New figures just released by the Cinema Advertising Council, a trade org repping 82% of U.S. screens, show a hefty 18.5% gain in revenue to just shy of $540 million in 2007, up from $455.7 million a year earlier.

That revenue is significant for the mature, perennially product-dependent exhib biz because the vast majority of it goes directly to their coffers instead of being split with Hollywood.

Despite complaints that in-theater advertising is alienating audiences and driving disgruntled customers away, a 2007 Arbitron study found

that a majority of frequent moviegoers recalled specific ads and also did not mind having ads before the feature.

Adding more credence to that view is the remarkable track record of 2008 box office thus far. According to the AP:

A solid June lineup has pushed Hollywood ahead of last year's record box office pace. Since the first weekend of May, domestic grosses total $1.46 billion, up 4.6 percent from 2007's, according to Media By Numbers. Factoring in higher ticket prices, actual movie attendance this summer is up 1.6 percent.

2007's summer box office set a record with more than $4 billion in ticket sales. This summer is outpacing it so far without the trhee $300 million thee-quels that 2007 could boast. YTD, box office is off 1%.

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Before getting outside the box office, they get right into it:

THE HOLLYWOOD REPORTER: Will summer 2008 set another new boxoffice record?

CAMPBELL: We have a strong slate of films this summer, but what you’re missing is what I’d call the three money-in-the bank films you saw last year in May. There’s a lot of diversity in product this summer, but will it be a record summer? I can’t say that.

FITHIAN: This year we have a few more unknowns. Some of those will surprise on the upside and some on the downside.

THR: And the year?

CAMPBELL: What I would say about the fourth quarter is that last year that was our weakest quarter, so on a comparable basis I think there’s more powerful product in that quarter of this year.

FITHIAN: I don’t disagree at all. I think it’s also important to remember we are coming off two up years in a row.

 On ratings:

THR: Exhibitors tend to like less restrictive ratings, yet there continues to be a regular flow of R-rated movies. Are you OK with that?

CAMPBELL: From a selfish, economic point of view as an exhibitor, we do better with PG and PG-13 films, and on any given year you generally see 17 or 18 of the top 20 films as PG or PG-13. There is still a place for R-rated films, but we do better at the boxoffice and at the concessions with PG and PG-13 films.

FITHIAN: I am mystified why everybody in Hollywood wants to be Quentin Tarantino instead of trying to sell movie tickets.

 
THR: Any other specific advice for Hollywood on the kind of pictures they should make?

FITHIAN: More family titles of any genre. When you take an action film and decided to make it PG-13 instead of R, it does better. And in most cases, if you have a comedy and decide to make it PG-13 it does better, although there certainly is a role for the harder-edge comedies as well. But as the father of a 5-year-old, there are times I am looking to go to the movies with my child and can’t.

Year-round movie-going: 

THR: You like to encourage “ 12-month releasing.” Isn’t there a limit to how many tentpoles can open while school is in session?

FITHIAN: Yes, but we’re still doing it wrong. Virtually every school in the country is still in session the first weekend in May, and the biggest movies in 2007 were released over the first weekend in May. Yet we leave April almost entirely off the table, and the circumstances of school are very similar in April and May.

There are only so many blockbusters you can tolerate in the year, but in summer when they are so close together we are losing money. With those huge titles last May, we lost— in my estimation —$50 million$100 million because we had them all in one month. If one of those had been in April, I think we would have made a lot more money.

CAMPBELL: We could increase the boxoffice several percentage points by having a release schedule that was spread a little more evenly.

Read the rest here. 

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Smithsonian Magazine has a nice overview of the history and appeal of this Anerican icon. 

On June 6, 2008 the flag flying over the U.S. Capitol will commemorate the 75th birthday of a distinctive slice of Americana: the drive-in movie theater.

It was on that day in 1933 that Richard Hollingshead opened the first theater for the auto-bound in Camden, N.J. People paid 25 cents per car as well as per person to see the British comedy Wives Beware under the stars.

The concept of showing movies outdoors wasn't novel; people often watched silent films on screens set up at beaches or other places boasting an abundance of sky. However, it took an auto-parts salesman such as Hollingshead to see the genius in giving a car-loving society one more activity they could do in their vehicles.

He first conceived the drive-in as the answer to a problem. "His mother was—how shall I say it?—rather large for indoor theater seats," said Jim Kopp of the United Drive-in Theatre Owners Association. "So he stuck her in a car and put a 1928 projector on the hood of the car, and tied two sheets to trees in his yard."

From that humble and slightly TMI beginning, the drive-in theater swelled to more than 4,000 screens at its peak in the 1950s. The advent of TV and the pressure of rising land values drove most of them out of business by the late 90s. Since then however, there has been a resurgence in interest, with the number of screens stabilizing and then rising once again.

Go, and learn more about the past, present and future of a movie institution.

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 Publisher Nick Dager starts it off with a bang:

The answer lies in the fact that the studios, either by happenstance or by design, are taking a very passive-aggressive approach in their negotiations with DCIP. Several studios are demanding higher virtual print fees, which exhibitors insist they can’t afford. Other studios are demanding that exhibitors convert to digital now in order to justify the costs of the 3D features due out next summer.

In some cases that passive-aggressive attitude exists in the same studio. In interview after interview Jeffrey Katzenberg, CEO of Dreamworks Animation has led the charge all but demanding that exhibitors waste no time in converting to digital, this of course so that his 3D movies can make more money. Yet his long-time partner Steven Spielberg tried to block the digital release of Indian Jones and the Kingdom of the Crystal Skull. In a recent story on the topic reported in the Chicago Tribune Spielberg is quoted as saying, “Making a film on celluloid, as I like to do with all of my pictures, but then transferring it and releasing it and projecting it digitally is a very inferior image.”

Where does that leave the transition to digital cinema, and by necessity, 3D? 

 
Scylla, meet Charybdis:

John Fithian, president of the National Association of Theatre Owners, says the situation has placed exhibitors squarely between a rock and a hard place. "Several studio leaders currently hope to reduce substantially the virtual print fee support they are willing to provide for the digital cinema transition, at the same time that several other studio leaders demand that exhibition install many systems rapidly for the 3D slate in 2009,” he says.  “And at the same time one of the industry's filmmaking icons refuses to release a big summer picture on digital cinema screens except for locations where that is the only option. So, should we or should we not move faster with the digital roll out? How do they possibly believe that exhibitors will do anything less than push back? Maybe they should get their act together first before they try to tell us what to do."

So when do we put the "budge" in budget? Insiders differ. Some suggest the deals are dependent on a successful resolution to SAG/AMPTP negotiations, others ascribe the hold-up to the credit crunch fueled by the home mortgage meltdown.

What seems crystal clear (and you don't need special glasses to see it) is that the delay is all about the Benjamins. The 2009-2010 3D slate has only upped the urgency of resolving the basic calculation with a concrete and near-term demonstration of how much (and whose) money is at stake.

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It comes as no surprise to theater owners that hard times send people to movie theaters. Movie-going remains the least expensive form of out-of-home entertainment, as these charts show:

But wait, there's more, considering your ticket dollar in terms of time spent:

Source: ¹Intl’ Laser Tag Assn.    

Source: ²United States Bowling Congress / Mischel & Co. (ave. price/open game)

Source: ³NATO

The L.A. Times weighs in with the tantalizing suggestion, " If you're struggling to pay the bills, why not let Angelina Jolie take your worries away?"

Marketplace follows with an on-air interview on the subject with yours truly.

 And the Times of London speculates on the forthcoming summer season with an economy in the doldrums:

“In the past four decades there have been seven recession years in this country, and box office climbed strongly in five of those years,” said John Fithian, the president of the National Association of Theatre Owners.

“Consumers cut back on expensive purchases during recessions but also typically shift what discretionary spending money they have left to affordable activities, such as going to the movies.” This economic anomaly was first observed during the Great Depression, when even the Dust Bowl refugees used what little money they had to pay for admissions to monster movies and Marx Brothers comedies.

 Let us know: where will you be spending your money this summer?

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Fithian countered that some of the studios can't agree on what they'll pay the top three circuits in virtual print fees and that circuits need to have those fees in place before they can make the costly investment.

He wouldn't name names, but industry insiders say that Disney, 20th Century Fox and Paramount are close to agreement with exhibs, while Warner Bros. is far behind. Universal and Sony are still in talks.

Katzenberg "suggested it is the cinema companies who are dragging their feet," Fithian said. "That is not the case," he added.

Further, Fithian noted that Katzenberg's colleague, Steven Spielberg has been, at best, lukewarm about the conversion to digital cinema.

There was an outcry among theater owners earlier this year when Par suggested it wouldn't supply digital prints of Spielberg's "Indiana Jones and the Kingdom of the Crystal Skull," because Spielberg wanted the movie played only as film on 35mm screens. Filmmakers including Spielberg sometimes balk at having their movies shown in digital when they were shot on film.

Not providing a film like "Crystal Skull" on digital would slight theater owners who have made the conversion, according to exhibs. Theater owners have long argued that there's no reason to make the transition if the product isn't there.

Par changed its position and will be releasing digital prints of "Indiana Jones." Exhibs aren't entirely mollified, though, since digital prints will go only to those houses where all the screens are digital. If there's a mix of screens in a theater, that theater will get only a film print.

Spielberg a print tease? Get your popcorn, the show isn't over. It's only intermission. 

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"In the last 30 days, things have not progressed as well as I had hoped, expected and, quite frankly, been committed to, by all the parties involved," Katzenberg said in response to an analyst's question. "It's ongoing as we speak literally now, but in terms of getting the big three (exhibitors: Regal, Cinemark and AMC) on board and actively moving forward, I feel as though things have dragged along, and it's been pretty disappointing."

Exhibitors and distributors are in the midst of tough negotiations over Virtual Print Fees (VPFs), both how many and how much the studios will contribute toward each VPF.

"If these guys don't get their act together very quickly in the next 30 days, they're not going to be able to achieve that goal," (Katzenberg) said. "Every week that goes by, it'll be several hundred less screens that manage to be rolled out in the time frame."

This line of reasoning sounds strangely familiar:

Katzenberg's accusations come just a couple of weeks after National Assn. of Theater Owners prexy John Fithian made similar remarks from the other side of the bargaining table during the Digital Cinema Summit at NAB. "If the studios want this to happen in time for 2009, the deals have to be struck, and they have to be struck right now," Fithian said at the time.

Despite the opportunities for increased profits from additional 3D screens, in the earnings call Katzenberg asserted that "what we are confident of being installed will pay for our investment."

You can listen to the entire DreamWorks conference call here. 

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Week in and week out, Projector exposes the often-bitter truth about Hollywood. On one point, though, he must back the industry line with gusto. Call Projector creaky, but nothing matches the moviegoing experience or offers a better entertainment value. Consider:

* Since Projector lined up with a horde of other freckly nerds for the original "Star Wars" in 1977, when the average U.S. movie ticket cost $2.23, the price of admission has climbed less than the rate of inflation. That same ticket, in today's dollars, would cost $7.86 -- or well above the latest norm of $6.88. These averages include rural theaters and matinee, senior and child discounts; in L.A., the price of movies, like almost everything else, runs higher.

* Contrary to the whiny drumbeat of the nostalgia crowd, the product is as good as ever, especially for those who look beyond the top of the box-office charts. Projector's recent favorites include "Pan's Labyrinth," "The Bourne Ultimatum," "Juno" and "The Bank Job."

* Theater owners have crowed for years about what a bargain movies are compared with such events as concerts, which in 2007 commanded $62.07 for the average ticket, and baseball games, which went for $22.77. This spring the exhibitors' trade group, the National Assn. of Theatre Owners, calculated that watching films also costs less per minute than laser tag and bowling -- even if fans don't get the opportunity to rent those cool shoes.

Best of all, Friedman doesn't just take NATO's word for it. He takes the Times' money and actually checks it out. 

The price of fun
On a recent date night, a couple spent $31.25 at the movies -- excluding baby-sitting and other costs. How does that compare with other entertainment options?

* Baseball game at Dodger Stadium: Two infield reserve tickets, plus online "convenience charges," parking, hot dogs and sodas. Tab: $100.50

* Laser tag at Ultrazone in Sherman Oaks: Two $23 "unlimited game" packages on a Friday night, plus pregame Red Bulls. Tab: $50.78

* Marty & Elayne at the Dresden restaurant in Los Feliz: Dinner for two (pepper steaks with Caesar salad or French onion soup), followed by cocktails (Blood and Sands) at the piano lounge, with tax and tips. Tab: $111.94

* Paint ball at Warped Paintball Park in Castaic: Two basic packages on a weekend afternoon, including goggles, compressed air and Tippman 98 semiautomatic paint ball guns. Tab: $90

Read it all. The man loves him some movies and turns in a fun and funny article.

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