Average Cost of Movie Marketing Declines

For the first time in 20 years, the average cost of marketing a motion picture declined in 1999, Motion Picture Assn. of America Chairman Jack Valenti said Tuesday.

Although the decline isn’t huge--$780,000, bringing the total to $24.5 million--it combines with lower production costs to bring the average total cost of producing and marketing a movie down by almost $2 million, Valenti said.

“The average cost per film in 1999 was $76 million, as contrasted to total costs of $78 million in 1998,” he told several thousand movie exhibitors at the annual ShoWest convention.

Valenti didn’t give any specific reasons for the reductions, crediting an overall effort by the studios and production houses to cut costs for the slight but significant downward turn.

While costs came down, box-office revenues went up as the average cost of tickets rose from $4.70 in 1998 to $5.08 last year. U.S. domestic box office reached a record $7.5 billion in 1999 even though attendance was down slightly over the previous year.

Valenti said the “riptide rapture effect” of “Titanic” was responsible for driving up 1998’s higher attendance. “There’s no way you could match it,” he said in a meeting with reporters before delivering his speech. “You can’t equal the ‘Titanic’ phenomenon.”

It’s the escalating cost of running a movie theater that most concerns exhibitors. After several years of heavy outlays--as theater owners spent millions of dollars to construct new theaters with stadium-style seating, more comfortable chairs, cup-holders and state-of-the-art projectors and screens--the industry is prepared to reap the benefits, said John Fithian, president of the National Assn. of Theater Owners.

More comfortable theaters will boost attendance by moviegoers who are over 40 and who make up 31% of all admissions, he said. “I think patrons are willing to pay a bit more for our new theaters,” he said.

Those huge investments, however, have left exhibitors in no position to foot the bill for the coming conversion to digital cinema, Fithian said. The costs of dumping the current projection systems in favor of this next wave of technology have been estimated as high as $100,000 per screen. Exhibitors want the studios to foot the bill for installing them. “We cannot finance the transition right now,” he said.

Valenti said he held a meeting last week with the heads of all of the major studios to discuss the transition to digital cinema, Internet transmission of movies and other issues related to the new computer technology. Much of that meeting dealt with ways of protecting digitally transmitted movies from hackers, he said. Meetings between representatives for the studios and the exhibitors will start shortly, Valenti added.