Film-Tech Forum ARCHIVE: Is the motion picture industry still recession proof?

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Posted by John T. Hendrickson, Jr (Member # 849) on 09-21-2008, 07:49 PM:

There was a time when many people in the industry argued that the motion picture industry was recession proof. Much was made of the fact that during the depression of the 1930's, people flocked to theaters that provided a cheap form of entertainment, and an escape (though temporary) from hard times.

Still true? At least for exhibitors, I don't think so. Are your attendance numbers holding up? How about revenue? Per caps? Where I work, those answers are no, no, and no.

Theater owners are faced with increasing costs everywhere you look. Electric- up. Concession costs- up. Insurance- up. Cleaning costs- up. Labor cost holding, but for how long? For those theaters who lease space, is your rent being adjusted to accommodate the downturn?

Another problem is trying to get a loan if you are looking to make any kind of improvements. The credit markets are in a shambles and money is tight.

Have distributors given you a break on film costs? Patrons suddenly complaining about prices at the concession stand and the box office? Would you dare to impose a price increase at this point in time?

My belief is that exhibitors everywhere are in a terrible squeeze. The post here on Film-Tech about theater closings is growing longer all the time.

Lets face it, times are tough. Today, our industry is competing with home entertainment, sports, the internet, video games, and a plethora of other pursuits for "descretionary income" that is shrinking for many folks.

What's your take on the state of the industry?

Posted by Mike Blakesley (Member # 26) on 09-21-2008, 08:04 PM:

My take is the same as it always is: If we get good movies, we put butts in the seats. Bad movies: Fewer butts. But I do agree the economy is affecting us a little - because a lot of our customers are from smaller towns 25 and 35 miles away, so it's an investment to drive over for a movie. However, I don't think most people are really cutting back much - yet.

Here, our numbers are holding up well to last year -- we were a little behind until the summer came along with the better movies, and now things are softening again due to less-popular movies, but overall we're up over last year.

Posted by Adam Holland (Member # 4539) on 09-22-2008, 07:22 PM:

This is where the small community theatres will once again fill a void and the studios need to realize it.

With the rising cost of gas, the local theatre is once again finding a market for itself.

In our small comunity of 2,176 in the city and 14,000 in the parish the theatre is holding its own showing a movie one weekend a month. And showing pictures on less than adequate equipment.

In the coming months we are looking at investing in new 35mm equipment which will allow us to get new movies and increase the frequency of shows.

The feed back from our customers, many of whom come everytime the doors are open is how nice it is not to have to drive 40-60 miles to watch a movie.

It is my belief that if the studios would see how valuable the little guys could be in this time or recession we could vary well see the rise of the small community theatres once again. And the community theatres would be recession proof just as they were in the depression.

Our theatre opened in 1928 and by 1950 had become the largest theatre in Northeast Louisiana when it moved to its new state of the art house that we are in now.

Posted by Joe Redifer (Member # 3) on 09-22-2008, 08:10 PM:

It is as long as Adam Sandler keeps making movies.

Posted by Louis Bornwasser (Member # 3063) on 09-22-2008, 08:37 PM:

Please, just Kill me! Louis

Posted by Kurt Zupin (Member # 2751) on 09-22-2008, 09:51 PM:

LONG LIVE THE SANDMAN! [Razz]

I don't think we are recession proof, but I don't think were going to drop off the face of the planet either. We may hit a slow period, but once something comes out that everyone wants to see again, all bets are off as to how busy we will get.

Posted by Brian Guckian (Member # 1678) on 09-24-2008, 06:14 PM:

quote: John T. Hendrickson, Jr
My belief is that exhibitors everywhere are in a terrible squeeze. The post here on Film-Tech about theater closings is growing longer all the time.

I couldn't agree more; I think closures of large multi-screen cinemas will accelerate worldwide in the coming years. The elephant in the room is soaring energy costs brought about by peak oil and peak gas. Coupled with bigger home cinema displays, the advent of Blu-Ray DVD and unimaginative product the future for the mega-plex cinema model is grim.

It just won't be feasible to run these vast complexes with their huge energy and maintenance demands. And cutting staff and wage costs (how fewer people can be employed for how much less, at this stage?) can't address the underlying economic problems of the large-scale exhibition model that has prevailed for the last 30 years or so.

But...this is good news for the small, independent theatre! Hence:

quote: Adam Holland
It is my belief that if the studios would see how valuable the little guys could be in this time or recession we could vary well see the rise of the small community theatres once again. And the community theatres would be recession proof just as they were in the depression.

How true

Posted by Justin Hamaker (Member # 2165) on 09-24-2008, 07:27 PM:

I think my theatre might be a little more vulnerable to recessions and other economic slow downs.

Our business from local residents stays fairly constant from year to year - allowing for movies. But the area is largely supported by tourists in the summer. This summer, there were far fewer tourists in town all summer. Many who did come seemed to either choose going to the movies or going on the lake, but not both.

I also talked to a local police officer and someone who works at a gas station and both said the volume of out-of-towners seems to be significantly down from last year. 2007 also seemed to be down from previous years.

Posted by Mike Blakesley (Member # 26) on 09-24-2008, 08:05 PM:

Tourism at the national parks in Montana (Yellowstone, Glacier) was up this year. I think maybe the "big" downturn, if there's going to be one, might be next year; for 2008, people may have already had reservations pre-paid, vacation funds saved, etc. 2009 could be another story.

Our numbers are still ahead of last year but I'm not sure I'll be able to say that a month from now!

Posted by Gordon McLeod (Member # 33) on 09-26-2008, 09:38 AM:

A couple of side notes
the great depression which was a big period for the movies was not really for the theatres
many were saddled with large debt from construction cost in the booming twenties and the cost of converting to sound many having to replace sound equipment that was leased or purchased at great expense with optical rather than disk or rental service contracts on sound equipment . And the shortage of available to credit to finance with. Sounds familiar doesn't it

Posted by Brad Allen (Member # 470) on 10-05-2008, 06:58 PM:

There is no doubt that the current economic conditions are affecting the small town theatres in this neck of the woods.
Mainly gas prices.

Mainy other business owners in our area have expressed the same sentiment.

Just finished our worst September in 15 years. And all the small town area theatre owners I talk to are in the exact same boat.
Of course, we all agree, that there has been more crap released than ever before in the past 6 weeks as well.

Posted by Louis Bornwasser (Member # 3063) on 10-05-2008, 09:40 PM:

Small town theatres are the first ones affected in bad times; the last to recover. I have a special place in my heart for mom & pops, smaller places that are allowed to rise and fall over time. "Corporates" would surely have killed these locations during bad times. Louis

Posted by Richard C. Wolfe (Member # 431) on 10-05-2008, 10:06 PM:

I just finshed the best September that I have had in many years at my small town single screen theatre. So far October has been great as well.

So why have I done well while many others have not. I don't think it has much to do with the economy. It has to do with only one thing. PRODUCT! The product that has been released since Labor Day has sucked big time, and that is what most of you have been playing. I on the otherhand, as a subrun, am still playing good product from the summer... and it's STILL doing great business, just as it did then. If it were the economy or gas prices, it wouldn't matter what we played... business would be down. If you're playing pictures that people want to see, you'll do well, if not, you'll die... and that is what has been happening for the most part with the current product.

I have decent product to take me through October, but then I have nothing to play but the junk that has been released since Labor Day, and I will die with it just as you folks have. It's going to be a long November and December before Christmas. The only decent film I'll have to play during that period will be (I hope) the Dark Knight.

I actually think that if gas prices have any effect on my business, it will help by keeping people from driving out of towm.

I'm not too concerned about the recession, as I don't think it will take many customers from me, BUT I am VERY concerned about energy prices, and inflation in general. With prices rising so quickly, it's not enough to just maintain the same amout of patrons... either more patrons or higher prices will be needed. Of course, we all know that higher prices always means LESS patrons. Therefore, higher prices defeats inself, so the question becomes... during these recessionary, inflationary and bad product times, how the hell do we attract more patrons?

Posted by Thomas Dieter (Member # 2507) on 10-06-2008, 04:35 PM:

From my experience at our location, we have done nothing but increase year after year, and this year is no different. We just set record breaking number labor day weekend, our first 3000 people ever, and the week after.

I think that the days of the good old discount theatres is going to be back. Our entry fee is very reasonable, and our concessions are equally reasonable.

Last time I went to AMC or Regal to get popcorn and 2 drinks, i paid close to 20 or 25 dollars, just for concessions alone. That's not counting the 8 or 9 for each ticket. If you are in the market for discount theatres, that's where the money will be so long as you know how to market it.

Posted by Martin McCaffery (Member # 37) on 10-06-2008, 05:28 PM:

As we run a small town art theatre, we are suffering the decline art films are suffering throughout the industry. We're off 30% from last year and 15% of our five year average. But this has been coming for years, it's not so much a function of the economy. Fundraising on the other hand (we're a non-profit, so fundraising is important to us).

Overall, I agree it is the movie that gets butts in the seats (ok, and a strong advertising push). In 2002, when most people in the art business were having the post 9/11 recession, we had our best year ever thanks to Greek Wedding. Which we banked for just such a rainy year as this one.

Talking to one of the really small distributors, she summed it up nicely. We are the cockroaches. We're still around after the bomb goes off.

Posted by Justin Hamaker (Member # 2165) on 10-06-2008, 11:54 PM:

quote: Thomas Dieter
I think that the days of the good old discount theatres is going to be back.

In the last 6 months or so the DVD windows for major studio pictures has increased slightly. When you take out the movies that more or less flopped, it's actually over 4 months with some of this summers biggest movies being closer to 5-6 months. A longer DVD window certainly gives discount theatres a better chance to thrive.

Who knows whether this will hold, but I think the studios might be realizing that the shorter window is just eating away at the theatre revenue streams. The DVD sales and rentals will be there whether the title comes out in 3 months or 5 months.

Posted by Thomas Dieter (Member # 2507) on 10-07-2008, 09:23 AM:

quote: Justin Hamaker
When you take out the movies that more or less flopped, it's actually over 4 months with some of this summers biggest movies being closer to 5-6 months. A longer DVD window certainly gives discount theatres a better chance to thrive.

My question is when are they going to come out with another Titanic? That movie played for over a year before they stopped tracking box office revenue. When they do make one of those, when would the DVD/Blueray release be?

Going along with the DVD release, do they set the DVD release shortly after the break in first run theatres?

--Tom

Posted by Mitchell Dvoskin (Member # 751) on 10-07-2008, 09:53 AM:

During the Great Depression, movies (in theatres) played a much different role than they do today. Back then, for the price of a cup of coffee, a person could escape the problems of the world and be entertained for hours with a program of shorts, newsreels, cartoons and a double feature. Since there was not television and internet, this was it for affordable entertainment. Today, that is no longer the case. As such, I don't think the motion picture business is recession proof. Already movie going has change from a weekly activity to an occassional event. As money gets tight, theatre's will start hurting along with restaurants and other leasure activities.

Posted by Mark Gulbrandsen (Member # 72) on 10-07-2008, 09:57 AM:

quote: Mike Blakesley
My take is the same as it always is

Oh, so you also do the one for you... one for me thing.... I believe I have many customers that work along that realm.

Posted by John Hawkinson (Member # 1135) on 10-07-2008, 10:18 AM:

"when are they going to come out with another Titanic?"

You're in luck. Winslet and DiCaprio star in Paramount/Dreamworks' Revolutionary Road opening this oscar season.

ok, ok, this is probably not what you meant, I know...

--jhawk

Posted by Mike Blakesley (Member # 26) on 10-07-2008, 10:31 AM:

quote: Mark Gulbrandsen
Oh, so you also do the one for you... one for me thing.... I believe I have many customers that work along that realm.

I'm not sure what that means! But, I've been around the industry long enough to have seen just about everything short of a major depression and we've been able to survive. (Now, if a real depression happens, all bets are off!) The Roxy was built just after the last depression - in fact they took advantage of lower building materials costs to make the building nicer than originally planned.

Posted by Jeremy Weigel (Member # 4208) on 02-14-2009, 11:22 PM:

So far for 2009 we're up 24% on attendance and 11% on our concession per cap. Is anyone else seeing an up tick in business? Although its great that business up I usually look forward to the short lull after the Thanksgiving/Christmas season, but so far that just hasn't happened.

Posted by Robert E. Allen (Member # 1351) on 02-15-2009, 01:14 AM:

quote: John T. Hendrickson, Jr
There was a time when many people in the industry argued that the motion picture industry was recession proof. Much was made of the fact that during the depression of the 1930's, people flocked to theaters that provided a cheap form of entertainment, and an escape (though temporary) from hard times.

I can confirm that John. My dad worked through the depression as a projectionist and was never unemployed. He was making about $20 a week - pretty good money then. Yes admission was only a dime but it wasn't easy to hold onto that. I think people will want to escape today. But if exhibitors keep jacking up their ticket and concession prices they're only cutting their own throats.

Posted by Monte L Fullmer (Member # 2797) on 02-15-2009, 02:40 AM:

On the comments of the discounts: I work in a 6plex discount and with the family and 'date flick' movies that came out late fall, we are are playing them. Thus, we had a stellar weekend of sellouts and major conc sales.

As for the local 1st run complexes: it looks like the young single adults who attend these places aren't worrying about spending the 9 plus bucks to catch a flick, or spend 12 for the 3D versions.

It's the families and older people who really make the issue of high tix prices - yet, they still hit the 'red carpet' to catch that new flick on opening night.

quote: John T. Hendrickson, Jr
..people flocked to theaters that provided a cheap form of entertainment, and an escape (though temporary) from hard times.

And I do believe that this statement still holds to this day: People want to get out of the house, away from their home ENT systems to be entertained...just to do the "escape syndrome"....

And what Robert said about his father holds for me as well: Never was unemployed in the almost 40yrs in this industry. Thus, is that a good thing, or bad thing?

-Monte

Posted by Martin McCaffery (Member # 37) on 02-17-2009, 05:49 PM:

quote: Jeremy Weigel
So far for 2009 we're up 24% on attendance and 11% on our concession per cap. Is anyone else seeing an up tick in business? Although its great that business up I usually look forward to the short lull after the Thanksgiving/Christmas season, but so far that just hasn't happened.

We're the opposite, off 51% of our five year average. And January and February are usually our best months. Once again, though, we're an art theatre and our audiences skew much older for usual Hollywood films

[ 02-17-2009, 07:59 PM: Message edited by: Martin McCaffery ]

Posted by David Stambaugh (Member # 1102) on 03-01-2009, 08:18 PM:

This article ran on the front page of the local newspaper today. It's a wire story with some local slant added.

Americans go to movies seeking silver-screen lining

LOS ANGELES — Hollywood could get used to this recession thing.

While much of the economy is teetering between bust and bailout, the movie industry has been startled by a box-office surge that has little precedent in the modern era. Suddenly it seems as if everyone is going to the movies, with ticket sales this year up 17.5 percent, to $1.7 billion, according to Media by Numbers, a box-office tracking company.

And it is not just because ticket prices are higher. Attendance has also jumped, by nearly 16 percent. If that pace continues through the year, it would amount to the biggest box-office surge in at least two decades.

Americans, for the moment, just want to hide in a very dark place, said Martin Kaplan, the director of the Norman Lear Center for the study of entertainment and society at the University of Southern California.

“It’s not rocket science,” he said. “People want to forget their troubles, and they want to be with other people.”

Helping feed the surge is the mix of movies, which have been more audience-friendly in recent months as the studios have tried to adjust after the lackluster sales of more somber and serious films.

Some locally-owned Eugene movie houses have been reaping the benefits.

The David Minor theater, Eugene’s newest venue, reports it has had consistent business all year.

“During a recession people may not have income to spend on larger ticket items, this is entertainment and it is enjoyable,” said theater co-owner Ronny Goldfarb.

The theater, named for David Minor, who died in a bicycle accident last June, has used its unique style to carve out a returning audience, he said.

At the Bijou Art Cinemas in Eugene, business has been up as well, said theater manager Scott McGahan. A lot of that could have to do with the presence of two Oscar-winners in “Milk” and “Slumdog Millionaire” on its screens for most of this year.

“In our case, business has definitely been better than the last couple of years, but I don’t know if it would have been if not for those big hit movies,” McGahan said.

Movies offer family fun

As she stood in line at the 18-screen Bridge theater complex in Los Angeles on Thursday to buy weekend tickets for “Jonas Brothers: The 3D Concert Experience,” Angel Hernandez was not thinking much about escaping reality. Instead, Hernandez, a Los Angeles parking lot attendant and mother of four young girls, was focused on one very specific reality: her wallet.

Even with the movie carrying a premium price of $15 because of its 3-D effects — children’s tickets typically run $9 at the Bridge — Hernandez saw the experience as a bargain.

“Spending hundreds of dollars to take them to Disneyland is ridiculous right now,” she said. “For $60 and some candy money I can still be a good mom and give them a little fun.”

A lot of parents may have been thinking the same thing Friday, as “Jonas Brothers” sold out more than 800 theaters, according to MovieTickets.com, and was expected to sell a powerful $25 million or more in tickets.

Other movies kept up their blistering sales pace, too, including “Tyler Perry’s Madea Goes to Jail,” about a gun-toting grandma. Even “Taken,” a relatively low-cost thriller starring Liam Neeson, is barreling past the $100 million mark this weekend.

Historically speaking, the old saw that movies do well in hard times is not precisely true. The last time Hollywood enjoyed a double-digit jump in attendance was 1989, when the unemployment rate was at a comfortable 5.4 percent and the Gothic tone of that year’s big hit, “Batman,” seemed mostly the stuff of fantasy. That year, the number of moviegoers shot up 16.4 percent, according to Box Office Mojo, a box-office reporting service.

In 1982, theater attendance jumped 10.1 percent to about 1.18 billion (the top seller was “E.T.: The Extra-Terrestrial”) as unemployment rose sharply past 10 percent. Then admissions fell nearly 12 percent, an unusually sharp drop, in 1985 (the “Back to the Future” year), as the economy picked up — suggesting that theater owners have sometimes found fortunes in times of distress, and distress in good times.

Little research on subject

Academic research on the matter is scant. One often-quoted scholarly study by Michelle Pautz, of Elon University, was published by the journal Issues in Political Economy in 2002. Overall, it said, the portion of the American population that attended movies on a weekly basis dropped from around 65 percent in 1930 to about 10 percent in the 1960s, and pretty much stayed there.

The film industry appears to have had a hand in its recent good luck. Over the last year or two, studios have released movies that are happier, scarier or just less depressing than what came before. After poor results for a spate of serious dramas built around the Middle East (“The Kingdom,” “Lions for Lambs,” “Rendition”), Hollywood got back to comedies like “Paul Blart: Mall Cop,” a review-proof lark about an overstuffed security guard.

“A bunch of movies have come along that don’t make you think too much,” said Marc Abraham, a producer whose next film is a remake of “The Thing.”

Certainly exhibitors are looking for a profit lift in the downturn. A new report from Global Media Intelligence on Friday predicted that the fortunes of movie theater operators like Regal Entertainment and Cinemark Holdings would be “increasingly favorable against a backdrop of highly negative economic news.”

Cinematic quality has little to do with it. The recent crop of Oscar nominees has fared poorly, for the most part, at the box office. Lighter fare has drawn the crowds.

“It would take a very generous person to call these pictures anything other than middle-of-the-road, at best,” said Roger Smith, the executive editor of Global Media Intelligence.

Surge started before Christmas

The box-office surge started just before Christmas with the comedy “Marley & Me,” in which Jennifer Aniston was upstaged by a dog. And it has continued, weekend by weekend, with little sign of let-up, analysts say.

“Watchmen,” a dark superhero film, opens March 6 and is expected to do megawatt business. It is to be followed by “Monsters vs. Aliens,” a 3-D behemoth from DreamWorks Animation that analysts expect to have the biggest March opening ever for a nonsequel.

Movie theaters are already adding 3 a.m. screenings for “Watchmen” next week, and advance sales by online ticket companies like Fandango and MovieTickets.com have been strong.