Business Update with Mark Lacter

2010 movie box office results and its effect on the Southland

KPCC business analyst Mark Lacter talks about how the box office did in 2010 and what effect it had on the entertaiment industry in the Southland.

Steve Julian: On Tuesdays we talk about the latest business stories with Mark Lacter. Mark, every Monday we mention the weekend box office winners - it wouldn't hurt for us to look at what we should make of the 2010 results as a whole.

Mark Lacter: Well, attendance was down quite a bit - 6 percent - and the domestic box office was down 2 percent, and it would have been worse without the carryover in the early part of the year from "Avatar," the big blockbuster in 2009. Also helping prop up the box office were those premium prices we had to pay for watching something in 3-D. Of course, it's always risky to draw too many conclusions about a single year in Hollywood - maybe the numbers were off because people spent more time in front of their lap-tops, maybe it was the influence of services like Netflix and Hulu, and maybe it was because 2010 was generally a lousy year for movies.

Julian: I wonder how Hollywood can thrive with all of those factors.

Lacter: So far, the answer appears to be yes, but the movie business is in a kind of transition period, with the focus, more than ever, on kids and sequels and adaptations (notwithstanding many of this morning's nominations). And that pattern will continue this summer, the idea being to develop movie brands that have an established fan base and that can also be tied to other platforms - theme parks, merchandising, whatever. You see that with a blockbuster like "Pirates of the Caribbean." What also became clear in 2010 was the strength of the overseas market. The obvious examples were "Toy Story 3" and "Alice in Wonderland," but it also was seen with movies that didn't do especially well on the domestic side.

Julian: Hollywood has had an overseas presence for many years...

Lacter: ...but what you're now seeing is the calculation of international sales as an major element in deciding whether to even make the film. And that's an example of the business becoming more risk-averse - basically taking fewer chances on movies that don't have an obvious appeal. From the standpoint of art it's too bad, but remember that the major movie companies are part of much larger media conglomerates that aren't willing to fork over hundreds of millions of dollars on the possibility that some unknown film starring some unknown actor will take off. They're looking for sure things, as are their shareholders.

Julian: But where does this leave the local entertainment industry?

Lacter: Actually, in pretty good shape, starting with employment. From November to December there were an additional 4,200 payroll jobs in the entertainment industry (that covers both movies and television), and over the past year employment in L.A. County has increased almost 11 percent, which is light years better than most any other major industry in Southern California. You can see the activity by the jump in location shooting last year - feature film production was up about 8 percent (some of that was the result of the state's tax incentive program for movies made in California); television shooting was up about 12 percent (sitcoms and reality shows were way up); and commercials were up 28 percent.

Julian: So more jobs for folks behind the camera...

Lacter: That’s right – and also for businesses that service the film shoots. Keep in mind that the percentage increases are from 2009, which was a dreadful year for location shooting. But when you consider the effort that's been made by other states to attract movie and television production, these numbers would suggest that the industry isn't about to leave L.A. In fact, several of the states that have been offering all kinds of come-ons to movie producers are starting to push back. Now, let's be clear Steve: Hollywood is not immune to the ebbs and flows of the overall economy. But the industry does appear to be coming back from the recession more quickly and more strongly than other industries, say like construction or manufacturing. It’s not a cure-all, but it helps.

Julian: Thanks, Mark. Mark Lacter is a contributing writer for Los Angeles Magazine and writes business blogs at LA Observed.com and at kpcc.org.


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