Miramax to Increase Focus on Marketing Partnerships with Disney Divisions

Miramax is getting serious about forging marketing campaigns and promotional partnerships with other Walt Disney Company divisions, according to Variety.

To kick off the move, Miramax Executive V.P. of Business Affairs Michael Luisi has been given an expanded role that will put him in charge of developing partnerships with Disney divisions such as ESPN, ABC and Hyperion. While Miramax has conducted these sorts of promotional activities in the recent past, the move signifies an attempt to systematize these activities, to improve Miramax’s brand recognition, and to better integrate Miramax into the company as a whole. The move also mirrors Disney’s move towards greater divisional symbiosis. The best example has been their recent success with the ‘Pirates’ franchise, which began as a theme park ride and has led to increased park attendance and merchandise sales.

Miramax has grossed a little over $17 million year to date on six releases, down drastically from the division’s peak of $427 million in 2001. The sharp decline in revenue reflects the division’s shift in focus from larger budgeted tentpole productions under the Weinsteins to a mix of lower-budgeted independent fare and foreign acquisitions.

Fox Launches Second Demographically-targeted Specialty Division with FoxFaith

News Corp.'s Fox Filmed Entertainment today announced plans to target the Christian audience with the formal launch of the FoxFaith Home Enertainment Division.

FoxFaith will acquire up to twelve films a year, with a minimum of six theatrical releases a year under partnerships with AMC Theatres and Carmike Cinemas. The label will target evangelical Christians, a group whose beliefs have traditionally been at odds with secular Hollywood fare (including some of the racier content seen on Fox's broadcast network). The label has also partnered with the Dove Foundation, a non-profit that offers seals of approval to qualifying films free of offensive content.

Productions will be based on bestselling Christian fiction and will have production budgets under $5 million. Recent updates indicate they will be acquisitions, and not studio productions Additionally, the films will receive marketing support nearly equal to the production budgets, a significant figure for marketing low-budget films. This will complement Fox’s already hefty grassroots database of 90,000 congregations and 14 million evangelical households.

As we reported here over a year ago, FoxFaith has been making major inroads into the Christian marketplace in the DVD arena. Since the launch of the FoxFaith initiative last June, Fox has shipped over 30 million faith-based DVDs. As the DVD distributor for ‘Passion of the Christ,’ fox has sold an impressive 15 million units and established a considerable competitive advantage in marketing to the Christian community.

Another interesting element to this announcement: As opposed to the rest of Hollywood’s alignment of their theatrical and home video divisions along genre lines (Foreign, American Independent, Horror, etc.), Fox is throwing that paradigm out the window by aligning them along demographic lines, first with Fox Atomic, and now FoxFaith. It’s doesn't seem like much of a stretch to imagine a FoxAsian or FoxWomen specialty unit. After all, this model has been put to the test via specialty cable networks for several decades, but the web has given the model even more promise. With the lower cost of marketing to a known cohort, the centralization of these communities in online social networks, and the ease of building up reusable grassroots databases over time, Fox may have discovered a winning formula for combating the fracturing of the mass audience. The Weinsteins Company has placed a bet on this model as well with Our Stories Films, a specialty studio catering to the African-American audience.

CARU Asks Disney to Stop Advertising 'Pirates of the Caribbean' to Kids

According to Broadcasting & Cable Magazine, the Children's Advertising Review Unit of the Council of Better Business Bureaus has asked Disney to stop marketing the PG-13 'Pirates of the Caribbean: Dead Man's Chest' to children on Nickelodeon.

A self-regulating arm of the ad industry, CARU made a formal complaint about ads that ran in tandem with the film's theatrical release in June, three months after they had aired. Disney responded by saying they had no plans on rerunning the ads, and stated that they had relied on Nickelodeon's clearance department to ensure proper ad placement.

CARU frowns on advertising PG-13 films to children under 12 because the MPAA rating indicates the presence of content that "may be unsuitable." However, as the B&C notes, 'Pirates of the Caribbean' toys, games, food and a whole bevy of other licensed products are heavily marketed to children despite the film's rating.

It will be interesting to see how close and timely CARU's scrutiny will be when Disney launches the third installment of the franchise next year, and what changes Disney will make regarding ad buys on younger-skewing channels. As reported for Q3 2006, the Disney Consumer Products division’s income rose 70% over the previous year to $105 million, much of which was due to sales of Pirates-themed merchandise.

Wal-Mart Accelerating Digital Movie Download Efforts

According to recent reports on CNNMoney.com, Wal-Mart is ramping up its movie download service efforts amidst the recent launch of Amazon and Apple’s services.

The single largest seller of DVDs in the world, Wal-Mart accounts for upwards of 40 percent of all DVD sales, mainly from highly popular new releases from the studios. The article speculates that the move is part of Wal-Mart’s effort to maintain this dominance.

Wal-Mart is still working out the pricing and delivery options for the service, which may include free or discounted downloads with purchase. Downloads would be available at walmart.com, and the company is also considering in-store burning kiosks as well.

Wal-Mart’s moves come just weeks after it was widely reported that they threatened not to sell titles of companies making download deals with Apple. Earlier this year, Wal-Mart refused to carry Disney’s 'High School Musical' after it appeared on iTunes prior to release in stores.

Apple Announces Feature-length Downloads for iTunes

In a special presentation yesterday, Apple CEO Steve Jobs unveiled the new iTunes movie store, which will enable users to buy and download feature-length films.

The initial slate of 100 movies includes an offering of titles from Disney-affiliated labels Pixar, Miramax, Touchstone, as well as Disney-branded films. A forthcoming deal with Lionsgate is expected, but was not announced during the presentation. The films will be priced at $14.99 for new releases and $9.99 for catalog titles, but customers who pre-order new releases can order them for $12.99. The video files will use the H.264 codec and will be at 640 x 480 resolution, which is “near DVD” quality and suitable for viewing on standard TV sets.

Apple also gave a sneak preview of a new product tentatively called “iTV,” which is a set-top box that will enable users to stream downloaded movies, music, and photos from a computer to a consumer’s television set. The wireless box will also have HDMI output, which should be able to address the studio’s piracy concerns. The iTV release date is slated for sometime in 1Q 2007.

When compared to the lackluster release of Amazon’s Unbox service last week, the Apple offering looks like an improvement if they can secure a wider base of content partners. However, the pricing structure for DRM-hobbled, low-quality video without packaging or special features seems too high. For example, for $20 dollars, you can pick up Miramax’s ‘Kinky Boots’ DVD on Amazon, and for that price you will get DVD quality video, Dolby 5.1 sound, two featurettes, deleted scenes, commentaries, and foreign language tracks. You can play it on any DVD player in or out of the home, and if you wanted to, an individual with minimal technical knowledge can rip a DRM-free version to play on their iPod (albeit illegally). Therein lies the real problem: creating a downloadable product that offers consumers the same level of choice for the same price as a physical product, or reducing the price to reflect the true value to the consumer.

Perhaps the recent conjecture is right - maybe the studios aren't interested in seeing downloads cannibalize DVD sales just yet.

Guba Movie Download Pricing Experiment Boosts Sales 1000%

Guba, the online video sharing site, today announced that their month long price reduction experiment yielded a 1000% increase in sales and a doubling of their site traffic.

For the last 30 days, Guba has offered new release movies priced at $9.99, catalog titles at $4.99 and TV episodes for 49 cents, though the offerings cannot be burned to a DVD. These prices are at a substantial discount to the current pricing structure at Amazon's Unbox service ($14.99 and up for new releases, $9.99 and up for catalog titles) and the forthcoming Apple download store, which is likely to bow new release movie downloads at around $15 dollars.

Guba currently has deals with Sony Pictures and Warner Brothers, offering 500 and 200 titles from each library, respectively. In all likelihood, Guba is serving as a low-risk pricing test bed due to its lower profile and smaller user base, which is probably enough to keep Wal-Mart from getting nervous. As of late, the mega-retailer has been annoyed at the prospect of downloads being priced below their DVD wholesale pricing of $17 for new releases, and has used their muscle to influence online pricing moves.

So what is the optimal download price for a burnable, DRM-managed feature-length movie? Take the poll below to give us your opinion.

HD DVD Group Announces $150 Million Marketing Push

This week at the annual VSDA conference, The North American HD DVD Promotional Group announced an ambitious $150 million marketing and advertising blitz to build consumer awareness, Video Business reports.

The campaign will push the high definition format in print, TV, online, cable and outdoor channels, with a six month minimum commitment. The campaign’s theme is “The Look and Sound of Perfect,” and a corresponding website featuring hi-def trailers launched at lookandsoundofperfect.com as well.

Another component planned includes a ten city tour featuring an 18-wheeler truck covered with HD DVD promotional signage, hi-resolution screens and filled with sample products. The campaign is being coordinated by Goodby, Silverstein & Partners, the ad agency famous for the “Got Milk?” campaign.

Initial adoption of HD DVD has been slow so far, with only 20,000 players sold to date. However, sales of software have done extremely well given those numbers, and the article notes that hundreds of titles are being planned for the next several quarters. Additionally, players from other manufacturers will be available in stores for the holiday season.

In addition to the ad blitz, the promotional group has also established a task force to address in-store merchandising concerns regarding HD DVD products, including incorrectly calibrated displays, poor in-store display locations, under-educated sales staff, and misracked product.

'Star Wars' named the Overall Best License of the Year by Trade Group

According to a Lucasfilm press release, the International Licensing Industry Merchandisers' Association (LIMA) named the Star Wars franchise the Overall Best License of the Year.

LIMA presents the "best in show" award at their Licensing International Show annually to a property "that has had a significant and profound impact on the licensing community at retail and in the general marketplace during the previous calendar year." Star Wars also won top honors as the number one entertainment license of the year in the Boys Toy, Movie-based Video Game, and Licensed Publishing categories. According to Lucasfilm, Star Wars-themed merchandise generated over $3 billion in revenue from all channels in 2005.

The previous Overall Best License went to 'Spiderman 2.' The LIMA awards have been presented annually since 1984.

[link]

DVD Burn-on-demand Kiosks a Low Priority For Retailers

Despite numerous speculative articles in the mainstream press, installing DVD burn-on-demand kiosks is currently a low priority for retailers, according to Tech News World.

Unlike rental kiosk companies like Red Box and DVDXpress, which have placed machines in fast food restaurants and drugstores, penetration for burn-on-demand is nonexistent despite the ever-increasing competition for DVD shelf space at retail.

The rental kiosk model has no outstanding rights issues and has a successful three-year track record in the United States. In contrast, burn-on-demand kiosks have numerous unresolved rights management and technological issues, and have no proven business model. However, recent studio concessions on DRM issues may signal that retailers will soon be able to offer a breadth of selection comparable to what online retailers currently provide.

Technorati tags:DVD marketing

[link]

Wellspring Theatrical Distribution Division to Cease Operations

Genius Products is shutting down the theatrical distribution arm at Wellspring, the indie DVD label the company acquired last year. According to Variety, the decision to shutter the label was largely affected by a theatrical distribution partnership announced with the Weinstein Company late last year, a move which effectively eliminated the need for a costly theatrical distribution arm:

A Genius spokesman said that Wellspring will remain a label under the Genius banner but would not elaborate on how many employees the label would have.

Genius said that the move to fold Wellspring's efforts into its other divisions would save about $1 million in annual overhead expenses.

Movie Marketing Newsflash for February 21st, 2006

Is ‘Serenity’ Out of the Red Yet?

‘Eight Below’ Beats ‘Date Movie’ to Take the Weekend Box Office Crown

Fox to release signed and Numbered ‘Planet of the Apes’ DVD Collections

Warner Independent Pictures Premieres ‘A Scanner Darkly’ Trailer on Mobile Phones

Shameless Marketing Ploy: Jennifer Anniston Goes Nude in Throwaway Rom-Com

The Hi-def DVD Standard War Confuses Customers

Starbucks Moves Their Content Office to Hollywood

NBC pilot “Conviction” Appears on iTunes Two Weeks Early

Dallas Morning News to Distribute iMedia’s Movie Preview DVD Magazine

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"

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.

Has the Maturing of Generation-X prompted the rise of 'New Dude Cinema'?

In his latest column on Black Table, Tim Grierson has coined a new phrase to describe the emerging crop of frat-buddy comedies of the past year - "New Dude Cinema":

The New Dude company of actors, dubbed the "frat pack," includes Will Ferrell, Jack Black, Ben Stiller, and the stars of Wedding Crashers. Unlike the dude comedies of a generation ago, these new films' heroes aren't fighting the system -- they're fighting maturity. You see this phenomenon everywhere. Whether it's Esquire or Adult Swim or Xbox, the modern man is battling to stay in a perpetual adolescence where you never have to grow up, but you get to have tons of cool gadgets and expensive material possessions anyway. Remember how you always told yourself that those fraternity blockheads would be in big trouble once they entered the real world? Well, guess what happened? There's a whole industry devoted to them now.

As they embark upon middle age, the oldest Xers are coming into their own for the first time, generational experts say. They're getting married, starting families and embracing traditional values that set them apart from the "Me Generation' of baby boomers.

"At 40, you are beginning to see a blossoming of a generation,' says Ann Fishman, president of Generational-Targeted Marketing Corp. in New Orleans. "Many of them are just beginning to find their place.'

There are roughly 50 million Xers in the United States all born between 1965 and 1976.

McDonald's and DreamWorks Animation enter Marketing Pact

According to an announcement today, McDonald's is teaming up with DreamWorks Animation to promote upcoming films starting in 2007:

DreamWorks Animation SKG and McDonald's Corporation today announced a two-year worldwide marketing and promotional relationship. The first film associated with the tie-in will be Shrek 3, slated for release in 2007, and will include such signature promotions as McDonald's Happy Meals�.

The partnership, which gives McDonald's worldwide promotional rights to new DreamWorks animated properties, was announced today by Jeffrey Katzenberg, DreamWorks Animation Chief Executive Officer, and Mike Roberts, McDonald's President and Chief Operating Officer.

The agreement comes as McDonald's exclusive, ten-year deal comes to an end. On the other hand, the DreamWorks deal is non-exclusive, and the short duration gives both companies the opportunity to assess the success or failure of the partnership fairly quickly.

Given the uncertainty of the new release business for the foreseeable future, this is a smart marketing move for both parties. While Disney and McDonald's had some wild successes (in particular, with the Pixar releases) the ten-year exclusive deal is a relic of a slower, more stable period in the theatrical business.



[Via Yahoo! Finance]

Netflix to Launch Advertising Program

According to a press release from online DVD renter Netflix, the company will begin selling advertising to those interested in reaching the company's three million subscribers:

Netflix said it will offer advertisers a range of options, from placements in emails to its members to presence on its trademark red mailers and positioning on its Web site.

Anchor Bay Joins Growing List of UMD Distributors

According to Home Media Retailing, Anchor Bay Entertainment will become the latest indie retailer to release titles for the UMD format:

Anchor Bay, known chiefly for its large library of horror films, will begin its rollout Aug. 23 with six titles on the Universal Media Disc (UMD) format: Halloween, Evil Dead, Time Bandits, Blood the Last Vampire, Ghost in the Shell and Ninja Scroll. Each title will be priced at $19.98.

Ray Gagnon, SVP of sales for Anchor Bay, says all six films appeal primarily to PSP�s target young-male demographic. He said Anchor Bay was prompted to take the plunge because there�s so much support among big retailers.

Based on their release slate, Anchor Bay's approach looks like it will initially focus on proven back catalog titles, as opposed to new releases.

Every major distributor besides Warner is now on board, with over 100 titles available by the holiday shopping season. PSPs will likely be a hot commodity this christmas, which may be what prompts the smaller retailers currently on the sidelines into the game (especially in the Anime arena).

[Via Home Media Retailing]

Poll: Audiences Prefer Watching Movies at Home

According to an AP-AOL Poll, 73 percent of adults said that they prefer watching movies at home on DVD and VOD over going to the theater. One portion of the poll doesn't bode well for this summer's theatrical prospects:

Just 22 percent said they would rather see films in a theater, according to the poll conducted by Ipsos for The Associated Press and AOL News. One-fourth said they had not been to a movie theater in the past year.

However, rather than take the same "sky is falling" approach to this year's lackluster box office as we've seen in other media outlets, the AP explores the notion that perhaps the poor attendence so far this year is merely product-driven:

"I think this slump is product-driven," said Paul Dergarabedian, president of Exhibitor Relations. "That to me is a much less chilling problem than some sort of cultural shift in people's moviegoing habits. A cultural shift takes longer than 16 weekends of down box office."

Box office revenues have been down every weekend since late February. "Batman Begins," which opened Wednesday, could snap the streak this weekend. But if business is off again, Hollywood would match a 1985 downturn of 17 weekends, the longest recorded slump since analysts began keeping detailed box-office figures.

The 1985 slide came with similar dire predictions that movies on videocassette would devastate the theater business, Dergarabedian said. Box-office grosses were stagnant into the late 1980s, then rebounded strongly.

In the 1950s, some analysts foresaw the demise of movie theaters as people stayed home to watch television. While business plummeted from 4 billion or more admissions a year in Hollywood's glory days, movies remained a prime entertainment choice.

One interesting thing from the poll they mentioned was that DVD users, downloaders and gamers are more frequent moviegoers than the rest of the population. This young, male and tech-savvy audience is the veritable sweet spot of movie marketing, and coming up with initiatives that feed this symbiosis will become even more important than it already is now.

[AP Wire via Kansas.com]

Sundance Group Makes Foray into Exhibition Business

According to the Los Angeles Business Journal, The Sundance Group, parent company of the Sundance Film Festival and the Sundance Channel, has announced their intentions of creating a chain of specialty cinemas.

The circuit, which has been in the works for numerous years, will be headed by Paul Richardson and Bert Manzari, the pair who started Landmark back in the '70s. Programming looks like it will be similar to the Landmark/Laemmle paradigm:

The theaters will show in independent, documentary, and foreign language film, as well as quality studio films and original programming, which will include shorts, filmmaker interviews and forums.

This move will greatly enhance the Sundance Group's vertical marketing abilities, and will help to secure valuable publicity for their home entertainment releases. It now looks like 2929 Entertainment isn't the only integrated company in town...


[Via the Los Angeles Business Journal]

Talkin' Heads in Quirky Specs: The Launch of "Variety Vision"

If you've been to Varitey lately, you probably noticed the streamlined layout. But did you happen to click on the new "Variety Vision" clips? This might eventually turn out to be an interesting concept, but geez guys, can you spend a few bucks and spring for a set? We know the burnt umber Variety newsroom lends some authenticity, but come on - this is some public access quality work here. (or maybe not - see this NYC-based public access film news show "Indieville"). Pull something posh together guys - just make sure it doesn't clash with Snyder's swanky eyewear...

In all seriousness, if they do up the production value and plop in some more bits of EPK eye candy, people might actually watch 'em.

While they're at it, they should partner up with the good folks at Akimbo so I can watch these clips on my TV as soon as the service launches.

The Screening Q&A covering the Huckabee's flick is great -- but if you watch Saturday Morning Shootout, you already know how good Peter Bart can be. Maybe he can let his team use the coffee house set...

If you want to see Shootout, you can watch the entire episode from last week right here.

Variety.com - Entertainment news, movie reviews, industry events - Variety Magazine Online

Rumored Paramount Indie Division going Head-on With Fox Searchlight?

I would hate to be Ruth Vitale or David Dinerstein these days with all of the talk about an emerging, bulked-up "Indie Paramount Division." At any rate, The Los Angeles Times has an informative article that delves headlong into conjectureville, and along the way, drops us with some interesting marketing points. Specifically, it lets us know why the forlorn Paramount Classics label has floundered:

Paramount Classics has been stymied by an outmoded, low-risk, art-house business model. Set up by Dolgen in 1998 after he came to Paramount from Sony, the company was inspired by Sony Classics, which has consistently turned a profit by buying classy but low-risk foreign films and documentaries. However, Dolgen emphasized the no-risk part of the equation so much that Paramount Classics never had enough money to bid on top films or market them successfully. While other companies made their own movies, Paramount was limited until recently to acquisitions, preventing it from scooping up a sought-after script or building a relationship with a gifted young filmmaker.

We also get an explaination why Fox Searchlight is Miramax's heir apparent from Tom Freston, co-president of Viacom:

"Once you get past the tent-pole movies like "Spider-Man' or 'Shrek,' the indie film companies are the most financially viable part of the business today," he explained. "A specialty company is a place where you can make a profit on pictures at a relatively low risk, market movies more cheaply and build talent relationships that provide access to great material and bring new creative energy to the parent studio."

Later in the article, Freston goes on to draw parallels between the current crop of indie filmmakers and the Garage Bands of the past. But how "garage" are the major studios willing to get?

I'm not so sure. But I do know this: we're probably going to see the film business version of Sub-Pop in the very near future. The only question is wether or not it will be a studio's satellite...

Related Link:
A new indie film division could pump up Paramount

Survey: Wal-mart Rings 37% of All DVD Sales in the U.S.

Variety reports that the retail giant is a foundation for recent robust DVD sales figures. According to a recent cosumer survey,

Wal-Mart, the "everyday-low-prices" retail juggernaut, today rings up a hefty 37% of all new DVD purchases in the U.S., according to a new survey of video consumers, and easily writes the biggest check to Hollywood every year.

The article notes that Hollywood should be cautious, because each disc sold is a "loss leader":

For now, Wal-Mart and its peers seem OK losing a few bucks on every disc sold. But that may not be the case forever, and invariably Wal-Mart will insist on a wholesale price cut that could eat into those juicy DVD margins at precisely the time overall disc sales start to slow.

Yahoo! News - Wal-Mart crowned DVD king

A closer look at the MGM/Sony/Time Warner Triangle

According to Variety, the negotiations between MGM and Sony have hit a roadblock. The much simpler and tax-efficient Time Warner offer could win out.

With all of the buzz going on about this lately, I thought it would be interesting to backtrack and provide a "Q&A" of sorts. After all, understanding the financial value of a film property/library and the implications when a company purchases one can help put individual title marketing into perspective.

By the way -- if you have a Q&A you'd like to add (serious and funny accepted), put it in the comments, and I'll update the list.

Why is MGM a target for acquisition?
In the golden age of DVD, content is king, and MGM has a 4,000 plus title library. Current valuations (depending on if you're buying or selling it) range from $3.8 to 5.5 billion dollars. Here's a link that's a must read as a backgrounder on MGM's value to a potential buyer.

How do you value a film library?
Film Library Valuation typically uses an "income approach" -- that is, based on historical revenue from each title, you make a determination of expected future revenue from all streams (Video, DVD, TV sales and VOD). For titles without any historical data, a weighted average is used to compare similar films. Next, a "decay rate" is used to determine the annual decline in value of the asset.

After this, you add up all future revenues, and deduct contribution margins (Contribution margin is sales revenue less variable costs) and taxes. You discount this future cash flow to present value, and bam -- the magic number.

Many details are missing for simplicity's sake, and I'm not an accountant, so lemme know if I'm way off base here.

What's The Basis for Time Warner's dispute over MGM's valuation of around $5 billion?
My guess is that TW has a problem with two things: MGM's decay rates (they are probably rosy about the long-term DVD growth prospects) and the income stream projections for lower-quality titles (MGM has 200-300 "major" titles that drive up the library's average per-title performance).

What will happen to the MGM brand?
Despite the company's reduced output of new films in recent years, MGM has one of the highest brand-recognition factors of any major studio. Whoever purchases the company, expect to see an effort to leverage the brand (TV channel? Consumer Products? Print?) -- especially if purchased by a diversified media company like Time Warner.

Since Time Warner (or Sony, if they come up on top) already has a well-oiled distribution arm, what will happen to the staff at MGM?
The reality, unfortunately, is that we can expect massive lay-offs. There have been reports (unsubstantiated rumors, actually), that Time Warner may divest the distribution and marketing arm of MGM. Potential buyers could include someone like Steve Jobs (Pixar) or Harvey Weinstein, both of whom are at odds with Disney. Both men would very like have the access to capital necessary for a deal of that scope.

Related Links:
MGM
Time Warner
Buying Universal puts GE in the movie business
Yahoo! News - Inside Move: 'Hobbit' could end up nestling with 'Rings'

MPAA, NATO Want to Quash GKC's New "R-Card"

Looks like the MPAA and The National Association of Theater Owners fear that GKC's R-card could spur congressional action over movie ratings. Given the high sensitivity in the "post-nipple" era, I can understand the industry's fear over losing their right to self-regulation, but I still admire the forward thinking behind the card. Is it just a case of bad timing on GKC's part?

Here's what Jack Valenti had to say:

"All R-rated films are not alike. It is the parents' responsibility to make specific judgments about R films -- and wrong to give a blanket endorsement to all," said Jack Valenti, president and CEO of the Motion Picture Association of America, which issues movie ratings.

With only 268 screens, GKC doesn't have the clout to fight it out with the MPAA alone. However, the company does have strong family ties with the Kerasotes chain, and combined they have nearly 900 screens in the Midwest region. Look for another "forward thinking" chain to copy the idea -- I bet Mark Cuban has the gumption to try something like this with Landmark. If one of the big boys (Regal, AMC, Loews) gives it a run, the MPAA's beef is over.

If 700 parents have already signed up for the card in the pilot phase in a region supposedly saturated with "family values," GKC looks to have a hit of their own on their hands. All this free publicity sure can't hurt -- especially with the teens, who are now probably clamoring for their own cards...

CNN.com - Younger teens getting R-rated movie passes - Jun 7, 2004

Is it 1999 in Hollywood?

Around five years ago, I remember a buddy of mine telling me about this thing called "Napster."

"You can download any song you want for free," he told me. I gave it shot on my dial-up connection, and while it was painfully slow, the novelty of free, on-demand music was addictive.

Now I don't download much of anything these days, but I have to admit -- when I moved up to broadband in early 2000, it was an MP3 feeding frenzy. A typical song download took a minute instead of an hour. Practically any obscure song that came to mind was at hand in just a few moments. I think at Napster's high point, there were more people swapping songs at any one time than watching all three of the networks combined.

And at that point, no marketing, however clever or skillful, was going to get me (or millions of others, for that matter) to shell out money for a CD.

So is it 1999 for Hollywood? 2 out of 5 users have fast connections now. According to an article in today's Financial Times:

Ipsos-Insight, a worldwide marketing research firm, reported Tuesday one out of five Internet users who swap files have downloaded a full-length motion picture. Almost 10 percent did so within 30 days of the research product conducted by Matt Kleinschmitt, senior analyst.

Some people may argue that Hollywood has more revenue streams than the music biz or quote box office figures as proof of the industry's financial health.

But in reality, the theatrical release is more of a marketing effort for ancillary revenues, and is rarely a profit center in and of itself. And when you combine actual marketing expenditures with production budgets, most films are still bleeding red when they appear at the local video store.

Accounting tricks aside, if people stop buying DVDs, it'll be quite the blow to the movie industry's kneecaps.

We'll take a look later this week at how the Film Industry is dealing with the issue.

Related Link:
Investor's Business Daily: Breaking News

Online Voting Opens for the 33rd Annual Key Art Awards

Online voting is now available for the 33rd annual Key Art Awards. According to their site, the Key Art Awards are:

...the only international competition honoring the professionals who create movie advertising, including theatrical trailers, posters, TV commercials, Internet ads and more. It's the work of these individuals that often determines a film's box office success and chances for Oscar consideration. The Key Art Awards ceremony has become a cornerstone event in the movie marketing community, annually attracting a "who's who"of motion picture executives and creative professionals from every corner of the industry.

The term "key art" is industry jargon for the main pieces of collateral supporting a movie's release -- posters, stills, etc.

I've heard of the awards before, but I never knew about the online voting. This looks like the second year that they're doing it.

Here's a summary of who I voted for:

Best Poster, Comedy: 'Lost in Translation'
Best Poster, Drama: 'American Splendor'
Best Poster, Action/Adventure: 'Pirates of the Caribbean'

Best Trailer, Comedy: 'Lost in Translation'
Best Trailer, Drama: 'Mystic River'
Best Trailer, Action/Adventure: 'Kill Bill Volume I'

I thought the 'Lost in Translation' campaign was brilliant, but perhaps it just struck a chord with my demo...

Best Website: Identity

Related Link:
The Hollywood Reporter.com: Key Art

Pixar amassing cash for an acquisition?

With Pixar freeing itself from the Disney corral, there's been a lot of speculation about who their next distribution and marketing partner will be.

But the real question may not be "who" but rather "how long." An analysis of Pixar noted that the company has a goal of amassing over one billion in cash by 2006:

What is 54%-owner Steve Jobs really after, besides the $52 per year Pixar pays him? Of course, having all five of your films among the 11 highest-grossing animated films of all time isn't shabby. But in the last conference call, Jobs -- who, incidentally, has never sold a share of Pixar -- indicated that the company hoped to have up to $1 billion cash stockpiled by 2006. Why? To ride out a string of flops? At $100 million to $150 million per film, that's a lot of flops. Dividends? Maybe, but why not start a little one now?

I'm guessing that at a minimum, Jobs plans to put out more than the current one movie per year, but given that his conference call comments hint at a preference for quality over quantity, it's questionable how far down that line he and Pixar's creative talent are willing to go. And it's not all up to him, either.

Pixar's market, at least as it stands now, might not be willing to absorb more than one or two films per year. In other words, he probably has something up his sleeve. Maybe it's an acquisition; maybe it's a significant expansion of Pixar's offering; maybe it's just a few extra films and a buyback or dividend. Whatever is coming, I'd say this lottery ticket has some decent odds.

With Apple's successful foray into music, it would make sense that the next move would be an acquisition.

Who Pixar partners with will speak a lot about that.

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