All-Time Boxoffice, Slight Dip In Production Costs Highlighted In Valenti ShoWest Address

Jack Valenti, Chairman and Chief Executive Officer of the Motion Picture Association (MPA) carried good news to theatre owners attending the annual ShoWest convention in Las Vegas, March 9-11. Valenti's speech, entitled ""The Felicities of 1998,"" revealed that 1998 was a historic one with an all-time high in boxoffice totals and a forty-year high in the number of theatre admissions. Valenti did sound a word of warning concerning copyright thievery, particularly with the dawn of digital technologies. ""Unless we find suitable technological armor to protect the digital movie, we will soon be standing in the ruins of a once-great enterprise. The defeat of both earth-bound and cyberspace thieves is my highest priority in the 21""' century,"" he declared. Valenti catalogued the numerous competitive alternatives to cinema attendance that have emerged in recent years including direct broadcast satellite, videocassettes, the Internet and digital video discs. This competition, said Valenti, ""actually stirred increased movie theatre attendance. Not only did families want to get out of the house to be entertained, they also wanted an epic viewing experience that could be found only in your theatres."" The result of this search for quality entertainment was a 6.7 percent gain in theatre admissions over 1997. Admissions rose to 1.48 billion, ""the largest assembly of moviegoers in over 40 years,"" observed Valenti. On the average, each U.S. resident is attending one more movie per year than they were at the start of this decade. This bump in admissions led directly to a boxoffice of $6.95 billion, a 9.2 percent increase over the previous year. This total marks the largest boxoffice in the history of the industry. Since the start of the decade, U.S. theatre boxoffice has grown by almost 50 percent. Valenti also had cheerful news concerning negative costs. ""For the first time since 1991, negative costs were slightly down from the previous year,"" stated Valenti, ""a slight dip, but at least the trend is down."" MPA companies reported an average negative cost, including overheads, but excluding pick-ups, of $52.7 million, or $748,000 less than in 1997. ""The movie industry,"" said Valenti ""may have begun taming that fiscal Godzilla slouching around movie budgets for so long."" However, Valenti also offered figures showing that the average combined prints and advertising costs were up, by 13 percent over the previous year. Average prints and ad costs totaled $25.3 million in 1998 compared to $22.3 million in 1997. ""Launching and promoting a film these days is not cheap, as these numbers so gloomily affirm,"" declared Valenti. There was also positive news from the international marketplace. ""Buoyed by the miraculous success of Titanic and 19 other $100 million-plus grossing films, theatrical boxoffice in the international arena increased by almost 11 percent,"" Valenti said. ""More people went to movies in other countries than at any time in this decade."" With much discussion in recent years focused on films aimed at teenage audiences, Valenti noted that while ages 12-24 did account for 37.4 percent of admissions in 1998, it was the over-40s age group that has been the fastest growing segment since 1993, increasing by 35 percent. Valenti reported that the voluntary movie rating system continues to be received hospitably by the parents it seeks to aid. For the past decade, between 72 percent - 79 percent of parents with children 13 and under have judged the system to be very useful to fairly useful. He credited this run of success to ""the seamless partnership between exhibition and distribution, which began in November 1968 [with the birth of the rating system]. We are fulfilling our pledge to parents, for which American parents are grateful."" Valenti concluded his ""state of the industry"" remarks with a confident vision of the future predicting that ""so long as movie companies and movie artisans are passionate about telling stories that people on all the continents want to see, so long as theatres are inviting to their customers, so long as the marketplace is open to multiple public choices, we will dwell in a cheerful landscape."" The Felicities Of 1998"" Jack ValentiísShoWest Address Jack Valenti, Chairman and Chief Executive Officer of the Motion Picture Association (MPA) carried good news to theatre owners attending the annual ShoWest convention in Las Vegas, March 9-11. Valenti's speech, entitled ""The Felicities of 1998,"" revealed that 1998 was a historic one with an all-time high in boxoffice totals and a forty-year high in the number of theatre admissions. The following is Mr. Valentiís speech. There is a revelatory scene in Three Days Of The Condor, a movie of some years past, starring Robert Redford and Faye Dunaway. Redford is a low level CIA employee who has gone underground and the Agency is desperately trying to find him. In the late of an evening, the Director of the CIA, an OSS spy during World War II, played by John Houseman, is chatting casually with his young assistant, played by Cliff Robertson. Robertson says to his boss: ""Do you ever get nostalgic about World War II."" To which this old former spy replied: ""No, not especially nostalgic, but what I do miss is the clarity."" Clarity is very definitely not to be found in the current political arena. But there is a sure and certain clarity about the movie market landscape, not only in this country, but also around the world. It is rooted in a marketplace fact, which by any standard you choose to employ has been confirmed year after year. It is the one true star that guides us into the ill-lit future.It is this: There is a fluid harmony between movies and audiences, which produces two unyielding human compulsions. First, to be entertained, and second, to want to get out of the house from time to time to find that entertainment. Most families donít want to be tethered every evening to an electronic box, no matter how magical its entrails or how sweeping its reach. That instinctual enticement is the prime reason why 1998 was wrapped in felicities. Moreover, large benefits often arise from those events, which seemed calamitous when they occurred. For example, the Saracens invaded France in the 8th century and disturbed greatly the daily life of the French people: Yet when the Saracens, after defeated in battle, departed the Gallic countryside they left behind saffron, an herb without which bouillabaisse would have been impossible! The modern day version of the marvel of bouillabaisse began in the 1990ís. Your neighborhoods were invaded by satellite direct-to-home, cable premium movie channels, videocassettes, pay-per-view, the World Wide Web, and DigitalVideoDiscs. That infiltration threatened to become a veritable avalanche which exhibition, seemingly, could neither baffle nor contain. Doubtless many of you had more than a few Maalox moments. But, what appeared to be an invidious intrusion in your business turned out to be the equivalent of the blessings of saffron. Your theaters were not defeated. The movie going habit was not banished. These competitive alternatives did not conquer. In truth, the competition actually stirred increased movie theatre attendance: Not only did families want to get out of the house to be entertained, they also wanted an epic viewing experience they could not duplicate in their home. Only in your theatres was that excitement to be found on a grand scale. Movie viewers knew that laughter, tears, suspense, joy, all tumbling out of a wide screen, populate a theater with more emotional velocity than can be summoned by two people in their home. But as the movie industry moves toward the imprecise bewitchery of the future, we must rise to challenge assaults, which can ravage our tomorrows. Let me cite the nature of the brutes, which bear down on us: First, there is copyright thievery. We must mount a full-throttle defense against theft of America's globally popular movies, which loosens and dissolves the bindings guarding copyright. Without the shield of copyright, firmly formed, sternly enforced, we will watch the slow undoing of an irreplaceable art form. The theft of movies is infecting the distribution arteries of the global cinema market. How we define the future will depend on the constancy and the success of our struggle against copyright thieves. On the horizon, dimly but surely seen, is the entrance of digitized films on the Internet. If stealing movies and illegally copying them into analog sets off alarms, consider the potential for looting the Internet of digital movies, wherein the 1000th copy is as pure as the original. Unless we find suitable technological armor to protect the digital movie, we will soon be standing in the ruins of a once great enterprise. The defeat of both earth-bound and cyberspace thieves is my highest priority in the 21st Century. We must not, we cannot, and we will not fail. Second, there is the defunct mythology still reigning in some countries which, infected by delusion, insists that governments know best how to build a thriving cinema industry. Alas, governments, which brood over and intrude into the film marketplace, always disable competition without which nothing useful ever occurs. How true it is that neither parliaments nor presidents can mobilize audiences to see films that audiences don't want to see. Only gifted storytellers can do that. I keep trying to illuminate that truth in too many dimly lit government corridors. I will keep trying. Third, we have to be effective in persuading nations and investors that the enlargement of their national cinema is hinged to the rise of new modern theaters, particularly multiplexes. Over the years I have climbed aboard every rostrum available to sound again and again one steady message: New state-of-the-art theatres must be built to jump start movie going It is a confirmed truth that multiplexes give moviegoers more choice which is good for the local movie industry. Watching a story on the screen is far more inspiring when the sound is sensual, the seats comfortable, stadium seating, the ambiance fresh, and the screen large and luminous. But you and I know there is one indispensable asset without which even the very best of theaters cannot survive, nor any cinema industry flourish. That asset is the story, from which springs the dramatic narrative, which in turn is aroused, by fluent story telling skills of talented moviemakers. No theatre can beckon to audiences unless the artistic community rises to the highest point to which the creative spirit can soar, telling visual stories so seductive that audiences of every culture, creed and country are joyful about being wooed and won by what comes from a big screen in a darkened theatre. All these ambitions will shape the next century of movie making, movie marketing and movie watching, where competition prospers and freedom reigns. Now, what happened in 1998 that made the last twelve months sing with joy? 1998's boxoffice was $6.95 billion, a 9.2 percent increase over 1997, the largest boxoffice in the history of the industry! Moreover, since the beginning of this decade, U.S. theatre boxoffice has grown by almost 50 percent! This fiscal arithmetic is not funded in illusion. With inflation about 1.6 percent, this huge gain in boxoffice takings is real. Even more congenial is the 6.7 percent gain in admissions in your theatres. Admissions rose to 1.48 billion, the largest assembly of moviegoers in over forty years! On the average, each U.S. resident is attending one more movie per year than they were at the beginning of this decade. Enter now average negative costs, and combined prints and advertising average costs. Ralph Waldo Emerson once wrote that ""for every loss there is a gain, and for every gain, there is a loss."" Never was a maxim more emphatically confirmed. For the first time since 1991, negative costs were slightly down from the previous year, 1998 over 1997. MPAA companies reported an Average Negative Cost, including overhead, but excluding pick-ups, of $52.7 million, or $748,000 less than in 1997. Not much, but at least the trend is down. The movie industry, in one of its periodic fits of cost control, may have begun taming that fiscal Godzilla slouching around movie budgets for so long, like a sullen, unwelcome Banquoís ghost.That was the gain. Now, the loss. Average combined prints and advertising costs were up, by 13 percent, 1998 over 1997. Average prints and ad costs totaled $25.1 million in 1998 compared to $22.3 million in 1997. Launching and promoting a film these days is not cheap, as these numbers so gloomily affirm What happened abroad? The international marketplace was infatuated by the stories we told. Buoyed by the miraculous success of Titanic and 19 other $100 million-plus grossing films, theatrical box office in the international arena increased by almost 11 percent! More people went to movies in other countries than at any time in this decade. What kind of movies most mesmerized audiences in America? Drama and comedy were the genre leaders, accounting for almost two-thirds of the yearís top 250 films, supplying 55 percent of total boxoffice takings. But let me issue a note of sensible caution: No computer model can gauge a filmís success, nor pinpoint ígenreí as the reason for success or failure. Computers can do just about anything except one thing: They cannot predict human behavior and those who make the claim they can are engaged in an amiable lunacy. The storyís the thing and the only thing that counts. Did all films produced in America find audiences? Unhappily, movie success is migratory, and devilishly elusive. Of the 686 films produced in the U.S. some 177 never got a play date, never saw the inside of a theater. Who are your best customers? The frequent moviegoers, those who visit a theater at least 12 times a year. Over 28 percent of the population are frequent moviegoers and they account for 83 percent of all admissions. Moreover these frequent viewers increased their ticket purchases 1998 over 1997 by 14 percent! What is the admission ranking of age groups? Ages 12 to 24 accounted for 37.4 percent of admissions, followed by Over-40s with 35.3 percent, followed by the 25-39 group with 27.4 percent. What is the fastest growing age group? Over-40s. From 1993 through 1998, Over-40s increased admissions by 35 percent. Ages 12-24 increased by 29.5 percent. How did various ethnic groups fare in 1998? Whites accounted for 71 percent of admissions, Blacks 11 percent, Hispanics 11 percent and all others 7 percent. Fastest growing ethnic group? From 1994 through 1998, Whites increased admissions by 22.6 percent, followed by Hispanics with an 18 percent increase. Is the voluntary movie rating system created by NATO and MPAA still hospitably received by parents? The answer is YES! For the past decade, parents with children 13 and under have judged the rating system to be Very Useful to Fairly Useful by levels, 1989 through 1998, ranging between 72 percent and 79 percent. These are approval numbers any politician would kill to achieve. Thanks to this seamless partnership between exhibition and distribution, which began in November 1968, we are fulfilling our pledge to parents, for which American parents are grateful. Finally, what will be the shape of 1999 and 2000? I donít know nor would I choose to fiddle around with prophecies, which are casually offered and usually wrong. But letís not fret. So long as movie companies and movie artisans are passionate about telling stories that people on all the continents want to see, so long as theaters are inviting to their customers, so long as the marketplace is open to multiple public choices, we will dwell in a cheerful landscape. Let me leave you with this poem, whose author is unknown: ""There was a dachshund once, so long He hadnít any notion How long it took to notify His tail of his emotion. And so it happened, while his eyes Were filled with woe and sadness, His little tail went wagging on Because of previous gladness."" Dear friends, our tails are now wagging with previous and present gladness. Enjoy. If all I have declaimed about this day comes to the right conclusions, then unlike the long-bodied dachshund, woe and sadness will not fill our collective eyes.