Movie production costs soared in 2002

The price of making a movie soared dramatically last year, with the average major studio production costing nearly $59 million, a 23% increase from 2001, the Motion Picture Assn. of America announced Tuesday. It was the biggest percentage increase since 1997 and a little more than double the $29 million of 10 years ago.

In his address to theater owners at the annual ShoWest convention, MPAA president Jack Valenti lamented the skyrocketing costs of making movies and attributed the increase to the special effects and high technology now used throughout the filmmaking process in many movies.

“Costs are an un-gloried fact of the creative business landscape,” he said to nearly 2,000 theater owners in the Paris Hotel’s cavernous auditorium. He said all the studios were trying to “put a tight harness” on costs. But with today’s major movie stars making more than $20 million a picture, and the back-end deals landing them high percentages off the box-office receipts, it is unclear how those costs will be controlled.

More encouragingly, Valenti noted that in 2002 theatrical admissions reached their highest level since 1957, with 1.64 billion tickets sold in the U.S. alone -- a 10% increase over 2001. Last year the major studios made or distributed 225 movies, 29 more than the previous year.

In his characteristically florid language, Valenti reported the marketing costs of a movie, “the lumbering grizzly prowling the outer edges of the movie forest,” were down 1%. In 2002 the major studios paid an average of $30.6 million to market a movie, compared with $31 million in 2001.

Valenti said he thought that decrease was due to the studios’ more effective buying of TV time. With spots purchased on cable television, it has become cheaper and easier for studios to target mass audiences, he said.

Earlier, the head of the National Assn. of Theatre Owners told reporters that family-friendly films drove the box office last year. None of the top 20 films that grossed more than $100 million were rated R, said the organization’s president, John Fithian. “Most family-friendly films sell big,” he said. “Most R-rated features do not.”

To critics of the ratings system, however, this interpretation is misleading. They say PG-13 has been awarded in some cases to films many parents find objectionable.

Critics contend the difference between the R rating and the PG/PG-13 ratings is arbitrary and frequently confusing. For example, “Spider-Man,” which had intensely violent action, was rated PG-13, and “Star Wars: Episode II Attack of the Clones” received a PG rating despite including scenes such as a beheading. More recently, “Kangaroo Jack” received a PG rating, even though it contained strong adult language, sexual innuendo and potty humor.

Valenti defended the ratings system, contending its longevity proves its effectiveness. The system has lasted 35 years. “Nothing lasts that long in this brutal marketplace unless it is doing something that benefits the people it aims to serve -- American parents,” he said.

The largest percentage of moviegoers remains young, with 12- to 29-year-olds making up about 50% of admissions. People over the age of 40 constituted 32% of admissions and those 30 to 39 made up about 17%.

Despite MPAA and theater owners association worries about the threat of piracy, international admissions and box office were also up significantly last year. Admissions in all of the major markets -- Europe, Asia-Pacific and Latin America -- were up nearly 8% to 7.5 billion tickets sold.

Fithian of the owners association said U.S. exhibitors appear to be out of the financial crisis of three years ago, when more than a dozen big chains had to declare bankruptcy. After shedding unprofitable screens and restructuring, exhibitors have 35,592 screens compared with an all-time high of 38,000 in mid-2000.

Fithian also said he expected a significant increase as early as next year in the number of cinemas equipped with digital projection.