Demand driven by mouse-clicks

Studio executives like to think they’re in the business of giving people what they want. The challenge is figuring out just what that is -- a never-ending quest in Hollywood.

Research, carried out before a movie’s release, focuses on speculative criteria such as people’s awareness of given titles and which they most want to see. For home video however, two Internet behemoths, the retailer Amazon.com and the DVD rental pioneer Netflix, provide insight not only into public appetites but how a movie will actually perform when it hits the video stores.

By placing real orders for material they want to buy or rent, consumers are voting with their pocketbooks, industry analysts say. And with the big titles, their choices reflect on the effectiveness of a studio’s marketing campaign.

Release of DVD sets of the TV series “Charmed” and “MacGyver” were accelerated because of consumer demand, said Michael Arkin, senior vice president of marketing for Paramount Home Entertainment. And when the 1954 “The High and the Mighty” rose to the top of Amazon’s pre-sale list in July, he knew something was afoot.

“This 50-year-old movie took off, not only on Netflix and Amazon but across the board,” said Arkin. “Those lists are opinion polls of a sort, earpieces into buyers’ tastes. It’s a way of taking the pulse of the public, checking it on a daily basis.”

The companies, along with websites such as DVDTalk and TVShowsonDVD, haven’t replaced less sophisticated forms of communication between the public and the studios such as phone calls, letters and e-mails. Nor have they dislodged traditional market research. But they help publicize a movie and are effective marketing tools. Netflix informs studios which of its 50,000 titles its 3.2 million subscribers put in their “queues,” to be mailed when the product comes out. And Amazon’s Top 100 List, updated hourly, reflects sales rankings of future releases as well as current fare. “Star Wars: Episode III Revenge of the Sith” and “Batman Begins” are Nos. 2 and 4 on this week’s chart, though they won’t be out until Nov. 1 and Nov. 18, respectively.

One of the company’s goals is to help build the DVD business, said Laura Porco, Amazon’s general manager for merchandising, North American media. More than 50 million people purchased an item from Amazon in the last 12 months, the company says. And there’s an ongoing dialogue with Hollywood entities “big, medium and small.”

“Before we came along, no other retailer made sales ranks transparent to consumers and vendors,” she said. “No one knew what a new VHS would do once it got to retailer locations. Studios had to wait until Day 1, 2 or 3, when retailers’ reports came back. Our rankings tell them how their product stacks up against the competition. And our ‘wish lists’ -- consumer requests for movies or TV shows not on DVD -- help the industry prioritize what to bring out.”

Mike Dunn, president worldwide, 20th Century Fox Home Entertainment, checks Amazon.com at least once a day. Just as Federal Reserve Board Chairman Alan Greenspan refers to “wholesale inventories,” Dunn says, he looks to the Top 100 list to gauge the economics of a title -- particularly off-center films often squeezed off the shelves of many video stores.

“I saw ‘Napoleon Dynamite,’ ‘What the Bleep Do We Know?’ and ‘Roswell,’ a rather obscure TV series, pre-booking really well,” he said. “We got our ducks in a row so we wouldn’t be caught short. Amazon is a great bellwether, tipping us off on the upside of some of the less obvious titles. The rankings show which of the small movies have a lot of juice, so surprises aren’t surprises.

“Wish lists, however, are less relevant today than they were in the past,” he adds.

“Two years ago, we’d look at them and get to those titles earlier rather than later. But now many of our hidden jewels have already been unleashed. Most of today’s requests are more reflective of personal preference than mass demand -- cult films such as ‘Myra Breckenridge,’ which we ultimately released.”

With the exception of an occasional “March of the Penguins,” studios buy, produce and distribute mostly mainstream product, said Ted Sarandos, chief content officer for Netflix, which charges subscribers $17.99 a month for an unlimited number of titles. “Yet interest in so-called specialty films is broader than they think. The Oscar-winning documentary ‘Born Into Brothels’ has been rented by one out of every 10 of our subscribers, though it was small, box-office wise. And ‘Super Size Me,’ another documentary, outperformed 50 theatrical films in the same period.”

That goes to prove that the Netflix demographic isn’t typical of the American populace, some industry observers contend. What appeals to its discerning subscriber base, they maintain, isn’t what sells at Wal-Mart (whose online rental business was taken over by Netflix).

That’s not entirely true, Sarandos says. While its clientele is slightly higher in income and education, it is more mainstream than it has been. The first million were net-savvy early adapters and film aficionados, eclectic in their movie choices, he says. But new members are more likely to have been renting at Blockbuster the day before.

Netflix’ subscribers, however, are older than the theatrical audience. “Million Dollar Baby” and “The Aviator” were much bigger on DVD than in theaters, rented by adults who don’t go to the theater anymore, Sarandos explains. And the Clint Eastwood drama “Mystic River” is the company’s all-time top-renting film. Netflix adds a title to its database when a movie plays in a film festival or opens in a major city. A month or so before its release, subscribers can add it to their queue, asking for recommendations of others they might like based on their preferences and reactions to past rentals. Someone who favored Quentin Tarantino’s “Kill Bill: Vol. 2,” for instance, might be referred to Stephen Chow’s “Kung Fu Hustle,” one of the top-renting titles, or a previous film by director Chow. Subscribers living within five miles of the theater, moreover, were given tickets to “Hustle” before the theatrical release.

That’s a bonus for the consumer, Sarandos says -- and a means of creating “word of mouth on steroids” because the audience is predisposed to like the film. Through Netflix’s “friends program,” people can pass along their opinions to fellow subscribers. It’s preferences rather than ratings that are tracked, he says.

“Determining which pictures to show each person is like having a video store remerchandised so every customer sees his favorite merchandise displayed at eye level,” Sarandos said. “While we have unlimited shelf space, people have limited attention spans.”

Amazon.com, for its part, creates a “detail page” for a movie when its DVD release is announced (or sometimes before, if fan demand warrants). Consumers clicking onto the “Star Wars” page, for example, can get information about the story line, cast, price and release date -- as well as titles purchased by people who bought that DVD (in this case, 19% “Lord of the Rings” and 8% “Indiana Jones.” Customers are also given an opportunity to rate a given title, from one star to five. Often, they can view trailers or scenes from the DVD provided -- an addendum to information provided by the Internet Movie Database, a prime online entertainment industry resource acquired by Amazon in April 1998.

“Our website is very democratic,” Porco said. “Very consumer-driven.”

Now that the home video market is driven by sales, not rentals, some executives downplay the importance of Netflix. Paramount’s Arkin isn’t one of them. Research shows that rentals are a valid barometer of consumer interest in movies, he says. If someone rents a title and likes it, he or she might buy it down the road, Arkin said. And the bestselling DVDs generally tend to mirror the top-renting ones, Sarandos points out. Last week, “Guess Who?” and “Alexander” were the top two titles in both categories.

Netflix is already mainstreaming the behavior of watching specialty films, Sarandos says. And its influence, he says, should only increase with time.

“With 3 million subscribers, we’re interesting to the studios,” he said. “With 5 million, we’d be meaningful, with more bottom-line impact. With 10 million, we could reshape distribution. If we put a spotlight on less mainstream films, maybe studios would be emboldened to release product that’s more ‘challenging,’ shall we say. Our numbers could affect not only marketing plans but the kind of movies that get made.”