JOHN FITHIAN: STATE OF THE INDUSTRY

http://www.filmjournal.com/filmjournal/features/article_display.jsp?vnu_content_id=1003722830

 

by Andreas Fuchs

 

March 10, 2008

 

“We are confident in the long-term strength of the cinema business,” declares John Fithian, president of the National Association of Theatre Owners. NATO’s leader has every reason to feel vindicated after all the doom-and-gloom predictions of recent years. But instead of gloating, he politely reiterates the facts. “Theatrical exhibition is a cyclical business in the short term. But in the long term, we continue to grow as an industry. It’s about the movies, and it’s about the cinemas. With good and diverse movies, and with exciting and comfortable cinemas, exhibition continues to thrive.”

 

Along with many of our readers, no doubt, Fithian is equally “puzzled by prognosticators that challenge the viability of this industry. We heard from them in 2005, and both in 2006 and 2007 we had growth years at the box office. Again, in early 2008, Wall Street analysts said, ‘Yeah, but…this year will get off to a slow start and can’t possibly match the successes of the prior year.’ And here we are substantially up again.”

 

Fithian admits to being “stunned” by the 37% box-office growth on this past Super Bowl Weekend alone. “The most-watched sporting event in television history grew six percent as well. Then there was this new ‘thing’ called digital-cinema 3D that brought Hannah Montana to her screaming fans in a way like they have never seen her before.” Over the past couple of months in general, he was “blown away by the strength and the diversity of product, not just the movies” but including alternative events like the Metropolitan Opera.

 

Prestige movies provide equal cause for celebration this year. Not only were all five films nominated for the Academy Award as Best Picture still playing in theatres at press time, but they also experienced “decent increases post-nomination,” Fithian observed. “The Oscars are driving cinema ticket sales. That’s fantastic! Typically, we’d be looking at DVD releases right now of several of the nominated titles.”

 

A good point to the contrary is Juno. Not being a “big advocate for huge opening-weekend screen counts,” Fithian believes “we’ve gone too far in that direction,” and cites many exhibitors’ favorite film of the year. “The fact that [Juno] can start out slow and just grow and grow and grow and continues to grow is quite encouraging. We don’t have too many of those any more.”

 

Juno’s performance offers further proof to Fithian that you can’t predict how a movie is going to perform. “At the beginning of 2007,” he reviews, “people were saying there were too many sequels, too many franchises, too many movies in general, and also not enough comedies. Now the same people find there are not enough known movies in the line-up and too many comedies, as well as not enough movies during some peak periods.”

 

Speaking to FJI a few days before the end of the writers’ strike, Fithian observed that “in the short term, ironically, the strike is good for the cinema business.” For instance, discussions were under way to shift advertising dollars from television into the theatrical pre-show, and the lack of new and original TV programming may have helped the movie box office. “Work stoppage doesn’t really affect movie production for a while,” he contended. Looking ahead at press time, Fithian hoped that the actors would follow the lead set by the directors and writers.

 

Not likely to be resolved as soon, and with immediate consequences for moviegoing, is the overall economic picture. Says Fithian, “Economic downturns and recessions generally are good for the cinema business. It’s not that we would wish a recession on anyone, but with 60-plus percent of Americans believing that we are currently in a recession—even though our President won’t admit it—I think everyone is aware of the challenging economic times. What that means is people stay closer to home; they don’t spend as much money on vacations and other more expensive forms of entertainment. Instead, people downscale and look for more affordable ways to have fun. The cinema is one of the best alternatives out of the home to have fun, and we benefit from that.”

 

Fithian has been asked by the popular media, for example, if rising gas prices hurt moviegoing. “No, not really. I tell them that they decrease long trips and driving to Florida for the holidays, but it hasn’t impacted our business that much.”

 

Does he think, however, that the current record number of screens in North America will have an impact? “The next year or two will be important, because many great new cinemas have been developed recently,” Fithian says, acknowledging the potential over-screening involved. “So far, box office and revenue growth are supporting those screens.” Given the short-term, cyclical nature of exhibition, “downturns are bound to happen at some point and we’ll see what that number of screens then means. My concerns earlier in the year about over-screening have dissipated somewhat, in part because we have a lot of product right now, both movies and alternative content. Evidently, we don’t know if that will always be the case. While we still need new cinemas in markets that do not yet have modern facilities, [we need] to be careful about the total number of screens.”

 

The number of those going digital “is moving forward,” he says, “but it won’t take off and get really exciting” until the two major exhibitor interest groups have reached their final deals. In addition to Digital Cinema Implementation Partners (DCIP) spearheaded by Regal Cinemas, AMC Entertainment and Cinemark, the Cinema Buying Group (CBG) represents the vast majority of independent exhibitors. The latter have “completed the request-for-proposals process and narrowed a list of ten responses down to four,” Fithian details. “They are in negotiations with potential vendors and/or integrators. At the same time, the eventually selected partner will have to negotiate virtual-print-fee agreements with the studios… It’s a complicated process and it will take until mid-year at the earliest until that’s all ironed out.”

 

Although deadlines to join the Group have long passed—after having been announced for an even longer period of time, including in this publication—Fithian says it will be up to the integrators whether they will accept additional members. “The CBG will still take applications, but there is no guarantee that these theatres will be treated like the first group. In other words, if the selected provider wants to entertain additional members for the deal, he can but doesn’t have to. On the other hand, the proposal was specifically written so that all those in by the deadline would have to be serviced.”

 

At ShoWest 2008, Fithian foresees this issue, along with film theft, being a major point of discussion once again. “In the past years, the debate appropriately was about digital cinema: Do we or don’t we? What’s the model? I think most of those questions have been answered. Now it is more about implementation. What does this new technology mean for our business? And alternative content—how big will it become, what will work and what won’t—is certainly one of those important issues.”