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Slashing marketing budgets no way to sell movie tickets

By Martin A. Grove
Movie marketing: As fond as Hollywood is of sequels, it's not happy to see a fall sequel developing to last summer's boxoffice slump.

After four weeks of September ticket sales that compared favorably to last year, October's turned chilly with three weekends of fall fizzle that are giving insiders new cause for concern. At the same time, marketing executives at several studios are facing having to work with slashed budgets to open upcoming films. But this is the sort of slasher story with no boxoffice potential because allocating less money to launch films and spending too much of it on traditional media like network TV and consumer newspapers won't reverse the downturn in moviegoing.

Cutting marketing budgets to help make up for losses in other divisions of the media conglomerates that own the major studios isn't as good a solution as trimming hefty production budgets and bloated development costs. Marketing, in fact, is what Hollywood needs to spend more money on if it's ever going to get people back in theaters, particularly at a time when the marketplace is packed with product and so cluttered with commercials that shouting louder -- i.e., spending money -- is the only way to be heard.

Every weekend brings an onslaught of three or four new wide releases, all hoping to convince moviegoers to part with their time and money. This Friday, for instance, will see four new wide openings -- Universal's R rated sci-fi fantasy "Doom," directed by Andrzej Bartkowiak and starring Dwayne "The Rock" Johnson; 20th Century Fox and New Regency's R rated drama "Stay," directed by Marc Forster and starring Ewan McGregor and Naomi Watts; Warner Bros.' R rated biographical drama "North Country," directed by Niki Caro and starring Charlize Theron and Frances McDormand; and DreamWorks' PG rated family drama "Dreamer Inspired by a True Story," written and directed by John Gatins and starring Kurt Russell and Dakota Fanning.

If this seems like a lot of new pictures competing for attention, bear in mind that it's even more competitive in major markets like New York, Los Angeles and other big cities where thanks to limited openings even more new product surfaces every weekend. This weekend's limited launches include three R rated films -- Sony and MGM/UA's youth comedy "Barely Legal," directed by David Mickey Evans and starring Tom Arnold; Warner Bros.' action adventure comedy thriller "Kiss Kiss, Bang Bang," written and directed by Shane Black and starring Robert Downey Jr., Val Kilmer and Michelle Monaghan; and Buena Vista/ Touchstone's romantic comedy "Shopgirl," directed by Anand Tucker and starring Steve Martin, Claire Danes and Jason Schwartzman. On top of that, this weekend will also see Warner Independent Pictures expand to about 200 theaters its release of the PG rated drama "Good Night, And Good Luck," directed by George Clooney and starring David Strathairn, Patricia Clarkson and Clooney.

The fact that these limited releases aren't playing in most markets across the country doesn't make any difference to moviegoers living in New York, L.A. and other key cities where these films typically arrive with a marketing splash. Because New York and L.A., in particular, are such big grossing markets, limited openings there require significant advertising.

If you're thinking that this weekend is unusually heavy with product, think again. Next weekend will also be overcrowded with four wide releases on deck to open Oct. 28 -- Sony's PG rated action adventure sequel "The Legend of Zorro," directed by Martin Campbell and starring Antonio Banderas and Catherine Zeta-Jones; Universal's PG-13 rated comedy "Prime," written and directed by Ben Younger and starring Meryl Streep and Uma Thurman; Lions Gate Films' R rated horror thriller "Saw II," directed by Darren Lynn Bousman and starring Donnie Wahlberg; and Paramount's R rated drama "The Weather Man," directed by Gore Verbinski and starring Nicolas Cage, Michael Caine and Hope Davis.

On the limited release front Oct. 28 will also bring four hopefuls -- Warner Independent Pictures' PG-13 foreign language drama "Paradise Now," directed by Hany Abu-Assad and starring Kais Nashef; Sony Pictures Classics' reissue of the PG-13 rated 1975 suspense drama "The Passenger," directed by Michaelangelo Antonioni and starring Jack Nicholson and Maria Schneider; Lions Gate's R rated foreign language horror thriller "Three Extremes," a compilation of short films from three Asian directors; and an expansion of Warner Bros.' R rated "Kiss Kiss, Bang Bang."

With the movie marketplace this crowded throughout the year, distributors forced to cut back on their marketing spending are likely to find themselves behind the eight-ball. Getting the message out gets harder and harder because not only is there more competition, but the traditional media Hollywood uses to market films no longer deliver the audience they once did. All this has been the subject of columns here and reports elsewhere about falling network audience shares, the negative impact of TiVo and other DVRs (digital video recorders) on 30-second spots and diminishing newspaper circulations across the country.

One of the key problems Hollywood marketers face is that the ties that bind them to using network television as their major arena for advertising movies are more than emotional. The media conglomerates that dominate Hollywood also own all the traditional broadcast networks. It's in the interest of all these global media giants to have their studios support not only their own TV network siblings but even the competing broadcast networks. This makes sense, first of all, because movie advertising generates a big revenue stream and if some of that can stay within the corporate family all the better. It's also important because if Hollywood were to suddenly stop buying network TV to promote movies that might prompt non-movie advertisers to start thinking about how much they're spending on network TV and could prompt them to find newer and better ways to reach consumers.

The extent to which the times have changed should be evident to anyone who reads the daily stream of news about technology and how the public is using it. Although such developments are continually making news, it's easy to lose track of them or to just not realize how much is happening. When you see a bunch of these reports grouped together, there's no doubt that big changes are occurring and Hollywood is going to have to respond to them sooner or later. Here are a few recent examples to consider:

A study of 13,000 Internet users by Burst! Media found that the computer is increasingly becoming the entertainment medium of choice in U.S. homes. Of respondents who were 24 or younger, 53.3% said they use the Internet to view movies and other video programming; 76.5% said they listen to music on the Internet; and 65.4% said they play games on the Internet. It stands to reason that if people are making that much use of the Internet, they can't be watching as much network TV as they did before they were plugged into the Internet.

A report from Forrester Research based on an Internet survey of over 5,000 people in the U.S. and Canada focused on how men and women differ in their use of media. Over the course of a typical week, men said they spent 10.2 hours on their computers (including time on the Internet) while women spent 8.5 hours. Men watched TV for 13.6 hours while women viewed for 12.1 hours. Playing video games accounted for 1.7 hours for men and 0.8 hours for women. Watching movies on video or DVD represented 3.7 hours for men and 3.3 hours for women. Men listened to the radio for 8.1 hours while women tuned in for 6.9 hours. As for reading, men spend 3.6 hours with newspapers and 2.3 hours with magazines while women read newspapers for 3.2 hours and magazines for 2.4 hours. We could spend a lot of time analyzing these statistics, but one thing that leaps off the page is the fact that the respondents are all spending more time with other media than they are watching television.

Access to broadband Internet connections is a key element in determining how much streaming video content people view on the web. A report from Nielsen Media Research (which is owned by VNU, which also owns The Hollywood Reporter) noted that 42% of Americans have broadband in their homes. That's up 16% from where it was at the start of 2005. As that number grows, so does the potential for people to view entertainment content on their PCs as opposed to their TV sets.

The latest example of how well this can work is Apple's new video iPod, which will enable people to purchase video content inexpensively and then play it back either on sleek new pocket size gadgets or on their computers. One-day-old episodes of ABC hits like "Desperate Housewives" and "Lost" are the first programs that will be available, but that list will grow once consumers start buying video iPods. Today's computer screens, by the way, are a far cry from the small low quality monitors they once were. Increasingly, people are connecting large flat panel screens and sets of stereo speakers to their computers in order to play high quality images of streaming video content from the web or from new technology like the video iPod.

In another report Nielsen said there are now 110.2 million TV households in the U.S., an increase of 0.5% from 109.6 million households in the 2004-05 television season. The same study showed that the television audience is getting older. The biggest percentage increase was in the 55 and older baby boomer group. Women 55-plus went from 35 million in 2003 to 36.2 million for the 2005-06 season while men over 55 grew from 28.3 million to 29.7 million. For Hollywood, which targets so much of its product to men under the age of 25, network TV would seem to be less attractive than was once the case.

The impact of TiVo and other DVRs was the subject of a research study by Accenture, a New York based consulting firm. The study reported that viewers who have such technology are skipping 70% of the ads in the TV programs they choose to record. The trend for the future is not encouraging considering that, according to the same report, by 2009 about 40% of U.S. television households are expected to have DVRs compared to about 8% today. The TiVo factor could cripple Hollywood marketers if they don't wean themselves from using 30-second spots to market their movies.

There already are signs that other types of advertisers are starting to see the handwriting on the wall when it comes to network television. A report from Boston-based Backchannelmedia said Britain's Unilever had disclosed that "its global expenditure on traditional television advertisements had dropped by one-fifth over the past three years and was set to plummet further...Alan Rutherford, the vice president of global media at Unilever, one of the world's largest advertisers, said the value of television advertising was dropping in the face of audience fragmentation and the proliferation of new channels."

While Unilever's cutbacks were on network television in the U.K. -- the report said "the biggest terrestrial television losers from Mr. Rutherford's doomsday scenario would be ITV, Channel 4 and 5, which are dependent on advertising for most of their revenues" -- we're living in a shrinking world these days and Madison Avenue is certainly well aware of what's going on in England.

While Hollywood is still wedded to 30-second spots, there are signs that distributors are starting to seek out new opportunities to market movies using the Internet. One interesting case in point is the horror thriller "Cry Wolf" from Focus Features' Rogue Pictures label, which cost about $1 million to make and opened in mid-September to $4.4 million. In an e-mail report in late August the MediaPost newsletter pointed out, "In a sign of the movie industry's effort to expand beyond traditional advertising, Universal Pictures' Focus Features two weeks ago quietly started promoting its upcoming movie 'Cry Wolf' via an online game played on America Online's instant messaging service. Recently, Focus Features has made news for eschewing traditional advertising in favor of blogs and other newer media."

The report went on to explain how Focus and Rogue were using AOL's instant messenger to get players involved in a game where some are "sheep" and others are "wolves" and finding the "wolves in sheep's clothing" is the name of the game. It all tied in with the movie about a group of kids at a boarding school who make up a story about a serial killer and after posting it on the Internet discover that their killer may be less imaginary than they thought.

It's the sort of small step in the right direction that other Hollywood marketers should be taking. (And if some of them are, it's a well-kept secret at this point.) While no one's advocating that Hollywood should suddenly eliminate all its network TV advertising, what would make sense is taking a more balanced approach that acknowledges times have changed and that the Internet and a wide range of non-traditional out-of-home media outlets are now valuable ways in which to market movies.

Filmmaker flashbacks: From April 7, 1986's column: "Exhibitors had their first look at Warner Bros.' 'Cobra,' the $25 million Cannon Group action adventure starring Sylvester Stallone, last Thursday in Los Angeles. As one distribution source at another studio put it, 'The worst thing that anyone's saying about it is that it's just good.'

"Insiders who saw 'Cobra' Thursday morning at Mann's Regent Theater in Westwood agreed it is violent enough to satisfy Stallone's fans...'There's so much violence it makes 'Rambo' look like a cartoon. It delivers what the youth market wants to see -- Stallone running around shooting people -- and they're not cheated.'...The line insiders familiar with the script have been predicting will wind up becoming the equivalent of Clint Eastwood's 'Make my day' is the one in which Stallone advises a criminal, 'You're the disease and I'm the cure.'"

Martin Grove is a regular contributor to CNN Headline News' "Showbiz Tonight" weeknights live at 4-5 p.m., PT (7-8 p.m., ET) with repeats at 7 & 9 p.m., PT (10 p.m. & Midnight, ET).


Copyright 2005 The Hollywood Reporter

Web exclusive: Martin Grove looks at the business of film via conversations with directors and producers. Grove also reports for CNN and KNX-AM Los Angeles. Posted Wednesdays and Fridays.

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