High Movie Marketing Costs a Factor in Lions Gate 2Q Loss
Lions Gate's $14.1 million loss for the Second Quarter of 2005 is mostly attributed to a $26 million dollar loss from marketing the late summer releases 'Lord of War' and 'The Devil's Rejects,' Reuters reports.
According to company statements, Lions Gate spent a combined $35 million to market both titles, but neither of them generated the theatrical revenues to make up for the spend. However, the studio is still confident that they can make up the deficit on the home video front. That is, of course, if they can keep the additional marketing spend required for the home video release under check.
In analyzing the marketing-to-production spend for these movies, you can see why the industry is freaking out about rising marketing costs. The combined production budgets for both of these films was approximately $49 million dollars (roughly $42 million for 'Lord of War' and $7 million for 'The Devil's Rejects' according to IMDBpro.com). That would put the marketing costs at around 71% of the production budget -- an alarming figure at any rate.
Consider for a moment what Dawn Taubin was quoted as saying when interviewed for in article about the recent Warner Bros. layoffs:
"Marketing costs are just skyrocketing, and if we don't address this we are going to put ourselves out of business"
That 71% percent the Lions Gate spent looks even worse when you compare it to marketing spend figures touted in that same
New York Times article:
Consider this: the average cost to market a film domestically in 2004 was $34 million, roughly half the $64 million average price tag to make one, according to the Motion Picture Association of America. Blockbusters cost even more to market: as much as $60 million.
Given Lions Gate's strategy of marketing lower budget pictures as if they were bigger releases, they could potentially get themselves into a whole heap-o-trouble with even a minor slump...
General Mills to Give away free Movielink Downloads
General Mills will be giving away coupons for free Movielink downloads as cereal box promotions, according to the Minneapolis-St. Paul Business Journal. The $5 coupons will be in specially marked boxes of Honey Nut Cheerios, Lucky Charms, Cinnamon Toast Crunch and Golden Grahams, among others. The code will allow the customer to rent a digital version of the movie of their choice for 30 days, according the the article.
A joint venture of Paramount, Sony, Universal Studios and Warner Bros., Movielink's content is made up of the partnering companies' catalog titles, and they also have non-exclusive distribution agreements with Disney including Miramax) Lions Gate and others.
After many years of being the official "idea before its time," Movielink's time may have finally arrived. And with consumer acceptance of digital downloads quickly coming to a head, they really need to think about building their brand. Partnering with General Mills gives them the broad exposure outside of their core audience, which until now has probably been tech savvy early adopters. Movielink coupons in boxes of sugar cereals will help them reach teens -- the most voracious of digital content consumers.
125,000 Pixar Videos Sold in one Month on iTunes
Posted on Wednesday November 9, 2005
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According to Mac Daily News, Steve Jobs noted that PIxar sold over 125,000 short film downloads on iTunes in under one month. A few other interesting tidbits from the call:
- Steve Jobs thinks Blu-Ray may win the HD format war.
- Release dates for the next three PIxar films afters cars are tenatively slated for the summers of 2007-2009.
- Jobs thinks that people aren't necessarily in the habit of illegally downloading movies, and that there is still time to put in place legal alternatives.
We'll post a link to the full transcript when it becomes available.
National CineMedia's Pre-Movie Show Goes Back to the Drawing Board
Posted on Wednesday November 9, 2005
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According to Ad Age, National CineMedia is retooling their pre-movie advertainment content to make it more appealing to cinema audiences. Up until now, the pre-show video entertainment has been a mix of studio promotional pieces and standard television-type advertisements. According to the company, it's a bit too commercial for cinema-goers:
National CineMedia executives claim that research shows 78 percent of moviegoers like the pre-show, but that it needs to become less marketing-driven and more inline with the trailers and feature film.
Basically, it looks like people have little little interest in watching the same boring ads they see at home on TV -- big surprise. Perhaps the higher cost of creating compelling theatrical adverts will slow in-theater advertising's rapid growth, which has been in excess of 20% a year as of late.
[Via
Media Buyer Planner]
Sony Pictures Releases Full-length Films on Mobile Phones
Posted on Wednesday November 9, 2005
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The U.K. Branch of Sony Pictures Digital announced the first slate of films available for mobile phone viewing, Hexus Gaming reports. The initiative brings four more Sony titles to market on Mobile Media Cards (MMCs): 'Hitch,' 'Ghostbusters,' 'Charlie's Angels: Full Throttle' and 'Stuart Little.' This release slate comes after a successful pilot test earlier this year of of 'Spider-Man 2' and 'Monty Python and the Holy Grail.' Sony commented that:
"Mobile phones are quickly becoming the entertainment device of choice for many consumers. People are constantly on the move today and watching full-length feature films is a great way for them to use their phone for entertainment while in transit," commented Mike Arrieta, senior vice president of Sony Pictures Digital Sales and Marketing. "The overwhelming response to the initial two films made it immediately clear that there is a strong demand for high quality content within the mobile market. We will continue to develop products to meet this growing demand," he continued.
Interesting -- the same thing can be said for the Ipod phenomenon in the U.S. as well. But is portable video merely an urban/commuter trend? We think that this may drive the early adoption, but the eventuality will be higher-quality portable video that's also suitable for viewing on home systems. Look for that technology to facilitate the tipping point for broad digital download acceptance.
Report: Home Video Profit Growth to be Flat in 2006
Posted on Friday November 4, 2005
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According to a recent report issued by investment bank Goldman Sachs, the four major media conglomerates will see zero profit growth in the home entertainment marketplace in 2006, and a high-single-digit decline in total home video revenue for 2007, Gamedailybiz.com reports.
The report describes several important factors regarding the rapid decline:
1. DVD players penetration will be at 79.7% next year, reducing the number of "library builders."
2. Late adopters are less likely to purchase large number of DVDs.
3. The quality of releases will decrease as much of the quality titles in the studio's back catalogs are exploited.
4. With demand waning at the box office, sales of new release DVDs may also suffer at retail.
5. Sales growth from new formats will be hampered by format disputes.
We believe that these factors will also contribute to DVD profit growth decline:
1. Downward pricing pressures will squeeze margins -- the average price per disc in the typical multi-disc set has fallen from around $20 dollars per disc in 2000 to approx. $8 per disc today. Due to the sheer number of buying options available to the consumer, DVDs are quickly becoming a commodity product.
2. Shady marketing tactics will turn off customers -- continually reissuing titles to fleece and re-fleece consumers (aka "double dipping") has become rampant in the business. Some studios are getting lazy and simply changing the packaging without adding any value. This tactic is merely hastening the onset of buyer fatigue. Studios should embrace the notion of high-value special editions (like the Criterion Collection) which results in brand loyalty and repeat purchases.
3. Much like they did with music five years ago, consumers will quickly become accustomed to owning digital versions of video content. Just look at the year over year decline in packaged music sales (and the rampant growth in digital music sales) and there's no question in anyone's mind where this business is headed. Naysayers who think that the era is "five years away" should take a hard, fast look at the 1,000,000 video downloads at ITunes over a 20 day period last month. Apple, or some other company, will likely come on board with an Ipod-like device to carry hundreds of hours of HD-quality video that can be jacked right into a TV set. Those companies who don't get their digital ducks in a row will be on a raft of unsold DVD product floating in a sea of red ink by the end of 2007.
Is the Sky Falling Around Disney's 'Chicken Little?'
Posted on Thursday November 3, 2005
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According to Jim Hill Media, all is not well in the Magic Kingdom. Rumor is that director Mark Dindal has quit the Walt Disney studio, apparently because studio execs have been distancing themselves from the film for fear it may tank. Apparently, Dindal isn't the only one in the cross-hairs:
Right now, the "blame game" (I.E. Finding which studio exec will actually take the fall when "Chicken Little" fails to meet expectations) is allegedly already well underway. With the top guys at Disney Feature Animation frantically pointing fingers at Thomas Schumacher (I.E. The former head of WDFA. More importantly, the guy who actually greenlit "Chicken Little" back in 2001) and Michael Eisner (The company's recently departed CEO. Who inexplicably had the film-makers make many changes to "Chicken Little" while this movie was in production. Among then ordering that the film's title character be changed from a girl to a boy).
The marketing has been criticized as unfocused and infrequent as well. Jim Hill thinks this whole imbroglio couldn't have come at a worse time given the
negative advance reviews that are already rolling in.
I would think that this film would've steamrolled over the bad press and reviews with heavy TV ad rotation, and it may even surprise everyone at the box office this weekend (although expectations are being heavily managed right now, of course). This whole blame game scenario is really "inside baseball" -- it'll get some play in the trades and blogs, but I don't think that makes much difference -- kids don't care about reviews or Hollywood machinations. If it fails, the marketing should take it's fair share of the blame.
Warner Bros. to Simultaneously Release Poseidon in IMAX Theaters
Posted on Thursday November 3, 2005
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The IMAX Corporation and Warner Brothers announced in a joint press release this morning that the upcoming adventure flick Poseidon will be released simultaneously in both IMAX theaters and conventional theaters.
The film, a reworking of the 1972 hit The Poseidon Adventure, is slated for a May 16th release, making it one of the earlier entries in "blockbuster season." So far this year, Warner Bros. has announced two other simultaneous releases with IMAX for 2006 - Superman Returns and Happy Feet. To IMAX's credit, they have done an outstanding job in picking quality films - we can't recall a "commercial" IMAX film that hasn't performed well, and in some cases (as with The Polar Express) the IMAX versions have outperformed their conventional counterparts.
Warner's move is part of a recent movie marketing trend of eventizing new releases with high tech, value-added features. Other efforts in this vein include the return of 3-D (via Disney's Chicken Little) and hi-def digital projection (the recent Star Wars release). As home entertainment becomes more like the theatrical experience, expect more moves in this direction.
Studios Shift DVD Holiday Season Release Dates Earlier
Posted on Thursday November 3, 2005
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Following earlier moves by Buena Vista and Universal, the Home Entertainment divisions at Sony, 20th Century Fox and Lions Gate are all moving up their December DVD release dates to the 26th, Video Business reports. The move will put titles in stores on one of the busiest shopping days of the year, when many retailers offer "day after Christmas" sales.
The move comes amidst a pessimistic outlook for the holiday season, with retailers feeling serious pricing pressure much earlier than the typical wide discounting seen on "Black Friday." The move also reflects the reality of Christmas and New Year's falling on the weekend this year -- quite simply, the studios just can't expect the same level of shopping traffic during December 26th-31st since people won't have as many days off.
Universal Launches Racy Virals to Promote 'American Pie Band Camp' DVD
Posted on Wednesday November 2, 2005
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Universal Pictures International has launched two racy virals to promote the straight-to-DVD release of 'American Pie Presents Band Camp,' Brand Republic reports.
The first viral is Bandies Gone Wild, a flash movie that lets the user choose a bevy of elements including characters, audio and effects to create a racy scene that ties into the film. The second viral, Cheerleader Charmer, lets the user guess musical notes to get a cheerleader to strip.
The virals were created by New Media Maze, a UK-based online entertainment marketing agency.
Both of these virals look well poised to create a mini-blog storm -- they're thematical smart bombs for the DVD's demographic. We'll keep you posted with how much blog penetration this viral gets.
The Weinstein Company and L'Oreal Enter into Marketing Alliance
Posted on Tuesday November 1, 2005
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The Weinstein Company and cosmetics manufacturer L'Oreal Paris have announced a multi-year marketing alliance, according to a press release on the Hollywood Reporter. Touted as the "first long-term partnership between a motion picture company and a major cosmetic brand," the Weinstein company will get (presumably) in-kind marketing dollars from L'Oreal product placement and event co-sponsorships, while L'Oreal will hopefully get some of the Weinstein Oscar mojo.
From a marketing standpoint, this looks like a great early move for the Weinstein Company. In a world where movie marketing budgets are often a third to half of print costs, bringing partners on board for long term deals helps control costs for all pictures coming down the pike. David Carr hit the nail on the head when he wrote that the Weinsteins "will squeeze every nickel twice before they spend it." Also, L'Oreal are masters at marketing to women, a demographic that the move business has had a hard time reaching as of late.
