The "tent-pole" effect

One of the five peculiarities states "revenues are streamed across a lengthy time period". This is very true, DVD's are now the largest studio revenue earners. So even though a major blockbuster film can have huge box office numbers within the first two weeks of it being in the theaters, that is not where all the revenue comes from. The revenue from DVD sales now eclipse the box office sales. In addition to the theatrical release, revenue is generated through many auxiliary avenues. In 2003 there was a study that stated "domestic theatrical box office grosses" now represent only 15 percent or less of the total revenues. The other 85 percent is know as the "ancillary" markets. These "ancillary" markets can include DVD and video, the international theatrical market, network syndication and pay television. For example drake uses the term "tent-pole" effect to mean that the success in films in theaters directly effects their success in other markets. The first two weeks in the theaters are all that matters, if the movie is a big hit and draws a ton of attention then there is a really good chance that it will be successful in its "ancillary" markets. Therefore the revenues are streamed across a lengthy time period. The Sale of DVD and VHS is not until at least 6 months after the release of the movie in theaters.

Windowing is also very important. Windowing is "the strategy is releasing film over time across different media windows". This strategy can be very effective if timed right. The marketing strategy is connected directly to the windowing strategy. The use of marketing must be time appropriately so that the release of each different media window is timed perfectly with the right amount of marketing and advertising to make people aware of the release on a new platform.

Marketing a movie: it's a win-win for everyone

Having good marketing skills is the trick to avoiding an unpleasant experience at the movie theater. Then again, you still have to follow through after hyping up the movie. One of the five peculiarities that Drake outlines is that “admission might buy the social experience of cinemagoing rather than to see the particular film." In my opinion, this basically explains that some people go see a movie simply for the purpose of going out and being with people. It’s understandable. I’ve done it before. For example, I dated a girl once that made me go see "Sorority Row" with her. Yikes. That was awful. Just awful. Almost as bad as "Prom Night," which my roommate and his girlfriend were watching on Sunday morning for some reason. Anyway, Drake goes on to explain that cinemagoing can be a risky business for both the consumer and for the film financers. It’s risky for the consumer because they might see a terrible movie at the price of both the film and the social experience. It’s risky for the financer because they can’t change the ticket prices based on how good or bad the movie is.

Movie marketing helps reduce the peculiarity of this experience and the very first thing I thought of when I saw this part of the question is the midterm exam that I wrote for class a couple of weeks ago. I wrote about "Paranormal Activity 3" and in it I talked about how they marketed the film. They hyped the movie up so much through social media sites like Twitter and Facebook that they had people flocking to the theaters. The contest on Twitter was to “Tweet your scream” and the city with the most responses got special access to see the movie first. It was a great idea because it took the film to a national level. In fact, Melbourne, Australia was one of the cities that won. The strategy helped the financers and producers make big bucks because the movie only cost $5 million to make but they netted over $50 million in the first weekend because they did a tremendous job of marketing it. In addition, the film got pretty good reviews. Therefore, it’s a win-win for consumers and financers. Financers make money and consumers see a good movie while enjoying a pleasurable movie-going experience.

Ticket Prices: the equalizers of film

The price of tickets for all films is exactly the same. This is one of the things that is unusual about Hollywood films. No matter the amount of production, or marketing money put in, the price is still the same at theaters. If ticket prices were more on a scale for what films cost to make (i.e. more expensive films = more expensive tickets and vice versa) or perhaps on how much the exhibitor paid to obtain the films, popular movies would completely change. For example, if this were the case lesser known films would be more popular since they would be cheaper to see. While films that generally cost more would probably try to cut down their budgets in order to compete with lesser films. In a system where ticket prices are exactly the same price, there is a level playing field. The only decision is which films people want to see and that is created by accessibility and marketing. A film gets seen that is actually showing in theaters, that is the first step: access to a film. The second is more complicated. Because it is a level playing field, and movie making is an expensive risk, films are advertised and marketed as much as possible. There are trailers, web advertisements, billboards, interviews, posters, merchandise and more. All of these things create a buzz that must not only get people to make the choice to go see a particular film in theaters but also create revenue after the film is done. The more a marketing team is able to spread the word in as many different facets of the media as possible, the better the film will do, and therefore make it more likely to be seen in theaters. So with ticket prices being the same for all films, it just comes down to which has the buzz and is marketed better.

A good example of this process was with Disney/Pixar's Cars 2. This is a sequel, thereby creating a franchise out of the Cars series, which also makes it a more likely choice for audiences to see. Before Cars 2 came out, Toys R Us, Walmart, and the Disney Stores all had toys, clothing, and other merchandise with the film. This created a buzz for the film as audiences saw returning characters and new characters. With Disney's global mobility, the film was also able to be heavily marketed outside the United States as well. All of these marketing techniques created a success story for Cars 2 when it finally came out in theaters.

High Risks and High Costs of P&A in Cinematic Releases

Drake outlines five peculiarities of Hollywood films as cultural goods in the article “Distribution and Marketing in Contemporary Hollywood”. One of the peculiarities of blockbuster marketing that piqued my interest is the cultural value of seeing a movie in the cinema. As noted by Drake, box office sales account for only one quarter of movies revenue, with the rest of the revenue being comprised of DVD sales, international release, and licensing. Although many Americans might assume box office sales would play a much larger role in revenue generation, it is important to note that they are disproportionately valuable in terms of overall revenue generation for cinematic releases. Box office sales serve as important indicators of a films overall profit potential, heavily influence the value of a film in overseas markets, and play a large role in constructing a movies marquee value. In other words, box office sales are vitally important because of their role in determining the financial worth of a movie in after cinematic release sales, which make up three quarters of a films revenue.

Also important to note is the risk associated with a cinematic release. Given the high production costs of a blockbuster, uncertainty of a movies profitability, and the importants of block buster sales, producers and studios pay a great deal of money to advertise their releases, and garner hype for their productions. In 2005, blockbusters had an average production cost of 60 million dollars, and a P&A (pint and advertising) cost of 36 million dollars (half the cost of production). The reason for this high investment in a movies marketing and advertising lie in the understanding of P&A as a revenue stabilizing expenditure. Movies that are not advertised well enough simply do not develop the hype needed to succeed as cinematic releases.

This leads to the question, how does movie marketing help reduce the risk associated with blockbuster releases? One simple answer is that P&A increases benefits of cinematic attendance to a particular movie. Movies play an extremely important role in our culture; people quote them, talk about them, learn from them, and experience a cultural phenomena by attending them. By paying top dollar to advertise a production, producers are actively reminding viewers of the aforementioned cultural benefits associated with movie attendance. And because admission might buy a social experience rather than viewing a particular movie, it is vital to studios that viewers see their movies over others.

The Film Industry: Choice, But Not Much Choice

In our discussion of Drake’s article about distribution and marketing, one point in particular makes Hollywood a unique industry: “films are product-differentiated in more complex ways than other categories of products (64)”. This fact is very interesting, especially when considering the number of options that are available at any given time in theaters. However, part of the film industry’s success is that while it gives cinemagoers various options for genres, it does not give them much choice across these genres. Unlike television, where there are now so many specialized networks that produce shows to very specific audiences due to the rise of cable networks, moviegoers are limited to one or maybe two films that fit the genres which they want to see. Speaking from a personal standpoint, I usually only go to the theater to see a comedy movie, and I am picky about what comedy movies I want to see, so I rarely go to the theater (I haven’t been to theaters since Horrible Bosses, and I won’t be back until I go see the new Harold and Kumar).

This model sets up a unique situation for people that go to the theater; sometimes it is not an issue of seeing a particular movie, but instead it becomes an issue of what would be the best movie based on a particular genre. A great example of this occurred this past weekend; it was Halloween and amazingly the only scary movie with a wide release was Paranormal Activity 3, so if one wanted to see a scary movie this past weekend, there was one option. This creates an interesting problem for the consumer: do you go to the theater to see a movie because it is in a certain genre, or do you not go because you don’t care about the particular film. In addition to this personal problem, because going to the movie theater is a group activity, the opinions of what others want to see must also be factored in to movie selection. Going back to Drake’s point, just about every film is different than their counterparts, but because options within genre are limited in theaters, the consumer’s choice often comes down to whether or not they have the money or will to see a movie, with the quality of the film being secondary in most cases. This could be one reason why Oscar winning films are not widely viewed in theaters and why the blockbuster film is a critical business tactic for Hollywood studios.

Ticket Prices and the Risk of Film Making

Philip Drake discusses 5 peculiarities of Hollywood films that make them riskier to produce than a typical consumer good. Ticket prices at a given theater are not variable for each film, but instead they are constant and each film costs the same amount. This has a great affect on each film because no two films cost the exact same amount of money to produce. Producers put the amount of money into a film they feel they can get back from revenue, and when a theater charges the same price for a movie that cost $30 million to produce and a movie that cost $5 million to produce it leads to a great deal of risk for expensive movies. If they do not bring in revenue at the box office, the producers of and investors in the film will lose a lot of money.

Marketing is one strategy that can help ease the risk of level ticket prices. As stated earlier this is a lot more important for expensive movies, but a tactic used by all movies. First of all, marketing can show the future movie-goers what makes the movie so great; and how the millions of dollars spent producing it went to good use. For example, if a movie is shot in 3D, marketing can show the consumers how great 3D is and create a buzz for the uniqueness of the movie. Also, marketing can show audiences that may not plan on going to the movies that there is a movie in theaters they might be interested in. Advertisements do just that, and the more people that know about a certain movie, the more people it has the opportunity to appeal to, which lessens the large amount of risk inherently built into film making. In the end, the more people are talking about a certain film, the less risk there is that people will not go to see it. More viewers makes the non-variable ticket prices less of an issue.

3 Questions for Kacey Hagler

1. What are the differences when promoting movies for different audiences? (families, teens, children, adults, etc.)

2. How is promoting documentaries different than a typical movie?

3. What are some major differences between working at Searchlight and working at Disney?