Friday, April 8, 2011
How Hollywood Reads The Latest Numbers
This is important to what we see because the six major studios rarely, if ever, green light a project unless it is certified as “marketable” in America. What makes a movie “marketable” is that the marketing arm finds that it contains the action, stars, visual effects or other elements that it needs to put in 30 second television ads to activate millions of people on a particular weekend to go to the opening of a movie at thousands of screens across the country. This operation is extremely costly. The average ad budget was $32 million for wide-released movie in 2010. But even with such huge budgets, given the cost of TV advertising, studios usually can only afford seven times coverage, which means hitting the same television audience 7 times in the weeks prior to its opening. To be effective, not only must the ads resonate with those targeted, but those targeted must be people who are frequent movie-goers. If they are not, even if the ads excite them, they are unlikely to go to that movie. So the marketability decision really comes down to a single issue: Will a proposed movie yield the kind of ads that will reach frequent movie goers at a cost the studio is willing spend?
In the pre-television era, there was no problem finding frequent movie goers. That job description indeed fit most Americans. As late as 1948, sixty percent of all Americans routinely went to the movie theaters in an average week. But, alas, that is no longer the case. According to the 2010 Theatrical Market Statistics Report, “frequent movie goers,” now defined as people who go at least once a month, constituted “only 11% of the population.” The MPAA, which published the research in February 2011, correctly pointed out, “This relatively small group is the locomotive of the industry, now responsible for more than 50% of ticket sales.” If anything, that assessment may be an understatement. Without these frequent movie goers, and their popcorn and soda purchases at concession stands, the multiplexes could not remain in business. In 2000-2001, for example. just a 5% decline in theater attendance drove almost half the movie theaters in America to file for bankruptcy. The clear mandate of studio marketing department thus is to sift out the few frequent movie-goers from the masses, and then, once isolated, to laser-beam them ads.
But who are they? According to the MPAA report, 47 percent of the total are under 25 years old. Fortunately for the marketing arms this demographic group is easily reachable because its members to concentrate their attention on the same cable television shows. Even better, they also are of prime interest to the merchandisers, such as McDonald, Dominos, and Pepsi who are willing to make merchandising tie-in deals with the studios (such as handing out toys based on the characters in the movie.) Such deals greatly amply the reach of a movie’s ad budgets to this prized frequent-goer group.
Of course, with the aging of the American population, there is also a sizable grey-haired audience of frequent movie goers, but it is much smaller and more difficult to locate. The MPAA research shows 8 percent of people 50 to 60 are frequent movie goers, but, as this more elderly audience does not cluster around MTV-style programs, attempting to bombard them with 30 second ads is a risky business. Even if they find programs watched by people 50-60, 92% of them are not frequent movie-goers. And marketing executives are not prone to taking such risks with the studio’s money. After all, they have to worry about losing their jobs if their campaign goes wrong. So while adult-oriented films can garner critical acclaim, Oscar nominations, and even make money, they are not likely to be deemed marketable.
The 2010 data merely reinforces what has become the marketing play book of Hollywood: Green-light the movies whose action, visual effects or iconic stars can be used in 30 second ads to stampede the herd of youth into the multiplexes .