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January 1, 2003

..Gary Dretzka
..Noah Forrest
..Leonard Klady
..R.J. Matson
..David Poland
..Douglas Pratt
..Ray Pride
..Michael Wilmington

When the winter Consumer Electronics Show opens Thursday, in Las Vegas, it will come as a surprise to no one if the home-entertainment industry declares itself to be as fit as a Strativarius fiddle, and far more optimistic about its prospects for 2004 than anyone making pictures in Hollywood these days.

Well, that's not precisely true. Those lucky sons of guns in the video divisions of major studios probably think they'll be able to earn their bonuses this year, even if no one else does.

We’re barely past the first week in January, and, already, we’ve learned that not only were total box-office receipts down about $100 million in 2003 -- from a record $9.52 billion in 2002 -- but about 5 percent fewer tickets were sold, as well, making it the second-best year for ticket sales since 1957. As Jack Valenti will tell us at ShoWest in March, those are damn good numbers … and, he would be right.

He’ll also probably tell us that the average price of a ticket went up only slightly in 2003, but not enough to diminish its reputation as the single biggest bargain in the known entertainment universe. And, again, he wouldn’t be wrong … although concession prices could stand to be downsized.

Last week, apparently along with thousands of other slowly graying adults, my wife and I went to the local Bijou to see Something’s Gotta Give. It was great to walk out of our screening to see a long line of other Baby Boomers waiting to get into the auditorium. Like us, they clearly were primed to enjoy themselves, and, I’m guessing, they did.

Which is only to say, in an inexact science like movie making, some formulas still work.

I can’t imagine that this crowd ventured out from home on New Year’s Eve because of some halo effect from Lord of the Rings, or even some mostly upbeat reviews. I think that, given the opportunity, these same folks would be only too happy to spend every New Year’s Eve at the movies, hoping to spend some time with actors who look just like them.

Conversely, it’s also worth noting that the critically panned IMAX family adventure feature Young Black Stallion is quietly growing some legs of its own.

Although, at $2.4 million, its total gross tends to go unnoticed in the Monday-morning quarterbacking, this number ought to be weighed against the fact that it’s only playing in 51 theaters, and not always at night. It’s per-screen haul for the first week was second only to LOTR and Big Fish, and, in the second stanza, it was only behind Big Fish (on 125 screens). It was one of only a very few titles to record growth in its second week, up 20 percent.

Not bad for a movie that required some finding, and was dismissed by critics. Disney executives were buoyed even more by the reality that group sales – the staple of that segment of the industry – had yet to become a factor in attendance.

Nonetheless, anticipation of YBS eventually crossing the pond couldn’t prevent the owners of one of the handful of IMAX theaters in the U.K.from shuttering its doors.

But, I digress.

Attendees of the 2004 Consumer Electronics Show won’t have those numbers on their mind. Very few people outside of Hollywood do. Instead, a great many of them will be crowing over something far more dear to their digital hearts.

It also was reported this week that revenue from the purchase and rental of DVDs in 2003 increased more than 40 percent, to $16.3 billion. According to Video Business, the average household with a DVD player bought 16.5 DVDs in 2003, and that pushed overall spending on home video (videocassettes and DVDs) to $22.2 billion, representing a 9.3 percent increase over 2002.

“For the first time, romantic comedies such as Greek Wedding and Sweet Home Alabama, and a straight comedy, Bruce Almighty, ranked among the top 10 home-vid moneymakers for the year,” the magazine reported, ahead of the annual state-of-the-video-industry announcement Thursday, at CES. “The list had previously been dominated by action films and family movies. Seven titles earned more than $200 million. Nemo and Lord of the Rings generated even more spending on home video -- $431 million and $343.7 million, respectively -- than in theaters.

“The Digital Entertainment Group will report this week that another 33.7 million DVD players were shipped into the marketplace in 2003, bringing the total since 1997 to more than 90 million. And another 1.02 billion DVD titles were shipped to dealers, bringing that total to nearly 2.4 billion.”

And, guess what, the older-skewing Seabiscuit – only in stores for two weeks – is doing very well, indeed. It’s already sold more than 7 million units.

Now, comes the bad news for television networks already desperate to figure out where all their viewers went, especially of the young, male persuasion.

Judging from the numbers, many American viewers are content to get their TV via DVD. With entire seasons of new and old series now available in one tidy box, why suffer through commercials, pre-emptions, commercials and teasers for dopey news reports “at 11.” That category now represents $1 billion in consumer spending, up a whopping $610 million over the year before.

The VHS market continued to decline, but it isn’t as if those consumers decided to blow up their TVs and turn their attention to collecting classical music on vinyl.

On the exhibition floor at CES, manufacturers of home-entertainment appliances will be previewing DVD recorders and affordable home-theater systems that inevitably will encourage more adults to stay home. Next-generation “personal video recorders” will finally start to drop in price, and they’ll be used to create great-looking DVD libraries of favorite shows and movies. By comparison, VHS cassettes will look like kinescopes.

That shouldn’t come as any sort of good news for the piracy police at the MPAA or the networks, which very well could find themselves time-shifted out of existence someday.

- by Gary Dretzka

January 8, 2004