At Issue... Page 3 of 3

Short Takes

By Matthew Peterson
Keeping an eye on the numbers
It behooves all of us to keep our eyes on the industry’s drivers even as we focus on our individual businesses’ daily issues. A careful study of the 2001 Economic Review from the Motion Picture Association of America (MPAA), released in March, yields some interesting insights about the domestic scene.

What I look to as leading indicators from the film industry for content creation service providers were not particularly rosy in this most recent report. The annual theatrical release count — 482 films in 2001 according to the MPAA — remains at about the same level as it has been since 1996. A decline in average negative cost reported by MPAA members — an indicator of content creation expenditures — reflects the continued downward pressure on costs that have yielded a 10.7 percent decrease in this metric since budget-busting record of 1997. (The actual decline may be even greater if the impact of recent accounting changes were to be factored into the trend.) It is not surprising that employment is reported as down for “Production and Services” after peaking in 1999.
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By contrast, expenditures by MPAA members on marketing continued to grow to the point where they now equal 65 percent of the negative cost. Better yet, expenditures for advertising-related creative services don’t appear to be under the squeeze discussed above. It is also notable that online promotion now captures over 1 percent of the media budgets for films released by MPAA members.

Relevant top-line drivers remain healthy, too. The MPAA reported that box office revenue grew 9.8 percent last year. This record growth appears to have been driven in equal measure by rising audiences and ticket prices. A potentially sluggish year appears to have been rescued by a Q4 surge: theatergoers clearly did their patriotic duty with respect to post-9-11 consumption.

Combined shipments of pre-recorded DVDs and videocassettes were up dramatically, despite a decline in the later format that has been going on since 1998. Shipments of pre-recorded DVDs doubled (again) over the previous year and available titles increased 50 percent.

As long as the top-line numbers are strong, the squeeze on content creation costs will be a matter of finding the right balance within a relatively healthy industry. This is very different than the slide down from the dot-com boom, during which many segments never transcended their $0 billion top lines.

One final observation: while the Economic Review devotes about a dozen pages to television, cable, satellite and Internet statistics, there appears to be no mention of digital television.

Matthew Peterson, Scenic Wonders, Phone: 608/273-4803,

April 24 — Washington, D.C.
DTV Summit • Washinton D.C. Convention Center. Visit

May 13-16 — San Jose, Calif.
ContentWorld 2002 • San Jose Convention Center. Visit

June 1-3 — Los Angeles
ShowBiz Expo 2002 • Los Angeles Convention Center. Call 323-653-8053 or visit

June 9-14 — Banff, Alberta
Banff Television Festival • Visit

June 8-14 — Las Vegas
InfoComm 2002 • Visit

June 14-16 — San Rafael, Calif.
Visual Effects Society 2002: A Festival of Visual Effects • Rafael Film Center.

June 24-26 — Amsterdam
M3/REPLITECH • RAI Convention Center

June 26-29 — Los Angeles
Promax/BDA 2002 • Los Angeles Convention Center. Visit

July 21-25 — San Antonio, Texas
Siggraph 2002 • Henry B. Gonzalez Convention Center. Visit

September 12-17 — Amsterdam
International Broadcasting Convention 2002 • RAI Convention Center. Visit

October 5-8 — Los Angeles
113th Audio Engineering Society Convention • Los Angeles Convention Center. Visit

October 9-12 — Orlando, Fla. ShowEast 2002 • Orlando World Center Marriott. Visit

October 23-26 — Pasadena, Calif.
144th SMPTE Technical Conference and Exhibition • Pasadena Convention Center. Visit

November 6-8 — Bangkok

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