Business Update with Mark Lacter

Why we're going to the movies more than we did last year

KPCC's business analyst Mark Lacter says movie theaters are expecting big crowds Christmas Day with highly-anticipated releases out like "Les Miserables" and "Django Unchained."

JULIAN: For all the talk of the fiscal cliff, movie fans will be jumping overboard today on Christmas Day. Mark Lacter, will you be catching a film later today?

LACTER: I’ll be staying home Steve, but lots of folks are going to the movies – it’s always a big day. Actually, it's turning out to be a pretty big year. They're expecting the box office in the U.S. to total around $10.8 billion, which is a 6 percent increase over 2011. Also, the number of admissions is higher than a year ago, although it's worth mentioning that 2011 was generally pretty weak. Now, part of the explanation is that, quite simply, you had several very successful releases - "The Avengers" made more than $600 million domestically, "The Dark Knight Rises" about $450  million, "Hunger Games" more than $400 million. And as was true in 2011,  sequels played an important role: Of the 10 highest-grossing films this year,  five were sequels of some kind (and that doesn't include the James Bond film  "Skyfall," which you can argue is the 23rd sequel to that series).

JULIAN: Sequels are really like franchises, aren't they?

LACTER: They are and the studios love them because it means having a  built-in audience that will buy tickets for the latest installment no matter  what. The other ongoing development is the importance of the overseas box  office. Great example this year was the fourth installment of the "Ice Age"  series, which didn't do all that well in the U.S., but took in more than $700  million overseas, including about $70 million in China (which by the way is  becoming a huge movie market).

 JULIAN: I guess the international market is becoming a factor in deciding which ones get made?

LACTER: Absolutely, especially when they  involve big production costs. And the focus on movies that attract broader audiences leaves out a lot of mid-range films -  especially romantic comedies or more serious adult fare - that won't attract much interest  in Asia and the Middle East. One other point worth noting about the year in  Hollywood is that 9,000 jobs were added to entertainment industry payrolls in  L.A. County in 2011. Now these numbers tend to be volatile, but  overall they've been going up - and they fly in the face of those who claim that  L.A. is somehow losing its grip on the industry.

JULIAN: So if Hollywood wants to attract audiences, why are movies so long? It seems more and more plays are 85 minutes without intermission.

LACTER: I love those 85-minute plays! With movies, the long running times have a lot to do with self-indulgent directors who see nothing wrong with keeping audiences  in their seats for two-and-half hours, even when their film is clearly not "Gone  with the Wind" (even if they think otherwise). And part of it is due to the misplaced perception that the  longer the film, the better chance it has to win come Academy Awards time.  (Actually, it's not true - both "The King's Speech and "The Artist" were pretty  trim and they both won Best Picture Oscars.)

JULIAN: Aren’t long movies a  problem for the owners of movie theaters?

LACTER: They can lose one entire screening per day - and that means only one showing in prime time when most of the ticket revenues are generated. Now some theater chains get around the problem by showing a blockbuster on several  screens - kind of like a train schedule: if you miss the first screening another one will come along in 30 minutes. But it does mean that less popular films will be given the boot. It could also push out successful films that had been in release for quite a while and which the theater owner was still getting decent audiences for.

JULIAN: Something like "Argo" for example?

LACTER: Right. This is a big deal because for exhibitors because the studios get the lion's share of ticket revenue in the first  couple of weeks. After that the percentages go up for the theater owner, which is why they try to keep movies for as long as possible before being moved over to DVD. And in general there are fewer releases from the studios, so theater owners have to figure out what to show when "The Avengers" or "The Amazing Spider-Man" have moved on. Not today, though  - most everything will be jammed.

 Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.

 


blog comments powered by Disqus