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The wonder of Hollywood

Theatrical runs are marquee attraction, but for how long?

Todd Leopold
CNN

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Along with theatrical runs, DVD sales, television deals and merchandising tie-ins are big business for movies.

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(CNN) -- "You used to be big," screenwriter Joe Gillis tells reclusive silent film star Norma Desmond in the 1950 film "Sunset Boulevard."

"I AM big," Desmond retorts. "It's the PICTURES that got small."

Desmond, played by Gloria Swanson in the Billy Wilder classic, didn't know how right she was.

When "Sunset Boulevard" came out, the major Hollywood studios -- the behemoths that built an industry and an art form out of thin air -- were kings of the entertainment realm. Stars were signed to long-term contracts and obeyed studio dictates. The founders -- men like Columbia's Harry Cohn, Warner Bros.' Jack Warner and MGM's Louis B. Mayer -- were still in charge.

There was little competition. Television was in its infancy. Network radio was fading. The music business, years before rock 'n' roll revived it, was stagnant. The generic phrase "going to the movies" was appropriate; a night out at a theater often included a newsreel, a cartoon, and a double feature.

"The movie business was about movies," says Edward Jay Epstein, author of a fascinating analysis of how Hollywood works, "The Big Picture" (Random House) and Slate.com's "Hollywood Economist" columnist.

"In the old days, box office was everything. Until 1950, every penny a film made was from the box office."

Contrast that with today, Epstein observes.

Now the major Hollywood studios of the 20th century's first half -- Columbia, Warner Bros., Paramount, 20th Century Fox, Universal and Disney -- are owned by a "sexopoly" (Epstein's term) of six giant conglomerates: respectively, Sony, Time Warner, Viacom, News Corp., NBC-Universal and Disney. (MGM, another major, went through several buyouts and mergers in its lifetime and ceased to exist in 2004.)

Those six also own America's TV broadcast networks, the majority of its cable outlets, large shares in cable systems, sizable percentages of Internet partnerships and dominate its radio advertising. (Time Warner's holdings include, for example, the WB television network, the Time Warner cable system, DC Comics, America Online -- and CNN.)

And now the pictures literally ARE small. Instead of a film playing at a single-feature, 1,000-seat movie house, they play at 16-screen multiplexes. Instead of the money being in those theatrical runs, it's in the home -- home video, broadcast television, pay cable and syndication.

Theatrical movies -- what are called "current production" in studio parlance -- are simply a sliver of the overall entertainment business, and a money-losing one at that, Epstein says. Today, the profits are elsewhere, in the various ways a conglomerate can spin off a two-hour feature, from video sales to action-figure merchandising.

But what about the stars? The glamour? The attention paid to the weekly parade of movie openings, complete with celebrity interviews, breathless gossip and predictions of the weekend box office? What about the MOVIES?

Well, they're an illusion in more ways than one.

An illusion-based business

Movies are based on an illusion, of course -- the idea that individual images, played in a darkened theater on a large screen at 24 frames per second, can create a bigger-than-life experience.

The inherent excitement and immensity surrounding the movie experience extends to almost everything movies touch. Actors aren't just performers; they're "movie stars." Directors aren't just filmmakers; they're "auteurs" (French for "authors"). Even the old studio heads -- who were some of the best-paid executives of their time -- were called "movie moguls" (a term, notes Epstein, they adopted themselves).

And, of course, movie premieres are experiences worthy of royalty, with red carpets, expensive jewelry, stunning clothing, fleets of livery, dramatic lighting and hundreds of journalists and photographers in tow.

Still, it's always been a business, one that's been eminently adaptable to the economic and artistic needs of the time.

In the early days, movies were ways to fill empty theaters; later, the studios established their own theater chains, which were broken up in an antitrust decision in the late '40s. When television cut into movie attendance, the studios -- after initial resistance -- got into TV production, which is now more profitable than theatrical films.

The studios initially resisted home video (indeed, Universal, with other studios' support, sued Sony over the Betamax video recorder); now it's a huge profit center (and Sony is now a studio owner). They quickly caught on to audience trends: the summer blockbuster season dates from the '70s, the idea of targeting major films to teenagers (the most reliable moviegoing market) followed soon after, and when independent films started attracting audiences and awards, studios bought or established their own "independent" arms.

But so much is still wrapped up -- psychologically, if not necessarily economically -- in the idea of that big-budget, all-star Hollywood movie and its big-screen allure. Which is why studios still put so much energy into making a splash, from making sure their new releases get prominent play in magazines and on television (especially if they own the outlet) and shrewdly using the horse-race-like weekly top 10 list to keep interest high.

Box office slump?

And that's why the trend of declining theatrical attendance has many in the entertainment business concerned.

"Nothing says there has to be [theatrical] movies," says Epstein. "All the theater chains started as vaudeville, and they were all replaced by movie theaters. Opera was replaced by recorded music. ... As home theater [grows], you can lose movie theaters."

Indeed, North American theatrical grosses are down 9 percent this year from 2004, and ticket sales are down 11 percent from last year. Articles about the weekly weekend box office figures have focused on how they've paled compared to 2004.

However, says Brandon Gray, president and publisher of the box office-tracking Web site boxofficemojo.com, nobody should rush to judgment.

start quoteThe product drives the industry and the product has been weak this year. It's been boring.end quote
-- Brandon Gray

"Tales of a slump are premature," he says. "It's a down year, but Hollywood is coming off three boom years. 2002 was the most-attended year in nearly 40 years, and that's in the era of DVD and home video." 2002 attendance also spiked in the wake of the September 11 attacks, he adds, "so in many ways [that year] was unique."

Moreover, Gray says, last year featured "The Passion of the Christ" -- "a once-in-a-lifetime touchstone," he says -- that attracted people who seldom attend movies. And even with its down indicators, 2005 is still ahead of 2001's pace in ticket sales and "will be on a par with the late '90s."

What stands out about 2005, he says, is that "the product drives the industry and the product has been weak this year. It's been boring." There haven't been any water-cooler sleepers, films like "The Blair Witch Project," "The Sixth Sense" or "My Big Fat Greek Wedding."

However, that's cold comfort to exhibitors, who stand to lose the most by declining attendance. Thirteen theater owners filed for bankruptcy between 1999 and 2004, according to an article in Shopping Centers Today.

That article was actually upbeat about prospects for exhibitors. Epstein isn't. He observes that the "window" -- the time separating a movie's theatrical release from its video release -- is getting smaller, and "the video people [in the media companies] are getting stronger."

As that happens -- and home theater systems improve -- more people will wait until a movie comes out on video, he says.

Hollywood executives are thinking along the same lines. "Ten years from now, we'll release a film and you'll be able to consume it however you want," Sony Pictures Digital Vice Chairman Yair Landau told Newsweek.

Where that leaves the theatrical film is anyone's guess.

"It's too early to say if this is the beginning of the end," Gray says.

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