..Gary Dretzka
..Noah Forrest
..Leonard Klady
..David Poland
..Douglas Pratt
..Ray Pride
..Kim Voynar
..Michael Wilmington

What's A Billion Among Friends ...

Last year the Motion Picture Association of America decided days before the start of the ShoWest convention to unveil its annual box office statistics in advance of the event. The rationale was that everyone knew that both box office and admissions had declined and getting that dirty detail out of the way would allow the industry to concentrate of the future.

This year the MPAA can't blame declining numbers for posting its box office stats early. In the first week of January Variety, the Hollywood Reporter, MovieCityNews and other trackers had all weighed in with improved revenues. At this outpost the number was $9.23 billion and that was 3.7% better than 2005 with admissions too statistically close to say definitively that ticket sales were up or down.

Two months later, the "official" number announced is a generous $9.49 billion and the MPAA reckon that a 5.5% improvement. On the face of it the difference is a bit higher than the usual margin of error but there are considerably more profound aspects to the separation.

The numbers announced at the beginning of the year by the trades and tracking agencies are domestic revenues that include the U.S., Canada, Puerto Rico, Guam and dribbles from a couple of other American Protectorates. The Motion Picture Association figure it claims is the United States only. It's an assertion it has yet to back up with transparent figures.

Last year the Canadian box office was $890 million CDN. The portion that includes films from the Hollywood majors is reported to the trades on par with the U.S. dollar. In April of 2006 I had lunch with the heads of the MPAA's research department and brought a stack of papers that broke down the domestic box office by title and distributor and a similar stack covering the Canadian box office.

The question I posed to them was why, at least on the surface, do the figures that come out in January coincide within statistical range of their number. Yet, while the early numbers clearly embrace the domestic marketplace, the MPAA claims its do not.

One of the two actually blurted out: "yeah, I noticed that too." Her partner quickly stepped in and said their methodology might be slightly different from mine. I'm not sure but it sounded like a euphemism for something unkosher. Nonetheless, he promised to invite me over to the Encino office and show me their operation. That invitation is still technically pending.

The night prior to the official opening of ShoWest I once again poured over more than 100 pages of text, charts and data that the MPAA generates annually in search of the method of their madness.

It might be informative to backtrack a bit. Just as the MPAA numbers have been suspicious for decades, so too was the figure given out by the National Association of Theater Owners of the average ticket price. In truth, that number was also compiled by the MPAA. The irony was that counter to everyone's best interests it was too high.

In truth I hadn't given it much thought. However, one day while tracking down a story involving Cineplex Theaters I was rifling through the company's annual report and stumbled across its average ticket price in the yearly report to stockholders. Cineplex had one of the highest admission prices because almost all its screens were in major urban areas. Yet its average was lower than the one announced at ShoWest.

So, I started to look at other annual reports of movie chains and sure enough every one had a lower average ticket price than the "official" average. I wrote about it and even had lunch with then NATO president Bill Kartozian to complain. He was very diplomatic but the following year the average was still way out of line - more than a dollar too high by my calculation.

About five years of carping later, I arrived at the ShoWest press conference to hear Jack Valenti and Kartozian unveil their numbers. Bill began with the announcement that NATO had decided to take over compiling data on ticket pricing and had discovered flaws in previous methodology. The average was too high and it unveiled not only a new lower figure but had gone back and recalculated for the prior five years.

That turn of events provided me with the false hope that the MPAA might also do one of two things. It would either lower its U.S. only box office figure or concede that its numbers also included Canadian box office.

As I was paging through the ShoWest 2007 Program Journal I came across a listing of the top 100 grossing movies of 2007 as compiled by Nielsen EDI. Initially I totaled up the top 100 movies of last year according to my data base and came up with the not very helpful figure of $7.54 billion. But then I went down the list comparing box office of individual titles and noticed a number of films were annotated with an asterix. Scrolling down it indicated that those titles included box office through January 30, 2007.

It should also be noted that the figures listed conformed with studio reported numbers for the entire domestic marketplace that includes Canada. I'll also add that the films that extended 30 days into the following year represented about $340 million in non-2006 revenues. This triggered a Eureka moment.

It seemed to me that somewhere in the tsunami of MPAA data there was a mention of how many 2006 movies had grossed in excess of $100 million. Sifting through paper what I found was a line that said 63 films grossed in excess of $50 million. I went back to the list in the ShoWest program and looked for the list with the top 100 grossers. Number 63 was Apocalypto with a gross of $50,222,634.

The day after the official presentation I sat down with MPAA chairman Dan Glickman and Dean Garfield of its research department. Mostly we talked about matters unrelated to statistics but finally I asked him whether the Nielsen EDI top 100 in the program was related or reflective of their data. He ceded to Garfield who said that Nielsen had been involved in helping him prepare the report.

Then I pointed out that those numbers included Canada and the point about the corresponding 63 films that grossed in excess of $50 million. Glickman - who's not really a stats man - appeared slightly confused and Garfield said, "Len believes our numbers include Canada."

I asked Garfield if he stood behind the MPAA contention that 63 films grossed more than $50 million and he waffled. At that point Glickman jumped in and said, "it's a simple question that ought to have a yes or no answer." Only then did Garfield say that 63 films did indeed gross more than $50 million though they weren't necessarily the same ones listed in the ShoWest program. He added that he didn't have the list but would get it to me when he returned to the Association's Encino offices.

However, let's just for a moment consider that based upon those Nielsen figures that the MPAA figures are overstated by roughly $340 million. Their figure now dips even lower than any of those January numbers from the trades and other trackers. It lowers the year-to-year increase to 1.8% and, applying the math, turns the 3.2% improvement in admissions announced by NATO into a 0.8% decline. It's a thin line between positive and negative and a bit premature to be using the MPAA claim that "2006 Box Office Rebounds" as a mantra.

March 14, 2007

- by Leonard Klady