Movies remain recession-friendly
You would hardly believe that a recession was in full swing in the country if you attended a major multiplex in the U.S. during a recent weekend. This editor caught two films at the AMC multiplex in the Garden State Plaza Shopping Mall in New Jersey and it was evident from the huge crowds that box office for the weekend was up considerably. The crowds spanned all ages and it was wonderful to experience the power of the movies.
For decades, it has been said that the film industry is recession-proof or, as it is referred to now, “recession-friendly.” During these uncertain economic times, people are being very careful about how they spend their money and tend to be attracted to lower-cost, closer-to-home entertainment activities. So what’s better than the movies?
There may not be an abundance of cash in the hands of John Q. Consumer to take expensive vacations or eat at the best restaurants or buy a new car, but there certainly appear to be enough dollars to feed the hunger of the masses for filmed entertainment. Week after week since the beginning of the year, movies have performed extremely well. Holdovers are stirring the fire, and the impressive hot streak of 2009 continues. As of Feb. 16, year-to-date box office was 15 percent higher than last year’s, and the Presidents’ Day weekend gross was up an impressive 32% from 2008. People are flocking to nearly everything on the big screen, and with this kind of depth in the marketplace, 2009 can be a giant year.
The new edition of Film Journal International includes a report titled “Cinemas and the Recession: A Crash Course,” which looks at the effect of the economic downturn on the movie industry and more specifically surveys some major theatrical exhibitors on how they are coping during these difficult times.
Not surprisingly, all of those interviewed are tracking ahead of last year at both the box office and the concession stand. This just helps prove the adages that the business is product-driven and that going to the movies is an excellent discretionary income choice. Staying close to home is the preference of people during hard times.
However, like all other businesses, exhibition is vulnerable to rising costs. And because movie theatres are so product-dependent, product will dictate if and when people come, no matter how wonderful exhibitors make the experience of going to the local multiplex.
The bad economy is also affecting the rollout of digital cinema, which is inhibiting the number of screens available for 3D presentations. Plans are in place via Digital Cinema Implementation Partners and Cinedigm's implementation deal with the Cinema Buying Group when financing once again becomes available, and once it is we are going to witness the biggest and quickest technological change in the history of the business.
In the meantime, Paramount Pictures has offered an alternative plan to exhibition to enable them to play Paramount films like the upcoming 3D Monsters vs. Aliens on digital screens. In effect, the studio is willing to provide a payment amounting to a “virtual print fee.” Only time will tell if other studios do the same.
With the recent success of 3D releases and the number of projects in the works at the major studios, it behooves exhibition to climb aboard as soon as possible so they can reap the rewards of the new 3D age.
(This editorial was revised on March 2, 2009.)
As U.S. films lose some of their traction in foreign markets, a continuing phenomenon of joint-venture productions between the major Hollywood studios and local production companies is arising. These collaborations take on many shapes, but predominantly today they are in the form of crossover projects—ones where stars, scripts and money float back and forth between two countries.
India is the perfect example of crossover cinema, and with the tremendous success of Slumdog Millionaire, this type of cooperation is growing. Not only is it the loss of box office that is motivating the studios, but the emergence of new funding sources in these territories is critical. Most visible is the influx of $500 million by Reliance ADA Group to Steven Spielberg and DreamWorks.
India is a unique country and is the second most populous country in the world. Their movie industry puts out nearly 1,200 films a year, more than twice what is released in the United States. Some 95 percent of box-office revenue comes from local Indian movies and the industry is growing by 15 percent annually, including DVDs, online movie purchases and films. It is projected that the industry will hit $4 billion by 2012.
Currently in India, Sony Pictures is either co-producing, co-financing or acquiring six films; 20th Century Fox formed the joint venture Fox Star Studios; Disney made it first animated feature with India and has four more projects in development; and Warner Bros. has four projects getting ready for production this year.
Some of the projects that recently hit screens in both India and the U.S. include Saawariya and Chandni Chowk to China. Upcoming projects include the thriller Xtreme City, directed by Paul Schrader (American Gigolo, Affliction), and Incredible Love, co-starring Sylvester Stallone and Bollywood favorite Akshay Kumar. Jennifer Lynch (Boxing Helena) is in the final stages of shooting Hisss in Mumbai, and Reliance is funding a hybrid film, Broken Horses, with an American producer and an Indian writer-director, Vidhu Vinod Chopra. Mickey Rourke is considering a lead role.
Reliance is also betting that the American audience will have an appetite for Bollywood films and has invested in a U.S.-based circuit that currently operates 240 movie screens.
Expect to see more of this crossover cinema in the upcoming months. Going global is a key strategy nowadays, and as the credit markets open, it is inevitable that this pattern will proliferate.