..Gary
Dretzka
..Noah
Forrest
..Leonard
Klady
..David
Poland
..Douglas
Pratt
..Ray
Pride
..Kim
Voynar
..Michael
Wilmington
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Week 12: Readers Respond
The Discussion Over An Immodest Proposal Called For Some Back & Forth With Our Readers.
JEFF writes: "You're right about the idea of empowerment over profit. However, your two-tiered pricing idea has two flaws:
1) You give filmgoers a reason not to see the film on opening weekend, but instead wait for the price to come down. I'd definitely wait if that were the way it worked. Would studios really sacrifice their opening weekends so that a few more people saw the film a month later? It's the opening that makes headlines, right?
2) What about someone who has paid $5 for admission to X2 on its ninth weekend, then waltzes straight into the opening night of Pirates of the Caribbean? As it is, exhibitors can't stop people from hopping screens, and there's not even any monetary incentive yet! Do you think that teenagers who've just passed the child admission barrier (aka the studios' target audience) will pay full price if given the opportunity to go for half-price?
DAVID Responds: 1) The issue of disincentivizing movie ticket buyers is as old as the advent of sound movies. In that case, as with most in this industry, the advance was finally made in desperation... and became the norm with lightening speed. Television did change how people went to the movies. But those revenue streams were replaced with even bigger revenue streams. I would argue that the current evolution of the system - which is not designed to maximize the number of theatrical viewers but rather profits that come more efficiently through home entertainment - hurts the overall theatrical returns in two ways. It has created an unofficial two-tier system of films worthy of theatrical viewing and "wait until video titles." And it discourages people who might develop the theatrical habit in a more consistent way by making the theatrical experience around 8 times as expensive - for just 2 people - as renting a DVD or video, throwing some popcorn in the microwave and drinking a couple liters of soda.
The reason why opening weekend is so important is because studios have made it that way. It is not inherent in exhibition. It has become the choice because of the rush to get to home entertainment sales. So the real question is, will studios be willing to wait an extra fiscal quarter to go to home video if their returns on New Wave Second Run is $3 a ticket and not the old $1 a ticket?
And riddle me this… how valuable to perceived success would another $30 million, pushing the domestic gross over $300 million, be to a studio like Warner Bros. on a film like The Matrix Reloaded? Remember, domestic revenue is only a third (or less) of the profit pie. Publicity might not want to go back to work on a two month old picture, but would a jump in the gross in Weekend 8, driven by reduced ticket prices, be a story that would both generate positive buzz and shut the naysayers up?
2) Screen jumping is what I call a $100 a day problem. An $8 an hour kid can handle at least three screens.
Sean writes: "I've been thinking more and more about second-run recently - having become a papa, I'm crunched for both time (i.e. I'm unable to see stuff opening weekend, or the next weekend, or the next) and dollars. Given the chance to garner public support, I think (New Wave Second Run) could catch on in the public imagination."
DAVID responds: I'll be proposing crying rooms (some of which are still out there) for new parents and bad dates soon.
BERNIE writes: "My only concern is that exhibitors would balk at carrying movies over, six weeks later, at a lower price, because they'd rather use the theatre for a first run blockbuster.
Right now, movies are so closely stacked together, there's barely any room for a movie (six weeks old) to play.
If you were an exhibitor, it seems like a very easy call to boot 2FURIOUS (even at a discount price) so you could put in PIRATES at full price.
I think you really have to get into the whole "management of releases at the multiplex" and what that entails (I have no idea how it works.) But I would assume, the mandate is "Get as many people in the seats paying full price" period.
DAVID responds: The exhibitor incentive is to get as many warm bodies under the tent as possible. A $5 movie ticket still leads to $7 in concession sales. In the old Second Run system, most of those $2 houses also had cheaper concessions. But they also had old prints, dirty carpets and bad sound. And on a 50/50 New Wave Second Run ticket sale split, exhibitors could make as much income on ticket sales from selling a $5 ticket to an older movie as they could from the first weekend of a movie that they have to go 90/10 on.
These, of course, are reasons for studios to be wary of this idea. One of the often unspoken reasons for the My Big Fat Greek Wedding phenomenon was that they kept screens because by the start of last summer they were throwing off 50% or more of the gross to exhibitors.
Of course, if The Matrix Reloaded could add, say, $150 million to the domestic box office by playing for a year at 50/50 in second run, that might not work for Warner Bros. either. The $75 million in net becomes a diminishing return, as that long a second run would eat into home entertainment and delay the arrival or large pockets of revenue.
The trick to the proposal is balance. We are all used to a system that is audience response based. And what I propose speaks to the pure marketing play that already exists, but few will admit.
Before film lovers start screaming, "The screen is falling!" after reading that, I actually believe that industry structure would lead to more risks by studios, not less. One of the key problems with today's industry is that The Deal is more important than the screenplay or the idea. If a movie like Down With Love has a chance to pick up another $15 million in New Wave Second Run, it becomes much more likely that a studio will take that kind of risk again. If you can generate three or four movies a year that have even half the numbers of My Big Fat Greek Wedding through New Wave Second Run, others will come. But there is currently no system that encourages the next MBFGW. And as much as industry watchers keep thinking that people will chase that same "opportunity," the truth is that inside the industry, the flukiness of that occurrence has already been absorbed and excreted, almost as quickly as CBS and the TV version. (And Nia Vardalos will be a cameo-ing punch line in Austin Powers 4, I'm sure.)
BERNIE continues: "On the same subject, here in Pasadena we have an independent multiplex called THE ACADEMY 6. It plays second run movies (right now it's showing BRUCE ALMIGHTY, A MIGHTY WIND, CHICAGO, BOWLING FOR COLUMBINE, etc.) for 6 bucks a pop. It opens at 3pm and parking is free. I've gone several times, and although it old and could use some renovation, it's a great way to see fairly recent films, in a theatre, for cheap.
Scanning the Independent Theatre listings, there's also the FOOTHILL CINEMA 10 in Azusa that shows discount second run films for only 5 dollars.
I mention the ACADEMY and the FOOTHILL because I'm curious as to what kind of business model they have. Does these places make money? Is there room for more multiplexes of this kind?
If they do make decent money, it would bode well for your suggestion."
DAVID responds: The challenge is that the few second run theaters that still operate in this country are doing "run of lease" deals with their landlords. So you get the oldest, most run down facilities anywhere playing out the string until the new Target rents the land underneath the theater. Some of these situations can last for years and years.
Here on the mainland (ha ha), AMC has recently converted the Beverly Connection theaters into pseudo second run, with pretty much the same line up as The Academy theater you mentioned. But almost farcically, they are still getting $7 for matinees and $9 for evening shows. So much for that grand experiment.
THE BAUM writes: "The "New Wave Second Run" might not exist in the rest of the country, but it exist here in Memphis. There are at least two second one theatres and they do essentially what you mentioned with pricing. 2 Fast 2 Furious is playing at one of them right now, and for about 5 bucks at night.
These theatres are left-overs in areas where new and improved theatres now reign a few miles away. Instead of killing them off, Malco Inc (the monopoly movie theatre company in this city) decided to turn them into second-run theatres and turn a profit from what I have been told.
If my city can be looked upon as a test sample in this experiment, then someone out there should take notice. A New Wave Second-Run, just from witnessing the crowds myself, can work. It can do what you said it can do, if the movie industry wants to try it out.
I will end this with a hypothesis I have. Movies and TV are more respected forms of entertainment than Music in this country. Piracy affects music, because many a person believes they are entitled to cheap music (and free). However, these same people might spend hundred of dollars on a TV show(s) and Movie DVDs due them having more respect or appreciation for that product. Sure it is odd to use words such as respect and appreciation when it comes to a form of entertainment, but there is clearly a divide financially and in other ways between Movies and TV in this country compared to Music. Piracy will only affect the film industry in my mind, the way it does music, when the audience loses respect for the product. If this happens, the film industry is doomed. If they are smart they will pay attention to their less respected music branches, and keep the reverence of the audience in tact.
FINCH writes: "You can use legit theater pricing as something of a guide for second run movie pricing. In NY, the TKTS booth has been selling day of discount tickets to Broadway and Off Broadway shows for a couple of decades. There are also lots of producer created discount programs.
And like Broadway, which has begun to charge a premium for sold out hits, there is no reason why the old roadshow format couldn't be revived for really special event films. I still have a hard copy roadshow program from How The West Was Won that my older brothers brought home. So the pricing could go down, and up.
How many Star Wars fans would pay a premium to attend a special run of the next installment if there was merchandise and extra feature material added to the in theater experience? This isn't even out of the box thinking. Special first run roadshows were a regular practice a generation ago. But the hit and run philosophy of mega screen openings is so ingrained at this point that I'm sure every studio and producer would think that this is an insane proposition.
There will be studios and filmmakers who will boycott the concept, just as some Broadway producers don't send seats to the TKTS booth. Phantom of the Opera and Les Miz played for years below capacity before they began to sell discounted seats. There is the attitude that a HIT isn't discounted, and yet many shows with marginal attendance have extended their run for years by selling discounted tickets.
So, why not charge $15 for special runs $10 for first runs, and at the discretion of the studio, $5 for second wind releases? It makes a lot of sense, and I bet there's money to be made at the high and low end of the spectrum.
If fans are willing to line up at midnight for a movie they MUST see, there is no reason to believe they will have a problem spending 5 more bucks to see it if it has the luster of something special.
All of this will also give the marketing guys something creative to work with for a change. Wouldn't it be cool to have a DreamWorks debit card that you could use at a theater showing their movies?"
MALCOLM writes: "To avoid a problem between a still-revenue generating film like FINDING NEMO, and something that has run its course, like X2 or 2 FAST, might I suggest tying ticket prices not into time, but into theater size?
There is nothing that gets on my nerves faster than going to see a Movie late in its run and being marooned in the Multiplex's tiniest shoebox, and being charged full price for the privilege. Since Theater chains like AMC construct their multiplexes with 2-4 Main halls, a couple of Medium sized halls, and the rest shoebox-sized rooms, why not let the price of the ticket be reflected there accordingly. Full price for the main hall. Seven bucks for the Medium sized hall, and your fiver for the shoebox.
There's a part of me that says the Theater Owners will always have a much better sense of what's playing well, and what isn't, and that they should decide how to maximize their Ticket dollars, but I know the Studios are basically control freaks, contractually obligating certain films to play in their biggest houses for X number of weeks. But here's where Studio's black and white thinking costs them money. Imagine a crappy film like CHARLIE'S ANGELS or LXG OPENING on the seven or five dollar screen. Maybe the movie going public gives it another look at a lower price.
DAVID responds to both Finch and Malcolm: I don't actually believe that a wide range of pricing options would be effective for the industry. If the idea gets too complex, it cannot be marketed anymore. And as much as this idea is pro-audience, it also must be a legitimate option for the studios. I believe that definite structure is critical to this kind of effort.
The trick is not to reduce Charlie's Angels: Full Throttle's opening weekend by much, but to control the backlash by giving it an outlet. My niece, for instance, who didn't really love Full Throttle would still like to go see it again in a theater. She would be happy to see it three or four times in a theater. My nephew seems to feel the same way about X2 and 2 Fast 2 Furious. But for the same $7.50 (cost of a child's ticket) or $9 (cost of a ticket for the 14-year-old) it costs to get into Pirates of The Caribbean this weekend, it ain't gonna happen.
The movies have never been a zero sum game… until now. Profits have been pretty close to maximized. Like The Architect might tell Neo, "All that's left to deal with is this human anomaly of choice."
Let me stretch another analogy. I used to love Jamba Juice when it first opened. They had tangerine juice in season, grapefruit juice, occasionally monthly specials, etc. I could go in and find something different to drink pretty much every day of a given month. (I like variety.) Then they started to grow. Instead of servicing a handful of boutiques, they became a full-bore chain. Not enough people liked grapefruit juice… over. Tangerines were hard to get on a consistent basis… gone. Maximizing automation and profits became the central focus. The kids behind the counter were still nice. But a menu of 15 items and $3 for a cup of juice that was always about 30% more than anyone could drink became less charming. And unlike Starbucks, juice is seen as a luxury, not a coffee-like necessity.
Look at McDonald's. Decades of insane success doing exactly the same thing every single time you walked into or drove up to their outlets across the globe. But suddenly, increasing competition in the food business - not so much Burger King as the El Pollo Loco's of the world - has started eating into their business. And they are flailing away, looking for an answer… pricing, specialized items… LETTUCE!
But the thing is, people still need to be sold stuff. It is the classic entertainment premise… the same, but different. The movie business is having a moment of maturity. Exhibition is still a tough game, but it is not on life support anymore. We know that the technology to generate $50 million grosses in a weekend exists. We can pretty accurately estimate the revenue from home entertainment even before the first dollar is spent on a theatrical ticket.
Everyone is so busy trend watching that they are missing the underlying issue… how do we keep it going? As much as I wish that the answer was, "Make better movies," it is not. The quality of films is an uncontrollable variable. There are better ideas and worse ideas, better filmmakers and worse, etc. But great filmmakers make crap and crap filmmakers sometimes hit home runs. More to the point, there is no way of defining "quality" in a clear way. Read the lukewarm reviews for Pirates of the Caribbean. But notice that almost every one of them hedges and acknowledges that the audiences may be much more forgiving. They know. But they just can't forgive the running time, Keira Knightly's acting, etc. (She's a movie star, not an actress. Deal with it!)
The controllable variable is how the industry rolls out its product. Fear and ego is rampant in this game, but it is bad business. The Harvey Weinstein method of absolute, unrelenting vanity can work on the level at which he is working. If he ran Disney proper, the company would be destroyed in three years. Not every great mind works on every scale.
This is becoming its own column…
My point was that I believe an unemotional structure is what would make the New Wave Second Run a viable business idea for the movie industry. Do it quietly or do it loudly. But do it.
Everyone knows, even if there is no rule, that every title will be available in home entertainment within 6 months. There is no fear of, for instance, not being able to see Seabiscuit on DVD in December, before its Oscar run, if you miss it this summer… no threat that Universal will push home entertainment into next summer so it can do a theatrical re-release with meaning in December. Not gonna happen.
Okay. So throw out those old school dreams. But understand that there is now a void in the minds of consumers. Fill it. If Seabiscuit is great, it may well play into September, given its late summer start. But what if it could play into November in second run? How much better would that be for Oscar positioning?
And I haven't even hit on another major issue. What is the most effective and least expensive way to sell a movie? Trailers. Where do people see them? In a dark room, together.
But that's a whole different column…
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