American Cinema and the Global Market
Week 10 Readings and
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*Readings
1 and 2 report the summer boxoffice results of the top two US theatrical
studios.
Reading 1: Dollars
and Sense’ put Disney on top
Against all odds, the Walt Disney Co. did the impossible this summer: It took
on “Star Wars”-rich 20th Century Fox and won. In a stunningly
powerful boxoffice performance, Disney was helped by two blockbusters as
different as any pair of studio releases this year: the animated ‘Tarzan,”
possibly the most acclaimed animated feature since ‘The Lion King,” and supernatural
chiller ‘The Sixth Sense,” the sleeper hit of the summer. While Disney will not
take in any foreign revenue from “Sense,” it was the beneficiary of another
summer blockbuster: Julia Roberts starrer “Runaway Bride.” Unnoticed amid the
hoopla surrounding the Paramount roman-tic comedy was the fact that Disney owns
foreign rights to the picture. With a domes-tic take expected in the $150
million range, Disney will likely add at least that number to its coffers in
overseas theaters. “Sense,” which started with a spec script by the film’s
director, M. Night Shyamalan -for which then-Disney Pictures president David
Vogel shelled out some $2.25 million -proved a knockout, coming in No. 1 for
five weeks running. The film displaced the most-talked-about movie of the
season, ‘The Blair Witch Project,” and gave Bruce Willis his biggest box-office
hit since “Armageddon,” which earned $553.4 million worldwide last year for
Disney Costing $50 million-$60 million, ‘Sense” has proven to be a boxoffice
gold mine for the Disney studio, benefiting from some of the best word-of-mouth
of any release this season. Equally significant at the boxoffice was ‘Tarzan,”
which may have cost the studio more upfront (sources said its budget was in the
$150 million range) but managed to prove that animated movies can still have
terrific legs at a time when many naysayers have been questioning the long-term
appeal of animation. “Tarzan’s” success meant that Disney had not only another
major summer hit but one more jewel to add to its vaunted animation library,
giving it a constant revenue stream for years to come. Despite some tepid
reviews, Disney also managed to generate surprisingly strong business from its
Matthew Broderick starrer “Inspector Gadget.” The family movie will likely reap
more than $95 million before its run ends, though its cost was in the $75
million-$85 million range. Disney only had one real letdown this summer: the
Anthony Hopkins-Cuba Gooding Jr. thriller “Instinct,” which proved a box-office
dud for both Disney and Disney-based Spyglass Entertainment, which co-financed
the picture, as well as “Sense.” “Instinct” was Spyglass’ first venture in its
five-year co-financing pact with Disney, covering three to five pictures
annually. Its other release, “Sense,” put it on the map, giving Spyglass
founders Roger Birnbaum and Gary Barber the kind of hit any mini-major dreams
about. Spyglass, formed just over a year ago, is moving ahead with other Disney
releases, including Jackie Chan action-comedy “Shanghai Noon”; “Keeping the
Faith,” a comedy with Ben Stiller, Jenna Elfman and Edward Norton; and an
untitled basketball documentary directed by Leon Gast. Spyglass’ arrival on the
Disney lot was not the only behind-the-scenes activity at the studio this
spring and summer. After a shakeup last summer that saw Donald De Line exit as
president of Touchstone Pictures, to be replaced by David Vogel (who was given
the broader title of president of the Buena Vista Motion Picture Group), it was
Vogel’s turn to be replaced. In late April, Vogel officially departed the
studio, with Todd Garner and Nina Jacobson bumped up to co-presidents. Vogel’s
exit and the Garner-Jacobson pro-motions did little to quell insider talk of
further executive changes at Disney, where there has been intense speculation
about the future of Disney Studios chairman Joe Roth. But the real Disney drama
this year was the trial following former studio chief Jeffrey Katzenberg’s $500
million lawsuit against Disney. In one of the most extraordinary public dramas
to involve any major corporation, the DreamWorks principal took on his old
boss, Michael Eisner, in the full glare of the media, The Katzenberg trial
provided fodder for everyone from top Wall Street analysts to low-level workers
looking for a little titillation. After an out-of-court settlement, Katzenberg
will receive some $250 million -- even more than the $100 million-plus Michael
Ovitz walked away with. That was the cloud that tarnished a spectacular
performance in the movie theaters, justifying the nearly 2-year- old strategy
put in place by Eisner and Roth to reduce costs and annual movie out-put from
some 40 pictures a year to 15-18. The studio has saved $500 million a year on
production, marketing and development costs by cutting down on production. That
has been part of a major corporation-wide restructuring and consolidation that
has changed the international, video and television departments. : :
Reading
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*The following readings report on the business of theatrical exhibition
in Europe. They come from International Variety June 1999. Some 22 countries are covered.
Reading 3: TEUTONS
EMPHASIZE SERVICE
By LIZA FOREMAN
BERLIN: Ushers are back in fashion in German theaters,
where cloakrooms, taking telephone orders for refreshments and allowing smoking
in auditoriums are just part of the current service push being employed to keep
cinemagoers coming back for more.
With multiplexes rapidly becoming the norm (they
accounted for 16% of 4,435 German screens by the end of last year), keeping
cinemas attractive through service has become a must for German exhibs.
“The service trend started with the multiplexes, but
has had its effect on the whole business,” says Volker Riech, chairman of
leading German cinema chain Ufa. “But
it’s hard to implement here due to local resistance.”
But it’s not only in the theaters where multiplexes
are changing the German exhibition business.
Underscoring their share of the country’s screens, Germany’s 77
multiplexes in operation by the end of last year accounted for 34% of all box
office revenues. Building trends showed
last year, for the first time, more than half of all new openings in Germany
were in larger houses. The multiplex
boom year was 1997, when 25 complexes opened — as
many as bowed from 1990 to 1996.
Behind the scenes, the race to multiplex Germany has
led to a host of international partnerships, public listings, and investment
partners necessary to keep expansions viable.
“This building phase has made it necessary to look for
other sources of funding,” Riech says. “This a reaction to the pressure of building multiplexes, which is
happening because they are the future.”
Kieft & Kieft, one of
Germany’s leading chains, sold 50% of the company to Australia’s Greater Union
in January 1998. And rival Theile
formed a joint venture with Australia’s Hoyts last May. Theile-Hoyts Entertainment plans to open 25
multis by 2003.
Going public last year, Cinemaxx, one of Germany’s
leading multiplex operators, recently teamed with strategic partner Belgian
multiplex major Kinepolis, which now holds a 30% stake in Cinemaxx. Together they are expanding into Europe
through joint venture company Kinemaxx, which plans to open 20 houses by 2002.
Ufa, meanwhile, sold 20% of the company to investment
partners and has plans to float an offering in the next 12 to 36 months. And international players continue to enter
the market, joining companies in place in Germany such as Village Roadshow and
UCI — both in the center of the action.
Deciding to go it alone, the latest to sign up for
Germany, Spean Bridge, an L.A.-based investment-backed company, announced plans
earlier this year for 10 multiplexes in Germany. The first in Hamburg already
is under way.
With former partner Warner out of the picture, Village
Roadshow is pressing ahead with plans to build 35 houses in Germany over the
next five years. And U.S. giant Loews has made clear it has designs on Germany
in addition to Eastern Europe and Italy.
With Germany still under-screened compared to other
nations, exhibitors believe there is room for up to 2,500 new screens. To bring
Germany in line with screens per head in France, 5,500 screens are needed, or
7,000 to equal U.S. levels, according to local players.
“We are still looking for new projects,” says Raif
Schilling, topper of UCI, which runs 14 theaters in Germany. “There are still
some cities which haven’t been multiplexed. There are even major cities without
multiplexes.”
Considered the key factor to last year’s increases in
box office revenues (up 9% to $884 million) and admissions (up 4% to 148.9
million), new theaters are still in favor. “Without the new theaters, not even
‘Titanic’ (the top film last year) would have done the business it did,” says
Rolf Baehr, head of the national film subsidy body, the FFA.
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Greeks seek ways to bolster
local prod’n
By KAROLOS GROHMANN
ATHENS: According to recent research, Greece will have 25% more
screens by 2002. Over the past four years, multiplexes have been springing up
in urban areas of the country while older screens have been undergoing
substantial facelifts.
But this year things are different. “There’s no
‘Titanic’ this year,” a cinema owner says, “and with no ‘Titanic,’ we obviously
cannot match last year’s record figures of around 11 million admissions across
Greece.”
French blockbuster “Asterix and Obelix vs. Caesar” was
this year’s greatest success, with around 500,000 admissions, while local hero
“The Discreet Charm of the Male Sex” raked in some 200,000 admissions,
sustaining the market share of Greek pics at 5%.
Industry analysts suggest that a sharp 20% decrease in
box office figures and admissions is only temporary and that things can only
get better.
“We had a significant rise in box office, admissions
and screens for the past three years,” says Greek Film Centre (GFC) president
Manos Efstratiadis. “This year, it seems as far as admissions and B.O. is
concerned, we are more cautious, gathering strength. Next year things will
again be better.”
The GFC is currently offering tax rebates to
distributors with three or more local productions in their roster. “It is
important that we don’t just support local production that is now at around 15
films per year, but that we secure their exhibition, thus avoiding previous
mistakes where out of nine or 10 Greek films only two or three found their way
to the screens,” Efstratiadis says.
The decline in admissions this year has not dampened
exhibitors’ verve. After the construction of two multiplexes in Athens and
Thessaloniki, the country’s two largest cities, Oz exhib Village Roadshow is
completing a 20-screen megaplex in western Athens.
“The country is
definitely underscreened,” says Village Roadshow general manager Charis
Andonopoulos. “We are planning some four more multiplexes around Greece,” he
adds, explaining that the audience has changed since the introduction of
multiplexes. “We have changed it from a cinephile audience to a mass audience,”
he says. Another Village multiplex currently in the works reinforces
Andonopoulos’ point that cinema has become an issue of lifestyle and not simply
entertainment. “This venue will be in the style of Universal City Walk,” he
concludes.
Village’s total
investment in Greece will exceed $160 million over the coming years with the
completion of the projects under development. But since last year, Ster
Century, a subsidiary of South African exhibitor Ster Kinekor, has made its
presence felt through its joint venture with local exhib Assos Odeon.
With a nine-screen multiplex in central Thessaloniki,
and an additional one earmarked for Athens, it is expected to give Village a
run for its money. Industry sources claim Village’s Thessaloniki venue has
suffered more than just the average 20% drop with the appearance of the Ster
Platia Assos Odeon multiplex in that city.
With the competition heating up between international
exhibitors and a number of independent local exhibs inking sponsorship deals
with companies such as Philips and Ericsson and Nescafe to renovate theaters
and screens, the choices for Greek moviegoers are widening. The next few years
will be crucial in defining the exhibition landscape in a country where screens
have suddenly become a valuable asset.
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Russian biz takes a dive
By TOM BIRCHENOUGH
MOSCOW Russia’s burgeoning exhibition scene
nose-dived in the last quarter of 1998 in the aftermath of the territory’s
August financial crisis — and so far no one’s even willing to guess when —and
if — a turnaround will arrive.
The first part of the
year had seen the sector leaping to new heights. Record box office receipts for “Titanic” — at almost $6 million
is unparalleled so far this decade — had coincided with the inception of a
range of ambitious plans for cinema development.
In regards to ticket
sales, which remained constant, ruble box office returns doubled over 1997, and
dollar receipts, even despite the falling ruble, were up by 20% at year’s end.
Box office drop
Today, the picture
looks very different. Ticket prices
have risen by considerably less than the ruble fell, so overall dollar box
office gross has dipped. With a very
few exceptions, screen improvements have halted — new equipment was even held
up in customs as developers struggled to find currency — and the failure of
many commercial banks hit consumer spending power as well as institutional
accounts.
Though players in a
number of provincial cities upgraded facilities before the crunch came, the
number of projects today can be counted on one hand.
In Moscow,
U.S.-registered Golden Ring Entertainment, Eastman Kodak’s partner on the
city’s record-breaking Kodak Kinomir screen, is pressing ahead with a
four-screen mall site. Director Ray
Markovich predicts a July-August opening, though didn’t reveal GRE’s strategic
investor on the deal.
Plexing continues
As for multiplexes,
Media-Most continues with the conversion of its central Moscow Oktyabr venue
into an 11-screener which should open its doors this winter. The group plans to follow with five-plexes
in St. Petersburg and other regional cities, each costing around $2.5 million,
scheduled for the end of 2000, according to KinoMost director Vladimir Dostal.
Meanwhile,
construction at the Russian capital’s Chkalov complex, an ambitious
entertainment center that will include a multiplex, has halted after financial
difficulties with the developer, advertising, and entertainment conglom
Premier-SV.
The only new force —
so far not proven — to appear on the scene, Narodnoe Kino (National Cinema),
has plans for five Moscow four-screeners, each seating 1,000. With close ties to Moscow city government,
which will provide sites for ground-up construction in return for a 25% stake,
the company’s director, Yevgeny Zobov, is confident he can raise the $15
million for construction from commercial investors.
“Titanic” aside,
Hollywood pics that did well in the territory were “Armageddon,” “Deep Impact, “Godzilla” and “Enemy of the State,” according to GRE’s
Markovich.
While foreign action
pics excite auds, successful local production is geared toward comedy, melodrama,
and detective genres, according to KinoMost’s Dostal.
Though distribs have
been successful in persuading studios to open major films in Russia very close
to their U.S. release — in some cases even ahead of them — to counteract
piracy, most pics earn more from their video release, usually pegged two to
four weeks after theater opening.
Limited Release
With the territory’s
number of quality screens still low, distribs release their top pics in a limited
number of copies: Denis Yevstigneyev’s “Mama,” one of the biggest local films
this spring, grossed $150,000 over eight weeks from nine prints.
The real record
breaker, however, has been Nikita Mikhalkov’s Cannes opener “Barber of Siberia,” which caught national
attention to an unprecedented degree after its gala Feb. 20 opening. Eight-week results in Moscow saw it sell a
staggering 287,000 tickets, at an approximate gross of $1.3 million, breaking
even the record set by “Titanic” during the same period.
Released on only four copies over that time (unlike the 350-odd with which it bowed in France, where it also topped the box office), “Barber of Siberia” looks like an inspiration for the local industry — crisis notwithstanding.
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