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Movie Business Still Recession-Proof
Domestic grosses for the year topped $8.4 billion last week, about $65 million more than total ticket revenue for all of 2001 — the first year the industry exceeded $8 billion. Whether 2003 can top the record gross amount of $9.1 billion from last year remains to be seen.
Also on the bubble is whether receipts for the current holiday season, which runs the last eight weeks of the year, can top last year’s take of $1.1 billion and the $1.4 billion generated during the 2001 holiday.
As of last week, revenue was just shy of $800 million for the holiday season and the industry was primed for last Wednesday’s release of “The Lord of the Rings: The Return of the King.” On top of that much anticipated movie, four other major films open on Christmas Day: “Cheaper by the Dozen,” “Cold Mountain,” “Paycheck” and “Peter Pan.”
All this is good news for local theater operators because their box offices usually reflect what happens nationally.
“Barring any oddity like weather or some regionalized release, generally speaking we do mirror what is going on in the industry pretty well. There are some Midwestern leanings on certain films and there are big city vs. small city situations on some films. But, by and large, we follow the national trend pretty much up and down,” said Ron VanTimmerman, vice president of marketing and advertising for Jack Loeks Theatres Inc.
Jack Loeks owns and operates Studio 28 in Wyoming and three other theaters in Norton Shores. Two weeks ago, John D. Loeks acquired the firm’s interest in Celebration Cinema. Celebration has IMAX theaters here and in Lansing. The Business Journal was unable to reach Star Grand Rapids in time for the story.
The week from Christmas to New Year’s is the biggest single revenue week for the film industry each year. And as VanTimmerman noted, this year those days may be bigger than in recent years because Christmas and New Year’s fall on a motion-picture perfect day.
“We’ve got those Thursday holidays, meaning a lot of people have a couple of four-day weekends,” he said.
Up until last week, “Finding Nemo” was the top grosser for 2003. Nemo has crossed over into all age groups, and because it has been able to do that it has had a lot of repeat traffic.
Theater operators like those kinds of films because their business is front loaded, meaning that they pay more to studios to screen a movie in its first few weeks than they do later in a film’s run. So movies that have a longer run usually result in more revenue for an operator.
“A film like ‘Elf’ is a lot like Nemo. Those two and ‘Pirates of the Caribbean’ are three really good examples of what I think is right in the movie business,” he said.
In contrast, VanTimmerman said the two cultish “Matrix” films pulled in most of their gross in their first weeks, a time when a film’s cost for operators is the highest.
“They couldn’t last for four or five weeks, in some cases. A film like ‘Matrix Revolution’ that grossed $140 million did $100 million in the first week. That is an alarming trend and we don’t like that, generally, from an exhibitor’s standpoint,” he said.
By year’s end, there is a good chance that Disney will become the top-grossing studio in the industry. If so, it will have passed a pair of industry giants — Warner Brothers and Sony — to get there. In addition, IMAX should finish in the top 20 for the first time ever. It was ranked 18th last week with revenue totaling $20.7 million for 2003.
“They have a very cool new trend. They have now perfected the technology to digitally re-master Hollywood products for the IMAX screen,” said VanTimmerman. “We’ve seen that with Matrix and we’re going to see more of that as time goes on.”
Whether this holiday season tops last year’s and whether 2003 beats 2001 are two things we will soon learn. But there is one thing we already know from this year’s grosses. As it has been in previous economic downturns, the film business continues to be about as recession proof as an industry can be.
“Movies are probably as much culture as they are the lowest cost, best form of out-of-the-home entertainment,” said VanTimmerman. “We certainly have seen in tough times that people are still willing to put down what is a relatively small amount of money for a couple hours of escapism.”