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Global warming at the box office

Variety | September 2, 2007

Just 24 months ago, the sky was falling. With box office down, Hollywood's summer ended in a torrent of lament. Studios rushed to come up with an explanation, and some of the best minds acknowledged their greatest fears -- that in an age of iPods and cell-phone videos, there was a fundamental shift going on in the marketplace: Moviegoing, they concluded, was an outmoded form of entertainment.

Shift to this summer, and box office is up 8% domestically, 20% overseas. For the first time, domestic summer B.O. passed the $4 billion mark.

Since there was no shortage of theories about why box office fell, there are just as many hypotheses as to why moviegoing is up.

To start, there is the simplest explanation.

"Box office was up this summer because the movies were good," says Michael Lynton, chairman and CEO of Sony Pictures Entertainment. He notes that when box office is down, people run around saying "woe is me or woe is that" and look for a diminished appetite for moviegoing. "All the people I talk to say it's really all about the product," Lynton says.

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Notes MPAA chairman Dan Glickman, "As Shakespeare said, 'The play is the thing.' As long as we offer good quality stories that people like and a comfortable place to see them, people will go to the movies."

That theory, however, is just part of the picture. After surveying studio execs, producers, marketers and others, the big windfall of the summer of 2007 was about much more than just the movies.

Success begets success.

The success of pics like "300" and "Wild Hogs" in the season's first four months got people into the moviegoing habit. So by the time summer started, there was ample demand to see films, even if the summer saw an unprecedented number of tentpoles. Rather than cannibalize the business, they expanded it.

"The industry just got off to a fast and great start," says Marc Shmuger, chairman of Universal Pictures. "The momentum of moviegoing never let up."

And audiences in the winter and spring were exposed to movies in the summer.

"The 'trailering' from ongoing franchises was really helpful for 'Ratatouille,' 'Simpsons' and 'Transformers,' " notes Disney's David Kornbum. "People had a good time and came back for more."

Says one studio topper: "I think once you get into a cycle of good movies, people get into the habit of going to movies. It works both ways. It's the single biggest danger to a strike that I think people forget. When baseball was on strike, it took a while for the audience to come back."

Sequels equal must-see.

There were many preseason predictions that there were too many sequels, and especially vulnerable were the three-peats, since franchises tend to run out of gas in the third edition. The summer results defied conventional wisdom. Instead of getting tired of sequels, audiences seemed to be hooked on them. They could instantly recognize what the movies were, and anticipate them months in advance -- any movie marketer's dream.

(The lone exception was "Evan Almighty," which may have suffered because audiences didn't know it was a followup to "Bruce Almighty.")

"The fact that they were sequels creates that buzz," says Joel Cohen, executive vice president and general manager of Movietickets.com. "It creates that sense of anticipation. They saw the first run and are looking forward to the next one. People started buying 'Harry Potter' tickets two months before the movie was released."

Broader scope

Recent summers have seen a bifurcated market: Kids go for the tentpoles, adults go for the limited-release counterprogramming. But wide releases as varied as "The Bourne Ultimatum," "Pirates of the Caribbean: At World's End," "The Simpsons Movie," "Hairspray" and "Knocked Up" drew broader audiences, and studios found the benefits of targeting filmgoers beyond teen boys.

Expectations in check.

The decline in the box office of 2005 followed an abnormally strong box office in 2004 (which had been boosted by the unexpected success of "The Passion of the Christ"). So all of those filmgoing obituaries were not only premature, they ignored the overall long-term trend of rising box office. This summer was merely the natural progression of the marketplace. "You can't expect to have a record-breaking year or summer every time in a business that's 100 years old," says Bruce Snyder, Fox's president of distribution.

Prices inch up.

If a theater charges $10 per ticket, why not $10.25? This is the kind of incremental increase in ticket prices that exhibitors have been doing for quite some time. Even tiny increases can boost summer B.O. considerably.

Young guns.

Teen auds were lured by teen characters. Shia LaBeouf and Jonah Hill headlined pics like "Transformers" and "Superbad." Even "Live Free and Die Hard" benefited from the presence of Justin Long as co-star to Bruce Willis. As such, they drew teen audiences looking for the next new thing.

New-media fatigue.

Hand-held devices were supposed to revolutionize the business -- and they may have -- but the novelty has worn thin. This was the summer that the iPhone was introduced, but it didn't stop moviegoers from seeing "Transformers" just a few days later. Parents have started to encourage their kids to get out of the house and to the multiplex, if only to get them away from the computer. "All of the alternative media sources that have been obsessing kids have become more regular," says the head of one production shingle. "They are spending less time playing around on new media and more time looking for something else." A case in point: Amusement park attendance also is up, so kids are anxious to get out of the house. Gas prices would seem to keep more people in their homes, but "they've gotten used to the sticker shock."

Fat camp.

Two-thirds of adults and 25 million children are overweight or obese in the United States, according to a recent report, an epidemic of obesity that shows that Americans are spending less time exercising and more time sitting down. And as exhibitors install stadium seating, plush seats and delicious new concession options, what better way to find a berth for the girth?

Crafty marketing.

Studios are starting to master Internet marketing campaigns. For example, Sony unleashed a raunchier, Internet-only trailer of "Superbad," along with website clips featuring hidden ribald clips (age protected). Disney spread 9-minute sequences of "Ratatouille" on YouTube, Disney.com and iTunes. Heavy marketing paid off, but so did restraint. "Many marketing campaigns, especially those that were part of a franchise, didn't try to overreach or put the hard sell on the consumer," says Damon Wolf, founder and partner of Crew Creative Advertising, which handled assignments such as "Harry Potter" and "Bourne Ultimatum." "Sometimes we try to hit people so hard, it pushes them away."

The weak dollar.

Some of the summer's most staggering business took place overseas, with box office in international territories up 20% from last year, 30% ahead of 2005. And as much as moviegoers seemed to crave Hollywood product, studios benefit because of the weak dollar. The Euro's value against the dollar grew by 7% over the past 12 months. That meant more money for studios when dollars were translated from local currencies.

New territories.

New multiplexes in markets like Russia, Brazil and Eastern Europe boosted moviegoing. And some pics succeeded in unexpected places. South Korea turned out to be the best foreign market for "Transformers," raking in more than $50 million. Moreover, studios kept most of their non-franchise product out of theaters internationally for most of the summer, which helped focus the audience on the blockbusters.

The schedule.

The first of August usually marks a Maginot line at the box office, after which studios dump their least-promising product. But with "Bourne," "Rush Hour 3" and "Superbad" debuting, the month had viable material, and audiences responded. There still were pics like "The Invasion," but the dog days of summer were shorter this year.

The weather.

Is global warming good for Hollywood? Extreme heat and heavy rain across large swaths of the U.S. sent more people to theaters, looking for relief. The onset of the extreme weather -- record-breaking temperatures in the western U.S., rain up and down the Eastern seaboard, the Midwest and Texas -- started at the end of June, just as the box office was starting to see a bump. "You went from dreadful heat to downpours," Snyder says. "Historically, we've seen a bounce in grosses when the weather is bad. Also, when kids can't go outside, and make their parents nuts, they send them to the movies."


War, scandal, disaster. That's all you see in the news. People just want to escape. They'll avoid "The Mighty Heart" in favor of talking rats. It seems like a great explanation, full of cultural pontification, intellectual heft and societal angst. That is, until you remember what was in the news in the tepid summer of 2005: War, scandal, disaster.

Actually, the movies weren't that great.

According to some, all these theories are wrong. There's one school of thought that says things weren't so hot this summer. You had mixed reviews for "Spider-Man 3," an incomprehensible "Pirates of the Caribbean: At World's End," and way too many sequels to think that Hollywood had any ounce left of originality. "There could have been a huge bump," says the head of one production shingle. "As it was, we had an OK bump."

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