The film industry ought to be giddy. Box office is booming thanks to a pair of 3D movies; namely Avatar and Alice in Wonderland. Attendance is up; people, according to industry statistics, are going more often and rate the experience with four stars.

Yet, apart from the rare instance of hyperbole, you’d have to characterize the mood at Showest — the annual conference of global film exhibition — as cautiously optimistic. There’s a singular lack of enthusiasm, as Sony Chairman Michael Lynton discovered when he gave the keynote address at the opening luncheon.

Less lecture and more a stump speech to rally the troops, Lynton said almost all the right things. He called the relationship between the major film studios and theater owners the most important one in the industry, “we are tied at the hip.” He cracked wise and philosophical but failed to elicit laughs and the one instance of applause was polite and delayed. The material just wasn’t playing to the room.

“Most people are long term players,” said an acquaintance who operates a string of theaters. “We’ve seen these highs and they’re great. But it’s cyclic and we’re like squirrels storing away nuts for the winter that’s around the corner.”

The long view backward saw a consolidation of theater circuits in the past decade that reduced the ranks of national operations from seven to two; two and one-half to be generous. In the past five years there’s been a rise in regional players with concentrated strength that keeps the game competitive but for the rest the future could be a lot of Last Picture Shows.

While business is good (“no one’s ever seen a thin theater owner,” quipped a colleague”), most of the players are in hock up to their neck from retrofitting to digital and 3D. One long term player said he was virtually out of the game because, despite better than expected profits, his financier has put his chain on the block to capitalize on his investment. “I’ll keep a couple of theaters, make a nice profit but it’ll take me years to get back into the game.”

If there was irony to be gleaned from the situation, the crowd wasn’t seeing it. Outgoing Motion Picture Association chairman Dan Glickman was almost gushing about the global records set by Avatar’s box office. Twice he cooed about the all-time record the film had set in China but failed to note that in that country the government agency imports the good, the bad and the few at fixed rates and that precludes overages based on performance. In fact, it’s been cited that the love affair between Glickman and MPAA studio members began to turn when he failed to negotiate new trade agreements with several nations, especially China.

The other major industry cheerleader, National Association of Theater Owners presidentJohn Fithian, wasn’t about to hear a discouraging word. He characterized recent events involving the threat of boycotting Disney’s Alice in Wonderland by major theater operators in the U.S. and Europe as “misinterpreted” by the press. His view was that the concern over “windows” the time between theatrical release and when a picture becomes available in ancillary revenue streams such as DVD and vide0-on-demand as a non-issue.

According to Fithian the windows situation has been relatively consistent in the past five years; fluctuating between 16 and 17 weeks. Disney’s intent to shorten the period falls under what he referred to as “limited flexibility.” In a couple of rare instances event movies that opt to release at traditionally slower movie going periods of the calendar – think March or September – would be allowed to accelerate their window to get DVDs on the shelf for peak DVD sales periods during the summer and holiday frames.

But DVD competition isn’t the issue, according to Tom Stephenson of the Rave Motion Picture circuit. Fithian himself noted that 2009 was the first time in a decade that theatrical revenues surpassed DVD sales and rentals. Lynton said that the Sony experience was that recessionary times had swung the DVD balance from sales to rentals and that translated into a double digit drop in revenues.

“I believe that the second window will become video-on-demand in a couple of years,” said Stephenson. “And if precautions aren’t taken, it will have a major effect on the theatrical audience.”

The one note of levity thus far could be credited to Lynton who spent considerable time and energy (including polling and contact with government agencies) urging theater owners to move toward a more healthy concession stand. Citing alarm statistics about childhood obesity, he offered up a menu that would include fruit, yogurt, healthy drinks and the like.

“Every couple of years the Center of No Fun comes up with a report about how bad popcorn is,” observed circuit owner Tony Kerasotes. “It gets a lot of media play for a couple of weeks and then we go back to business as usual.” Fithian responded by saying that there are options in general but that what’s for sale is determined by the movie goers and that going to the candy counter a couple of times a year has minimal impact on diet. Glickman also downplayed the situation, noting that when he was Secretary of Agriculture in the Clinton administration he put pressure on theater owners to use more healthy cooking oils in the preparation of popcorn and years later studies suggested that while those oils might have different fat contents, they weren’t necessarily more healthy.

March 17 , 2010

– by Leonard Klady

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