribed to look the other way for some late night withdrawals with the knowledge that the police dare not attempt to make raids on an army compound.

There is no effective arithmetic formula that calculates that one increases by a factor of x for additional y factors regardless of what one ascribes the monetary values for piracy vs. prevention. Someone, somewhere sitting with actuary tables can still likely tell you that at a certain point it is no longer cost effective to plow more money into prevention to curb the impact of piracy.

Regardless of formulas (or in their absence) the current effort has been effective in at least maintaining a factor that has been part of the film industry from its inception. The contemporary manifestation of an ounce of prevention has sustained a trend and one suspects that had they been abandoned recent impact studies would have shown the sort of double digit erosion that has plagued the music industry.

The key factor of trend analysis is that when one or more elements change radically, a new trend is established.

In accessing the cycles Fithian references, one has to first consider how much of the long view one should embrace. I have a pretty good first hand knowledge of box office trends domestic and international that date back close to three decades. I also have more data files than I care to mention and from time to time receive requests for comprehensive information from people wishing to make their own conclusions from the information.

While hardly a hard and fast rule, most inquiries began by asking for too much information in my opinion. Depending on the particular need, I’ll advise people to narrow their focus to the past five or ten years. It boils down to the fact that the further back one looks, the less homogeneous the comparison becomes.

Just as movies in the age of television offers a manifestly sharp contrast in eras without that particular box, the fact that one has considerable revenue potential from such areas as DVD and Pay-cable exploitation alters the perspective of movies released prior to those elements. And it’s not simply new technologies that alter the landscape. The manner in which films are released and advertised has undergone significant change that makes side-by-side comparisons of current releases with films that opened in 1989 or 1995 of limited value.

I’m with Fithian in taking more than a snapshot perspective but my suspicion is that we have different focal lengths in our rear view mirrors. It’s only fair to assume that like the panelists involved in discussing the international marketplace, we will come to conclusions that vary in shades of gray and others that will contrast as sharply as black does to white.

There was another ShoWest panel that squandered an opportunity to discuss the present and future of film going from the perspective of four of the nations most muscular theater owners. They were asked the easy questions and they gave the easy answers.

What I’d like to know isn’t simply how to meet one’s house nut regardless of the release slate they cannot determine. It’s no great surprise that these men want to improve the entertainment quality of their respective pre-show ad packages but I suspect each has some innovative idea that’s yet to be tested as an audience magnet for the film going experience.

I also suspect that each has some queasy feeling from time to time that the slow, consistent drop in attendance of the past three years may not be anomaly. If that’s the case, each must surely have ideas about the causes and what elements were within and beyond their control.

I participated in a conference in London in December with the sweeping mandate of the global box office. It featured presentations from theater owners, marketing analysts, statisticians, studio distribution executives and the like and the one thing that seemed to recur in all the presentations was how little we know about the movie audience. It’s a factor that has grown in importance not simply because the potential customer has more entertainment options but also because movies (taking that long term view) have over the decades gone from seeing everyone as a potential customer to targeting specific sectors of the population.

Dan Glickman, president of the Motion Picture Association of America, announced in his ShoWest speech that his organization in concert with NATO had commenced a first ever research project to gather data about the movie going audience. Though he limited his description to the broad strokes, he made it clear that the intent was more than simply identifying who attends, how often and their socio-economic profile.

He gave the impression that a wide spectrum of questions would query every aspect of the movie going experience and the possibility that some elements might not be terribly illuminative about the future. Nonetheless, there was a sense it would be sufficiently wide-ranging to provide a degree of insight for an industry that historically has eschewed more than cursory reflection.

It isn’t simply good enough to embrace the fact that everyone loves the movies. People not only have films they will see again and again or shared experiences that bond them to others in an emotional way that few other mediums can claim and fewer can match in intensity. There are so many factors in going to the movies that defy categorizations. That’s the medium’s strength and the bane of researchers.

You cannot come to terms with something that defies logic but it’s crucial to identify those things that are hard facts. Otherwise some historian of the future will be taking the long term perspective to explain why movies disappeared and were replaced by …
March 17, 2006

– by Leonard Klady 

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It shows how out of it I was in trying to be in it, acknowledging that I was out of it to myself, and then thinking, “Okay, how do I stop being out of it? Well, I get some legitimate illogical narrative ideas” — some novel, you know?

So I decided on three writers that I might be able to option their material and get some producer, or myself as producer, and then get some writer to do a screenplay on it, and maybe make a movie.

And so the three projects were “Do Androids Dream of Electric Sheep,” “Naked Lunch” and a collection of Bukowski. Which, in 1975, forget it — I mean, that was nuts. Hollywood would not touch any of that, but I was looking for something commercial, and I thought that all of these things were coming.

There would be no Blade Runner if there was no Ray Bradbury. I couldn’t find Philip K. Dick. His agent didn’t even know where he was. And so I gave up.

I was walking down the street and I ran into Bradbury — he directed a play that I was going to do as an actor, so we know each other, but he yelled “hi” — and I’d forgot who he was.

So at my girlfriend Barbara Hershey’s urging — I was with her at that moment — she said, “Talk to him! That guy really wants to talk to you,” and I said “No, fuck him,” and keep walking.

But then I did, and then I realized who it was, and I thought, “Wait, he’s in that realm, maybe he knows Philip K. Dick.” I said, “You know a guy named—” “Yeah, sure — you want his phone number?”

My friend paid my rent for a year while I wrote, because it turned out we couldn’t get a writer. My friends kept on me about, well, if you can’t get a writer, then you write.”
~ Hampton Fancher

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~ David Simon