People like movies

By Scott Bowles, USA TODAY
So much for the death of the cineplex. After a three-year attendance slide and dire forecasts that theaters would succumb to DVDs and home entertainment centers, going out to the movies is back.
With less than a week left in the year, 2006 appears to be on its way to an increase in ticket sales and an end to Hollywood's attendance slump.

And with a raft of franchise films coming out next year, including a trio of expected blockbusters in May, studio executives are looking at 2007 as a possible record-breaker.

"It looks like we're back," says Jeff Blake, vice chairman of Sony Pictures, which led all studios this year with 13 No. 1 films, a record, and more than $1.6 billion in ticket sales.

"It was easy to get on the bandwagon and say business was down and wasn't coming back," he says. "But the industry has started casting a wider net. It isn't just about young males and families. We're catering to more people, and it's showing in the business we're doing."

This year's comeback seems to bear that out. According to box-office analysts Nielsen EDI, ticket sales are at $8.8 billion for the year, about 3% ahead of last year's pace.

More important: More people are going to the movies this year. Since 2002, attendance had dropped steadily; 2005's ticket sales were the lowest total in eight years.

But after adjusting for inflation and rising ticket costs (the average cost is $6.58 this year, according to Box Office Mojo), theaters have sold 9 million more tickets this year than at this point in 2005.

What sparked the turnaround? Studio executives say the key to this year's success — and the secret to 2007 — may be in lowering their expectations.

Sure, Pirates of the Caribbean: Dead Man's Chest shattered box office records, including the largest opening weekend, on its way to $423 million domestically.

But Pirates was the only movie this year to cross the $300 million mark, and only five films took in more than $200 million. In comparison with 2005, eight films raked in more than $200 million.

Instead, studios surged with mid-range hits such as The Devil Wears Prada, Nacho Libre and The Departed, movies that took in $80 million to $125 million by appealing to more specific audiences.

"I wouldn't call it niche marketing, but you can do well with movies that appeal, say, mainly to older women or men 18 to 34," says Clark Woods, president of distribution for MGM, which released Rocky Balboa last weekend to audiences that were nearly three-fourths male. "Everyone wants to hit a home run, but I think we're seeing success by hitting doubles and triples."

A big year ahead?

Next year's slate, observers say, could prove the most potent lineup of sluggers since 2002, which set the box office record with $9.3 billion in ticket sales in the USA and Canada. May will be the bellwether. The battle of the third acts will pit Spider-Man 3, Shrek the Third and Pirates of the Caribbean: At World's End against one another.

Many analysts give the early edge to Pirates, because the second film ended on a cliffhanger and comes just a year after this year's biggest movie, Pirates of the Caribbean: Dead Man's Chest.

"But I wouldn't bet against any of these," says Paul Dergarabedian of Media By Numbers. "There's room for all of them. May could easily be the biggest month of all time at the movies."

Add to that new installments of Harry Potter, Fantastic Four, Die Hard and the Bourne series, and executives say there's reason to hope the three-year slump is over.

"I think we might have forgotten a little about Middle America," Woods says. "It's easy to make movies that will be hits in big cities. But your success is going to be in listening to what all of the country wants to see."

That, and market a little smarter.

Industry officials and analysts say studios can build on the success of 2006 by tweaking how they make and sell films in 2007 and beyond:

•Spread award contenders throughout the calendar. Hollywood typically saves award-caliber films for November and December in the hopes of staying fresh in the minds of critics and academy members. But several films released in September or earlier, including Little Miss Sunshine, The Departed and The Queen, were commercial successes and are expected to be Oscar contenders for best picture.

"There was a little revolution of films that people just supported and enjoyed," says David Poland of MovieCityNews.com. "The movies didn't arrive with all this importance attached to them, which builds expectations you can never meet."

•Drop the tent-pole mentality. Studios are on the constant prowl for "four-quadrant" hits: blockbusters that are equally popular with men and women, young and old. But those "must-see" films can disappoint, "because you have to impress people twice as much," Poland says.

"There's nothing wrong with a two-quadrant movie," says Blake of Sony, which had just one movie, The Da Vinci Code, do more than $200 million this year. "We did really well with midrange hits, which can last a long time in theaters."

•Tone down the hype. Even studio honchos concede they have over-marketed films in recent years and have been forced to scale back the fanfare behind their releases.

"People want to discover good movies, not be told that they're good," says Steve Gilula, chief operating officer of Fox Searchlight, which has waged a relatively quiet commercial and Oscar campaign for Sunshine. "The best advertising you can have is a parent talking about your movie, not you."

Family films rake it in

And no one talked about movies this year the way parents did. If any niche proved nearly fail-safe in 2006, it was the family film, particularly animated movies. Four of 2006's top 10 movies were animated, the most ever.

Expect another plethora of animated fare in 2007, including The Simpsons Movie, Happily N'Ever After and Teenage Mutant Ninja Turtles.

"I'm not even sure you could call animation a genre anymore, because it's become like any other type of film," says Chuck Viane, distribution chief for Disney, which had the year's biggest animated movie with Cars, which earned $244 million. "The good movies are going to work, the bad ones won't."

Says MGM's Woods: "Let's be honest: We didn't exactly come out with the best products the past few years. Fortunately, that's pretty easy to fix. You make better movies. That's the lesson you take from this year and into every one after that."