Are Studios Front Loading Movie Releases?

Thursday, July 20, 2006 | 10:00 AM

Long_tail Over at the Long Tail, Chris Anderson asks: "Pirates of Caribbean: Dead Man's Chest has set an opening weekend record of $132 million. Does this mean that the blockbuster is back, contradicting my thesis?"   

Further noted was this overheard snippet of studio conversation:

"I happened to be riding to work with an exec from one of the major studios this morning, and he mentioned that the studios are increasingly making deals with theaters to inflate opening numbers. In particular, they will give the theaters very high revenue share for the first X days of the movie (he mentioned 100% for the first 3 days), incentivizing the theater to maximize the number of screens the movie's shown on, inflating opening numbers."

Our eavesdropping friend claims this conversation was referring to Superman and Pirates; Specifically, the question is whether Superman's decline was partially due to the theathers' incentive period running out.

I personally doubt what he heard this correctly -- but let's look at the practice anyway.

What they were discussing is called Front Loading, and it has been around at least since the early 1990s. It may have become more pervasive over the past few years.

That said, I would be very surprised to learn that Disney "gave much away" the first few days. This was a widely anticipated sequel, one that was likely to be reasonably successful. The studios wouldn't/shouldn't give away the cash cow: the opening week gross.

There are two related items worth noting about this:  First is the 70/60/50/40/35/30 scale. When a movie opens, the studios typically take the lion's share of the ticket sales -- 70% during the first weekend, leaving only 30% for the exhibitor. The following weekend the split drops to 60/40, then the next week it goes to 50/50, then 40/60, 35/65 and eventually plateaus at 30/70.

A hot movie, with good previews and lots of word of mouth buzz (i.e., Snakes on a Plane) might be a "double 70" -- meaning the studio gets 70% during the first two weekends -- including opening weekend, and the following weekend.

The 2nd item to remember is that theater owners are in the popcorn business; They make most of their money not from selling tickets, but from the concession stand sales. They like a big movie with repeat viewers because they sell more concession products.

~~~

I will try to confirm if the studios made some deal to open Pirates or Superman "bigger" via incentives/concessions to exhibitors, and report back here . . .

Thursday, July 20, 2006 | 10:00 AM | Permalink | Comments (21) | TrackBack (0)
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Maybe that explains part of this...

http://www.latimes.com/entertainment/news/la-fi-hollyfear20jul20,0,2453929.story?coll=la-home-headlines

Posted by: lola | Jul 20, 2006 10:47:17 AM

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