The Reel Blog

Nobody wants an economic downturn, but since it seems we're in one, everybody seems to be wondering how the movies will do.

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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The L.A. Times Josh Friedman ("The Projector") lays it out in a fair and thoroughly researched Sunday Business section front-pager: 

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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Our friends in the U.K. are running a cinema trailer compiling scenes from some of the big movies hitting the theater this summer. Courtesy of the Film Distributors Association.

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Michael Brush, financial analyst for MSN Money, takes a historical look at box office performance during hard times and, despite what some analysts conclude, comes up with some hard numbers:

Some industry analysts, including Hal Vogel of Vogel Capital Management, dispute the link between economic pullbacks and rising movie attendance. But for me, the evidence is strong:

• In 1974 and 1975, as the economy contracted 0.5% and 0.2%, respectively, after 5.8% growth in 1973, the annual box-office take rose 25% and 11% as Americans sought refuge from reality in hits like "Jaws," "The Towering Inferno" and "Blazing Saddles." Movie-theater attendance rose 16.9% in 1974 and 2.2% in 1975.

• In 1982, the economy contracted 1.9%, after 2.5% growth in 1981. Box-office takes shot up 16.4% as hits such as "E.T.: The Extra-Terrestrial" and "Porky's" offered escapes. The number of moviegoers was up 10%.

• In 2001, economic growth slowed to 0.8% from 2000's 2.7%, but box-office spending on movies such as "Monsters, Inc.," "The Mummy Returns" and "Ocean's Eleven" rose 9%. This was also the year the "Harry Potter" and "Lord of the Rings" film franchises were launched. Then, the box-office take rose 14% in 2002 as economic weakness lingered, growing only 1.6%. Movie-theater attendance went up 4% in 2001 and 11% in 2002.

All told, box-office spending went up during five out of the seven recessions or pullbacks over the past 40 years, according to the National Association of Theatre Owners. The pattern is so consistent that you can't write it off by saying moviemakers just happened to release better films.

If it is not the particular mix of films that accounts for the upswing in box office during recessions, what does? Sony's Jeff Blake suggests

"Movies offer something completely separate from what you are dealing with day to day. So they really become worth the money when money counts."

Lionsgate's Michael Burns concurs, saying

"When things are tough it is nice to be able to go into a dark theater and get lost in great entertainment, to be moved or scared and all those great things."

So weigh in if you're so inclined. Why do movies do well in bad economies? Is it the movies? The price? A desperate need to escape a stack of bills on the kitchen table?

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Nobody wants a bad economy, but movie theaters are well positioned to do well in tough economic times. In five of the seven recession years over the last four decades, box office revenues have gone up - as much as $670 million in one case. And it's not hard to see why:

Click the image to watch CNN's Brooke Anderson report on why movie theaters do well in recessions. Interviews with NATO President and CEO John Fithian and Media by Numbers' Paul Degarabedian are included. 

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Village Roadshow sparked quite a bit of interest with its announcement of $35 a ticket luxury cinemas featuring restaurant and bar service. USA Today weighed in almost simultaneously with a story on alcohol service in movie theaters. The story leans heavily on the possibility of underage moviegoers being served alcohol. As part of the permitting process, movie theaters go to great lengths to demonstrate how they will segregate the alcohol service from the more accessible areas of the theater - information USA Today had, but omitted from the story.

 A great article in NATO's former magazine, In Focus, covers the problems and prospects for alcohol service in the cinema.

Meanwhile, Fox Business Channel interviews yours truly about luxury cinema:

And Fox News talks with us about alcohol service:

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Disney's 3D concert feature "Hannah Montana/Miley Cyrus: Best of Both Worlds Concert Tour" set box office records ovewr the weekend. It's $29.1 million bow was the highest ever for a super bowl weekend, for a 3D film and for a film opening in less than 1,000 venues.

According to Variety, Disney intends to extend the one week limited release another week, and possibly two in some markets.

The weekend, aided by strong grosses from Oscar nominees, was up 37% over the same weekend last year. It is the seventh consecutive up weekend. YTD box office is running 19% ahead of 2007 and admissions are up approximately 13%.

 So is 3D for real? It is this weekend.

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Prime 3D evangelist Jeffrey Katzenberg, NATO president John Fithian and Classic Cinema's Chris Johnson talked 3D at ShowEast Tuesday.

Katzenberg was enthusiastic:

(T)he advent of 3-D filmmaking and exhibition also is "an opportunity for a game-changer for your business," he told exhibitors filling a large ballroom at the Orlando Marriott World Center.

But unlike digital cinema systems, distributors are unwilling to pay for the installation of 3D equipment. Katzenberg asserted that exhibitors will be able to charge a premium for 3D content of at least $1 a ticket. Classic Cinema's Johnson noted

With "Chicken Little," the chain enjoyed grosses more than one-third higher than would have been true without 3-D availability, Johnson said.

"Literally, with one picture, you will have paid for the cost of the installation of one screen," Katzenberg said.

Johnson, however, couldn't let the opportunity for some good-natured ribbing of his podium partner slip by.

"The unfortunate part is, you have to share some of that (extra) gross with the studio," he jibed.

NATO's Fithian made the point that a broad and stable base of digital cinema systems is the first priority, both as a requirement for 3D and for the health of the industry - a point backed up by an independent exhibitor in the audience.

The majors have agreed to underwrite the rollout of thousands of d-cinema systems by paying third-party installers the equivalent of what distributors will save in print costs during the next few years. Such agreements have been dubbed virtual film print agreements, or VPFs.

"Let's remember that digital is the dog, and 3-D is the tail -- a very important, wagging tail," Fithian said.

Katzenberg replied that the metaphor might fairly be reversed and went on to predict that within just a few years two-thirds of all major movies will be released in 3-D -- about 40 or more 3-D titles per year.

"Let's get the digital-cinema platform there, so we're not doing hodgepodge 3-D installations," Fithian said.

Indeed, exhibitors in smaller markets are still waiting for help with digital startup costs.

Greg Razmus, who operates an eight-screen theater in Corbin, Ky., said the closest digital screens in his area are in distant Lexington, Ky., and Knoxville, Tenn.

"We're still struggling with digital," Razmus said. "I think the 3-D part of that is going to be great, but at this point it's still a dream."

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Focus Features' head and Lust, Caution screenwriter James Schamus was interviewed on KCRW's The Business this afternoon and calmly and genially eviscerated every myth surrounding the NC-17 rating.

A few highlights:

• Very few newspapers have refused ads for the movie.
• Television advertising and standards & practices execs are eager to work with them should Focus choose to advertise on TV.
• The two difficulties he cites are audience perceptions of a stigma surrounding the rating, and a single major theater chain that has a blanket policy against screening NC-17 films.

I highly recommend you listen. His take on the process is refreshing, light-hearted and hypocrisy-free.

The film has taken in $1.3 million through its third weekend in release and is playing in 77 locations in the top 20 markets.

Update: Two newspapers weigh in on Lust, Caution and NC-17.:

The Naperville Sun in Illinois wonders whether the film will play in the suburbs. The upshot?

In either case, it seems to be the audience, not the theaters, that will determine if an NC-17 film will be played in local venues. Like any other foreign, independent or art film, they will show it - but only if you come.

In the Hartford Courant, NATO president John Fithian continues his campaign for broader acceptance of the rating:

Fithian's support for the rating is a matter of integrity.

"A lot of studios just require their filmmakers to produce a film that is not an NC-17. We think that is a mistake. By not using the rating appropriately, the pressure to cram films into the R rating is too great," Fithian says. "What we see is filmmakers making just enough cuts in their movie to fit into an R.

"This damages the integrity of their movie and is a potential abuse of the rating system," he continued. "As a consequence, the R rating is too broad. The soft end of R and the hard end of R are too different. If NC-17 were used correctly, ratings would make a lot more sense."

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