The first day of ShoWest has historically been held as an international day where exhibitors from around the world can attend panels that cover issues and topics that relate directly to their markets. In an attempt to bring attendees in a day earlier this year, ShoWest did away with “International Day” and instead jumped right into the convention with a lunchtime keynote address from Jim Gianopoulos, Chairman of Fox Filmed Entertainment followed by a panel discussion on current trends in the exhibition industry.
Sitting on the panel, entitled “How To Stay Ahead of the Curve as the Industry Confronts Its Future”, was Rory Bruer, President of Worldwide Distribution at Sony Pictures, Andrew Cripps, President of Paramount Pictures International, Dan Harkins, CEO of Harkins Theatres, Paul Heth, President and General Director of Rising Star Media, Lee Roy Mitchell, the Chairman of Cinemark and Tim Richards, CEO and President of Vue Entertainment. Jeffrey Katzenberg, Chairman of Dreamworks Animation, decided to join in on the panel after addressing those gathered to thank them for the huge opening of his studio’s 3D feature “Monsters vs. Aliens”. Though many of these guests are panel regulars at such conferences, the mixture of exhibitors and distributors at such discussions usually makes for a an interesting hour. Monday’s panel, moderated by Hollywood Reporter editor Elizabeth Guider, was no exception.
The first topic that Guider brought up was, not surprisingly, the increase in box office grosses. Despite difficult times, North American box office is up nearly 10% since the beginning of the year. In the United Kingdom box office is up 16% and only France is down year over year. Executives such as Bruer and Richards said they weren’t taking the increased revenues for granted. Harkins said his chain was socking away cash for future downturns. “We are managing today’s prosperity for our future,” he said. “We know that there will be another rainy day. We are not raising prices. We have kept our concessions at the same prices they were at two years ago and are letting everyone know we’re in this with them.”
In Russia, where National Amusement’s Rising Star Media runs many of the country’s top grossing theatres, Heth reported that business is booming and that the circuit is not cutting back on any of its expansion plans. “We want the finest cinemas in the world, not just Russia,” he explained. “But the world costs 40% more because of the devaluation of the dollar. We do believe in 3D but we want the whole experience.”
It didn’t take long for the topic of 3D to be raised and a great deal of time was spent discussing the innovative new technology. Katzenberg, who for the past two years has been a leading industry advocate for 3D, was quite happy to have opened “Monsters” on 2,000 3D equipped screens. While at leas year’s ShoWest he had expressed hopes of opening on 5,000 3D screens, Katzenberg was grateful that the number of installations had been increasing significantly since January. “Given the state of the financial markets today the exhibitors are actually doing a great job,” he applauded. “The success of the movie this weekend will help push the roll out. Exhibition is a portfolio business. It would be bad if one of my movies flopped. I only have two a year. I wold be up here today, I’d be fired. People are looking for a value and a bargain and there is a chance to reclaim movie theatres as the preeminent way to see a movie.”
For 3D to really take off Harkins feels that the number of 3D films being released has to be maintained, if not increased. “If the product flow continues as it has over the past 18 months then 10,000 screens might be right for North America,” he said when asked how many screens in North America should be equipped with the technology.
“One of the things we would like is an orderly release of product,” Mitchell agreed. “If they could do that then I think you’d see the types of success Jeffrey is having across the country.”
However many exhibitors, especially Disney and Lionsgate , have publicly stated they will be reducing the number of films released each year in an effort to save on production expenses. Bruer was quick to wave off such criticism. “We’ve always been pretty prolific when it comes to making movies and really don’t see that changing,” he said of Sony. “Are we looking at everything more carefully? Absolutely, but were in the business of making movies.”
Paramount’s Cripps explained that the studio is committed not only to maintaining the number of titles it releases each year, but also making sure those films can perform well internationally. “The old Paramount was a domestic centric company and the new Paramount is a global centric company,” he said. “Global tent pole films recently have shown that they have the most potential.”
Heth explained that in the Russian market many of Hollywood’s blockbusters don’t attract audiences. Instead, attendance increases for Russian films starring Russian talent. “Animation is the best bet, though locally produced stories are driving the business,” said Heth.
The super hero films don’t travel as well. Local production we feel is the game multiplyer for us.”
Cinemark’s Mitchell suggested upgrading theatres with such amenities as large format auditoriums has helped exhibitors increase attendance. “We opened a large screen format last week and it’s just gone crazy,” said the veteran exhibitor. “If Jeffrey saw that he’d wet his pants. It’s been so successful we’re going to do it all over the country.”
This allowed Katzenberg to put in a plug for Imax. “Monsters” opened on 143 Imax screens which accounted for less than 2% of the release but earned an impressive 9% of the box office in its opening weekend.
As for alternative content, none of the exhibitors were overly enthusiastic. Harkins relayed that his chain’s attempt to show President Obama’s Inauguration was viewed as a dud when it failed to sell out. “It’s not a day in day out sustainable business,” said Richards of alternative content. “We show movies. It’s our core business and will always be our core business.”
On the other hand, Sony has opened an alternative content distribution arm and is bullish about the potential of showing such material in cinemas. “We really believe in this as a wave of the future but you have to be very selective about what you show,” stated Bruer. “I definitely think with the digital screen roll out there are some great opportunities here.”
When it came to the topic of the digital conversation, the panelists’ differences were abundantly clear. Mitchell argued that theatres in smaller towns were being overlooked when it comes to virtual print fee deals. (In fact, Twentieth Century Fox recently settled a law suit with an independent exhibitor over just such a matter). Mitchell contended that the digital conversion is too expensive for such theatres and distributors should view giving VPFs to such cinemas as a marketing play by lowering film rental to help pay for the expensive digital equipment.
Katzenberg was quick to disagree, adding that his films are so costly he can’t afford to lower film rental. “Dreamworks Animation only makes two of the most expensive movies made each year,” he countered. “If we’re not in the top 12 to 15 each year we’ll go out of business.”
“It just a law of economics and the theatres in small towns just can’t afford digital so the rules might have to bend for them,” Harkins interjected.
Mitchell got a round of applause when he added, “These kids that live in the little markets need to be getting in the habit of going to the movies rather than staying at home surfing the web. This is the most liberal industry in the world in helping people out and all I’m saying is to help out some of our own. Give a small guy a hand here.”
Another topic close to exhibitors’ hearts is concessions and all the theatre owners on the panel were happy (if not relieved) to report that sales were holding steady. Richards has even seen more customers eating dinner at his upscale theatres in the United Kingdom. Only Mitchell said that concession sales had actually increased rather than remain flat year-over-year.
Piracy, always a major conversation piece at such conferences, was hardly touched upon. Mitchell offered up another applause line when speaking about the issue. “The main problem is the character of the world right now,” he complained. “Kids are gorwing up thinking everything is free if you can get it on the Internet. Parents have to get more invovled in educating their kids about what’s wrong.”
When asked what they would want to see out of distributors over the next year, exhibitors were unanimous in saying lower film rental and a release schedule that spreads out the opening dates for blockbuster films across the entire year. When the question was reversed, Bruer said he’d like to work more closely with exhibitors on in-theatre marketing, “Some of the best marketing material we have are trailers and we have to come toegehter on that.”
Katzenberg got the last word in as the panel wound down on a friendly note, “The truth is there’s more than enough for all of us if we innovate and make the theatre going experience even better.”