Releasing a film into the marketplace has never been tougher. As customers become increasingly sophisticated and demanding and competition intensifies Hollywood has reacted by officially making marketing their highest priority. As Martin Grove reports in the July 28th Hollywood Reporter, “Disney and Universal putting seasoned marketing executives in charge of production are only the latest indication that marketers are Hollywood's new power brokers.”
On the surface these moves seem to make sense. With so much at stake financially (average studio production budgets now exceed $60 million), it has become increasing important to create awareness for their product. But what this marketing-centric focus fails to consider is that successfully launching a new film into the market is not just a matter of spending a fortune on promotion. Movies are a combination of commerce and culture, business and art, and what I’m seeing is that the desires of the consumer and the focus of the studios are at odds. This dichotomy is characterized by four findings.
1] The Weak Link
In a recent poll conducted by the MPAA, more than 60% of moviegoers stated they are disappointed with the cookie-cutter product Hollywood has to offer.
In their business model the studios spend hundreds of millions of dollars on a film because they’re banking it will attract a worldwide mass audience and become a franchise. But for this strategy to work each film must have broad appeal in every quadrant (men and women, young and old). To ensure this appeal Hollywood waters-down their stories, removing content that may keep certain demographics from the theater, while at the same time adding elements (explosions, effects, celebrities) in the hope these elements will broaden the film’s appeal.
The problem is when you dilute the content you remove the very thing consumers most want from their moviegoing experience – a great story. The studio strategy is faltering because it is focused solely on marketing at the expense of content and moviegoer satisfaction.
2] A Strong Outlook
According to Pricewaterhousecoopers 2006 media report, filmed entertainment - lead by digital delivery platforms and the Internet - will expand at a compound annual rate of 5.3% through 2010 to reach $104 billion on a global basis.
This is encouraging news, but what’s most interesting is where that growth may be coming from. In 2005 the top 25 films generated $4.05 billion at the box office compared to $4.32 for the top 25 in 2004, a decline of 6.2 percent. Box office tallies for the remaining films however were up 4.6 percent in 2005 indicating that smaller films continue to perform well and fuel the market.
3] The consumer takes charge
As use of the Internet has proliferated, moviegoers have gained unprecedented access to information. More than 40% of moviegoers now make their decisions about what films to see after surfing the Internet, and that number is growing (Kagan & Associates 2005). Literally thousands of web sites, blogs and discussion boards now exist where consumers can find unbiased reviews and contribute to discussions about any movie released.
This means moviegoers no longer have to rely solely on studio marketing when deciding whether to see a movie. Before spending money on gas, popcorn and tickets, consumers are listening -- and talking -- sharing their views about whether a movie lives up to the hype and is worth seeing.
4] Independent films filling the gap
Of the 5 films nominated for best picture at the Academy Awards in both 2004 and 2005, all but one were independent, story-driven films.
These successes and others are attributable in part, to a change in the demographics of the theatrical audience. According to Nancy Klasky, Vice-President of Marketing for Century Theaters, “The movie-going population is aging, so there’s more interest in a little more complicated entertainment for a sophisticated audience.”
These films are satisfying audiences worldwide, performing at the box office and doing so without breaking the bank. As an example, Spielberg’s 2005 studio film Munich cost more to produce than the other four nominated films combined - all independents - yet it won no awards and performed no better at the box office (see Table below).
| 2005 ACADEMY AWARD BEST PICTURE NOMINEES | ||
| TITLE | BUDGET | US GROSS |
| Brokeback Mountain | $13.9 | $83.0 |
| Capote | $7.0 | $28.8 |
| Crash * | $6.0 | $54.3 |
| Good Night & Good Luck | $7.0 | $34.1 |
| Munich | $75.0 | $47.0 |
| * Best Picture of the Year | ||
| Sources: | ||
| boxofficemojo.com, the-numbers.com, oscars.org | ||
5] Bottom Line
The old adage content is king is more relevant than ever and the message for producers is that we must focus our acumen on creating meaningful, entertaining content that is intrinsically valued by a specific audience. The primary lessons I draw:
- The quality of content matters. When content is marginal and commoditized, audiences will find other ways to entertain and inform themselves
- Ownership of content doesn't guarantee the ability to control the business model. Audiences control the business model, always
- Marketing cannot make a movie a hit. Marketing serves only to draw an audience the first few days of a release. After that audience word-of-mouth drives results
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