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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Movie studios look beyond ticket sales for big money

Gary Thompson Philadelphia Daily News

To understand why Hollywood isn’t panicked about its four-month run of bad ticket sales, you have to think outside the box – or in this case, box office.

Consider: In Hollywood’s golden age, studios made virtually all of their money from ticket sales. Today, they make less than 20 percent at the box office.

The bulk of it now comes from DVDs, games, merchandising and TV deals – with DVD sales and rentals accounting for the lion’s share.

The real opening weekend comes not when a movie hits theaters but when it hits DVD.

“The Incredibles” opened with $93 million in ticket sales, while its first week of DVD release topped $100 million. “Ray” made as much in one week of DVD sales ($75 million) as it did during its entire theatrical run of more than 20 weeks.

“The value (that studios) create lies not in the tickets they sell but in the licensable products they create for future generations of consumers,” notes Edward Jay Epstein in his new book “The Big Picture: The New Logic of Money and Power in Hollywood” (Random House, 416 pages, $25.95).

He reports that Hollywood actually lost $11 billion on theatrical releases in 2003 but made $33 billion in worldwide home entertainment.

Naturally, these staggering totals affect the way movies are made. Studios readily admit that action movies and animated movies play better on DVD than in the theater; thus, executives are more likely to greenlight those titles.

Hollywood is rewarded for bringing to market pre-branded, derivative titles with built-in name recognition – such sequels and remakes as “The Longest Yard,” “Star Wars: Revenge of the Sith,” “Batman Begins,” “House of Wax,” “The Honeymooners,” “Bewitched,” “The Bad News Bears,” “The Dukes of Hazzard.”

Studios like the status quo, and so do consumers. They’re expanding the DVD market at the rate of 11 percent a year (while ticket sales stay flat, or drop).

So everybody’s happy?

Not necessarily. Wall Street sees tepid prospects for theater exhibitors, who don’t share in the DVD bonanza and who sell less popcorn and soda when the box office is soft, as it is now.

But even some exhibitors see a silver lining in the DVD boom.

“If people are more interested in movies, it’s better for everybody,” says John Toner, executive director of the County Theater in Doylestown, Pa.

“I compare it to the period in which videos were first introduced,” he says. “The technology exploded, and this was trumpeted as a bad sign for movies in theaters.

“What it did was increase the interest in movies in general, and that’s good for exhibitors.”

Still, Toner adds: “I think theater owners have to make sure that the experience of seeing a movie in a theater has to be different, and to emphasize that difference.”

Toward that end, studios and some exhibitors are toying with another technology upgrade – digital exhibition. Movies will be shot with digital cameras, stored in digital formats, and either shipped to theaters in those formats or beamed to theaters via satellite.

With national chains hurting for money, though, and with studios reluctant to pay for the upgrade, the conversion to digital doesn’t seem imminent.