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Summer Movies in Review

As the weather cools, it’s time to look back and see how we did on our Summer Movie predictions. We’re all about the money and 2009 was the biggest summer in Hollywood history. Movies are an international obsession so we prefer to look at international box office instead of merely the domestic totals. The reason… international box office now accounts for about 60% of theatrical revenue and is crucial in determining a film’s profitability. Angels and Demons is a great example, having had so-so business domestically but cleaning up in the foreign markets.

Leading the box office charge was Harry Potter. No real surprise there as most Potter films are at or near the top of the standings each year. The big surprise was the success of Ice Age 3 which nabbed the second place spot ahead of Transformers: Revenge of the Fallen. Sorry Michael Bay! The cute characters in Ice Age 3 earned more than $869 million in ticket sales and became the most popular animated film ever abroad.

Angels and Demons came in fourth and in another surprise, The Hangover was the number five movie of the summer as well as being the third-biggest R-rated movie ever made. Nobody saw that coming. There were still plenty of flops. Land of the Lost, Year One, Public Enemies, Funny People and Bruno were all disappointments. However, the numbers for the last two are solid enough for the comedy genre.

Here are the top ten movies of the summer, and by comparison, what we thought would top the charts back in May:

1. Harry Potter ($925 million)
2. Ice Age 3 ($869 million)
3. Transformers 2 ($831 million)
4. Angels and Demons ($484 million)
5. The Hangover ($453 million)
6. Up ($416 million)
7. Night at the Museum 2 ($404 million)
8. Star Trek ($384 million)
9. Terminator: Salvation ($371 million)
10. Wolverine ($363 million)

Our predictions:

1. Harry Potter ($900 million)
2. Transformers 2 ($750 million)
3. Ice Age 3 ($600 million)
4. Star Trek ($500 million)
5. Night at the Museum 2 ($500 million)
6. Angels and Demons ($450 million)
7. Wolverine ($400 million)
8. Terminator: Salvation ($300 million)
9. Up ($300 million)
10. Public Enemies ($250 million)

How did we do? We correctly guessed the top film of summer and went 9 out of 10 overall, missing only on The Hangover. Who knew? Not bad for the unpredictable world of entertainment.

The Mouse That Roared

The news that Disney is buying Marvel for $4 billion has taken the entertainment world by storm. Although the deal itself came out of nowhere, it certainly makes sense. Each company possesses a wealth of content (70 years of characters and stories) and more importantly, licensing opportunities. As DVD sales sink, Hollywood has been scrambling for new sources of revenue. This just might be the shot in the arm Disney needs.

While Disney has traditionally been known for its wholesome family creations, the purchase of Marvel adds an edgier, more violent element. By marrying Spiderman, X-Men and the Incredible Hulk with Mickey Mouse, Wall-E and High School Musical, the combined company will be able to exploit a universe of characters across everything from t-shirts and product tie-ins to movies and theme parks.

While merging the Marvel superheroes into Disney’s fairy-tale cast of characters may seem like a storytelling leap, the entertainment giant has pulled off the feat before. Through the years, Disney has acquired properties (the Muppets, Winnie the Pooh), created shows, rides and attractions with third parties (Star Wars, Indiana Jones) and incorporated

The big winners in this merger are movie theaters and boys. At a time when original plot ideas are difficult to come by, this acquisition could mean a surplus of scripts based solely on the team-ups, battles and other crossovers between the Disney and Marvel worlds. The box office numbers speak for themselves… of the 25 highest-grossing films of all time, four are recent Marvel adaptations.

This move will also help Disney broaden its appeal to boys. Mickey Mouse and other classic Disney characters appeal strongly to young children while shows such as Hannah Montana are hit with girls.

The one fly in the ointment is that Marvel’s sale won’t affect any existing licensing details. For the moment, Disney are still blocked from capitalizing on many of Marvel’s most prominent names such as the X-Men and Fantastic Four (movie rights owned by Fox), Spiderman (movie rights owned by Sony) and Iron Man (distribution rights owned by Paramount). Once these deals expire, Disney will be sure to jump in and may well want to take over distribution as well.

Online Video Sizzles This Summer

Anyone whose got a link sent to them of Susan Boyle’s performance on Britain’s Got Talent or Jill and Kevin Heinz’s Wedding Dance Video knows that online video has been burning up the data streams. Now we have the numbers to prove it. The Nielsen Co.’s July 2009 “VideoCensus” states that online video is way up on all metrics.

The measurement firm recorded a 14.2% year-over-year increase in unique viewers to nearly 136 million. Total streams climbed 31.4% to more than 11.2 billion and average streams per viewer were up to 82.4, a 15.1% gain. Viewers spent an average of about 3.5 hours watching online video in July, a jump of 42.2% over the prior year.

The top site for watching video, according to Nielsen, was YouTube—way out in front with more than 7 billion streams and 104 million unique viewers. Hulu ranked second in number of streams, but was surpassed by Yahoo!, MSN, CNN and Fox Interactive Media properties in unique viewers.

In June 2009, comScore reported record online video viewership, at 157 million unique viewers. Again, Google sites were on top, followed by Microsoft and Fox Interactive Media.

Let’s put those numbers in perspective. This means there are Super Bowl-sized audiences for online video each and every month. Companies would kill to reach an audience of that size… and it’s out there for a lot less money than a commercial during the Super Bowl. By the way, more than 157 million viewers watched an average of 135 videos during the month of July. Talk about growth!

There are some qualifiers to these numbers. ComScore attributed massive June viewership to unusual media events that became online video phenomena, including the memorial service for Michael Jackson and the civil unrest in Iran. Such major events have been important for online video viewing in the past, with many users checking out news videos during the workday, notably the January presidential inauguration.

Even with those qualifiers it’s obvious that the computer is becoming the new TV. Sure it has a smaller screen but as computer monitors get larger and more mobile, its only a matter of time before the computer is just as important for media distribution as the TV. If you don’t start developing online video for your product, service or pleasure now, you might find yourself falling behind in the marketing race.

* Info courtesy of eMarketer and Nielsen

Are Paid Content Models the Future of Online Video?

There’s been a lot of in the media business lately about paying for content online. With Disney, Fox and NBC’s investment in Hulu earlier this year, paid content models are all the rage. Chances are it’s not going to happen anytime soon. A new report from eMarketer says that consumer’s willingness to pay for content online is about as likely as J.D. Salinger writing another novel… that’s not going to happen.

“It is difficult to imagine the public tolerating a return to paid content for video genres that are currently ad-funded,” said Paul Verna, eMarketer senior analyst and author of the report.

There are some areas where consumers will pay online. They’ll pay for feature films, which is not surprising considering it’s a transaction-based business. You want to see a film, you enter your credit card number into iTunes or Netflix and voila… instant movie. Consumers will also pay for live sports programming with baseball on MLB.com and Mixed Martial Arts (MMA) matches being two notable examples.

The most likely evolution would be that Hulu and YouTube charge a fee for premium content (movies and sports) and leave the rest of their videos (TV shows, news, humor, user-generated clips) in ad-supported formats. But given that most consumers believe the old adage, “Why pay for the cow when you can get the milk for free?” don’t expect the change to happen that quickly.

Whether paid or free, the business of online video is booming. Audience levels and stream counts are climbing dramatically, while age range demographic of viewers is expanding. Slowly but surely, the content mix is evolving from short, home video clips to long-form content such as TV shows and feature films, according to eMarketer. That’s good news for everyone.

Virtual Clutter Coming to a TV Near You

Reminding me of a scene out of Rollerball or Demolition Man sports teams continue to find ways to improve their bottom line by cluttering up their product. Some have been around for years (stadium signage and commercial tie-ins) while others have emerged in recent years (in-game promos, sponsor “bugs” in the corner of the screen) but the biggest innovation in raking in more moola are the virtual ads.

You’ve seen them if you’ve watched Major League Baseball, NASCAR or the National Hockey League. They’re the high-tech ads digitally inserted inside game coverage and only visible to viewers at home, not fans at the arena, raceway or ballpark. At first they were a curiosity; now they’re becoming an annoyance as more teams find ways to cram more ads into their games.

This week, the NHL discussed how to use virtual ads during the season with its national TV partners in the USA and Canada. At least four NHL clubs are working with their regional sports networks to sell virtual ads next season: the Colorado Avalanche, New Jersey Devils, New York Islanders and New York Rangers. Expect more to climb on board in the coming months.

Teams already have their pitch down for these intrusions. With viewers flipping channels, marketers want to stick their messages “inside the games,” rather than around them during commercials, said Tom Philand, senior vice president at Altitude Sports & Entertainment, which airs Avalanche games. Virtual ads are not only “zapper proof,” studies have shown that such a sign is more than twice as likely to be recalled as a 30-second spot.

What do fans think of this? The Rangers and MSG Networks said they got only a “handful of complaints” after placing virtual ads for Subway, New York Life and iO TV on the glass behind the goalies in several game telecasts last season. Sponsors, however, don’t completely agree. Tony Pace, Subway’s chief marketing officer, said “Some viewers thought it was so visible it detracted from their view of the game.” Really? You think so?

Personally, I found them to be yet one more distraction detracting from my enjoyment of viewing this sport, although my friends would say watching hockey on television is hardly enjoyable. As virtual signs continue to grow in importance I wonder where it will stop.

The NHL will likely lead us further into this commercialized hell. Having placed advertising on everything it can, from the arena, ice and boards to the curtain in front of which coaches and players give interviews, they’re not one leave any revenue stone unturned. It’s just a matter of time before they go the route of European teams and have ads on uniforms as well.

I don’t know about you but I’m sure this multi-sensory overload will eventually drive me away from spectator sports and into a nice, quiet, happy place free of advertising noise. Curling anyone?

ESPN to Employees: To Tweet or Not to Tweet

Although the staying power of Twitter is still up for discussion, some media companies are cracking down on their employee’s use of the social networking tool. First to lay down the law - ESPN. The Worldwide Leader in Sports drew the wrath of some of its employees yesterday when it issued a set of formal guidelines limiting their use of social networking.

“The hammer just came down, tweeps: ESPN memo prohibiting tweeting info unless it serves ESPN,” Ric Bucher, one of the network’s NBA analysts, wrote to followers of his Twitter feed yesterday. ESPN’s Kenny Mayne followed with a great analogy: “was informed 2nd hand of Taliban-like decree against further Twitter.”

According to a memo issued by ESPN, the “first and only priority is to serve ESPN sanctioned efforts, including sports news, information and content.”

The guidelines prohibit “personal websites and blogs that contain sports content,” and talk about internal policies, a relatively standard practice for any media company. But they also aim to define when and what employees are allowed to Tweet about, including sports. ESPN’s guidelines go on to say, “If you wouldn’t say it on the air or write it in your column, don’t tweet it.”

What brought this about? Two reasons. One, it seems that the network that routinely broadcasts athletes’ Twitter updates on SportsCenter is getting concerned that its talent is getting off-message.

The other reason is one of protecting an investment. Turns out that ESPN is working on a platform that will allow it to publish its employees’ Twitter and Facebook entries simultaneously across “ESPN.com, SportsCenter.com, Page 2, ESPN Profile pages and other similar pages across our web site and mobile platforms” in the Fall. The last thing ESPN wants is indirect competition from their talent which might dilute the new content.

To show how serious they are about this the network warned, “if ESPN.com opts not to post sports related social media content created by ESPN talent, you are not permitted to report, speculate, discuss or give any opinions on sports related topics or personalities on your personal platforms.” Failure to follow the guidelines could result “in a range of consequences, including but not limited to suspension or dismissal.”

Wow! Seems heavy handed to the Media Mogul. And we wonder if it hurts their ability to be the first to ‘break’ a story. Twitter’s biggest strength is the instantaneous communication to an audience. It will be interesting to see if the media giant can wrest control of spontaneous tweets away from its employees. Stay tuned.

The Death of the Movie Soundtrack

Growing up some of my favorite CDs were movie soundtracks. The good ones always had a collection of great songs that perfectly encapsulated the mood of the film. Some were a handpicked selection of Top 40 hits (Animal House, The Big Chill, Dirty Dancing) while others were eclectic mixes of songs I had never heard before (Trainspotting, Natural Born Killers, Pulp Fiction). The best soundtracks gave a great variety of music and were huge sellers for record companies and studios alike.

Then in the late 1990’s the format hit a wall. Interest waned, numbers plummeted and the quality left a lot to be desired. The first Transformers soundtrack didn’t even sell 500,000 copies. Spider-Man 2, the eleventh highest-grossing film of all time, couldn’t sell a million soundtracks. Although the audiences for those films were huge it didn’t lead to soundtrack sales.

How did such a successful genre fall so far, so fast? It’s a mystery even a gumshoe like Sam Spade would have difficulty unraveling. There is a trail of evidence however. Let’s examine the clues…

Studios
Although they had much to gain by the success of soundtracks, entertainment conglomerates always saw them as just another ancillary revenue source. When cost cutting hit the studios hard in the 1990s, it was easy to scale back on original music. The new strategy was to throw in a bunch of filler music with a single original song by a name artist. Trouble was that song was usually under the end credits and often missed by audiences. Although a cheaper way to make soundtracks, consumers didn’t respond.

Record Companies
Licensing music has become an expensive proposition over the last twenty years. Songs from popular artists like The Beatles are impossible to find due to price. Add a shrinking catalog of artists that studios could get affordable access to and suddenly there was this repetition of music on soundtracks. Do a search sometime and see how many times “All Along the Watchtower” appears on a soundtrack. Great song, but it’s worn out it’s welcome.

Consumers
One explanation might be that people don’t buy soundtracks anymore. Around the world, music sales have declined precipitously this decade. That’s partially do to iTunes and other file sharing networks. Much like in the 1950s, we’re in a time where the single is more important than the album. If the album itself is a weaker concept, it stands to reason that the soundtrack is too. Why buy the whole soundtrack when you can download the one or two songs you really want and create your own movie playlist?

Directors and Producers
The creative side of film also shares some blame. Music has become an overlooked part of a film and left to the music supervisor to figure out. Just contrast the music for Transformers with the decades biggest soundtrack hit, O’ Brother Where Art Thou? With a clear strategy and hitless bluegrass music we rarely heard, O’ Brother went on to sell 7 million copies. When directors and producers get lazy on music, the movie soundtrack is bound to suffer.

Who killed the soundtrack? It can be argued that it was a collaboration of all. Have faith music fans because all is not lost. Movies like O’ Brother, Magnolia and About a Boy provide a glimmer of hope. All were not only fantastic soundtracks but integral parts of the film. More than providing color or revealing shifts in mood, the music was part of the action onscreen, speaking through characters.

Soundtracks will survive, although it is on life support. Certain films lend themselves to excellent music like the band-focused Once or others with a strong musical vision like The Life Aquatic and Slumdog Millionaire. The key to continued cultural relevance of the soundtrack is in good original compositions. The good news is that there are a host of talented musicians out there just itching to get a chance to compose music for a soundtrack. Let’s hope the studios and record companies give them a chance.

Winners and Losers with Oscar’s new “Top Ten”

The June announcement that the Academy Awards will now feature 10 Best Picture nominees is still reverberating in the industry. Doubtless it will have many profound effects – some positive, some negative – on Hollywood. About 300 films qualified for the award in 2008, so now almost one out of every 30 films will now have a chance to be a Best Picture nominee. The biggest upside is that more films will have the potential to capitalize on their nominations, in box office receipts and ancillary revenue.

But there will be a far larger impact on the big players in the entertainment industry, as well as some ripples in often overlooked areas.

Independents
The optimistic view is that an expanded list would make room for indies, foreign films, blockbusters and even comedies, an underrepresented genre at the Oscars. Imagine a list from last year that included The Dark Knight, Iron Man, Role Models and WALL-E. Or would those films still be shut out and replaced with Revolutionary Road, Che, Frozen River and The Changeling?

The Trades
Variety and the Hollywood Reporter have fallen on hard times during this recession. What better was to improve the bottom line than full-page “For Your Consideration” ads for every film from Transformers to The Hangover for three months.

Critics
Talk about fodder for the Internet and a new cottage industry. Pundits and prognosticators will come out of the woodwork to predict the almost every film’s Oscar chances. And the expanded roster doubles their chances of correctly predicting this new “Top Ten.”

Directors
When there were only five contenders for Best Picture, usually at least one director in that group missed out on a nomination. That often led critics to comment “Did the film direct itself?” Now at least five films will see their helmers shut out further dampening the egos of directors.

Studios
The expansion to 10 nominees has already increased the stress level of some studio executives who worry they’ll have to spend even more money on award campaigns. Most studio films will not merit serious consideration however and no amount of marketing will change that. Instead, smaller players will have a chance to get noticed… or at least in theory.

Academy Members
They’ll have to fill in 10 entries for Best Picture on the nomination ballot now, twice the work and twice the headaches. That will lead to more questioning of members’ choices, especially when it’s doubtful that they’ll have time to see a host of contending films.

Oscar’s Cachet
The Oscar has always been one of the most sought after awards in entertainment. The dilution to a top ten threatens the credibility of the Best Picture award. And in honestly, there isn’t an overabundance of quality films anymore. Go down to your local Cineplex and look at what names are in lights. In a year with Land of the Lost, Bruno and Year One I wonder where the Academy will even find 10 worthy films this year.

The change has been made but the dust won’t settle for quite some time. Will bigger be better in Hollywood? We’ll find out in February 2010.

Are Studios Feeling the Urge to Merge?

Chatter about deals has become more intense lately which usually is a sign that something is up. With an uneasy economy, terrible advertising market and a sharp drop in DVD sales studios are looking for ways to cut costs. Considering most studios are lean operations now, the other option would be to consolidate. Two recent rumors involve DreamWorks Animation and NBC Universal suggests that the climate might be right for mergers and acquisitions.

Insiders say that TimeWarner is considering a move towards acquiring DreamWorks Animation, the current jewel under the Paramount banner. We’ve been told that there’s an “out clause” which would permit DWA to terminate its deal with Paramount if it paid $150 million to the big blue mountain. Given the bad blood between DreamWorks and Paramount it’s a surprise the “out” hasn’t been used yet.

It’s unlikely TimeWarner would be the only bidder if DreamWorks left Paramount. Disney now owns the DreamWorks live-action unit and would love to put the two pieces together again. And of course Viacom, as Paramount’s parent, could decide to match any bids… especially since there are three major animated features to be released in 2010.

General Electric, which owns NBC Universal, needs to make a decision on the company in the near future. Former owner Vivendi is likely to sell it’s remaining 20% stake (worth potentially $4 billion), leaving GE to pony up and buy the stake or leave it to another major and get out of the entertainment business entirely.

Driving these rumors is a growing consensus that they entertainment industry is entering a new period of consolidation. Noted investor Mario Gabelli told Barron’s recently, “A round of consolidation will occur in the next six to 12 months because of the costs of financing, prints and advertising, the benefits of globalization and such. We hear talk of something going on.”

For now consider this kind of speculation seems like random water cooler talk that drives stock prices up and down but doesn’t do much else. On one point however, studio executives, investors and pundits agree… there will be fewer entertainment companies around in 3-5 years. How it will go down remains the big mystery.

For Your Consideration… Best Picture Nominees Expand

If you’ve ever felt that your favorite movie got robbed of a Best Picture Oscar nomination, the Academy of Motion Picture Arts & Sciences (AMPAS) is here to help. Starting in 2010, they will be expanding the number of Best Picture nominees from five to 10. Woo Hoo!

Truth is, this change isn’t about you. It’s about the pursuit of the almighty dollar. For the last decade, the Academy has been under pressure to get better ratings and keep ABC and those advertisers happy. The theory goes something like this according to Sid Ganis, President of AMPAS, “Having 10 Best Picture nominees is going to allow Academy voters to recognize and include some of the fantastic movies that often show up in the other Oscar categories, but have been squeezed out of the race for the top prize.”

The Academy argues that they’re simply honoring an earlier tradition. Back in the 1930’s and 40’s, the Best Picture category welcomed 10 nominees. In 1931/32 there were actually 12 nominees. The 16th Academy Awards (1943) was the last year to include a field of that size with Casablanca being named Best Picture for the year. Too bad we don’t have the quality of films of say, 1939, when the nominees were Dark Victory, Gone With the Wind, Goodbye Mr. Chips, Love Affair, Mr. Smith Goes to Washington, Ninotchka, Of Mice and Men, Stagecoach, Wizard of Oz and Wuthering Heights. Now that’s a Top Ten list!

Such a move might have made sense back in the 1960’s and 70’s but today the American film industry makes very few great films. Just look at the theatre marquee this weekend when Transformers, Year One and Land of the Lost are all in lights. With such gems to choose from I wonder where the Academy will even find 10 worthy films this year.

I’m tempted to call this the “Dark Knight Rule” because it feels like it’s in response to the blockbuster’s awards snub which came back to bite the Academy on Oscar night with low ratings of the show. The thought might be to increase the buzz (and television ratings) by adding nominations. Ratings for the telecast have slipped steadily since the 1990’s when more than 55 million viewers tuned in to see Titanic win Best Picture. With other entertainment options like the Internet taking people away from what used to be must see television, 10 spots would allow popular films like Dark Knight or Star Trek to be nominated. That could cause more viewers to tune in.

However, the Academy has never been about recognizing action-adventure films and box-office smashes (the Lord of the Rings trilogy being the recent exception). They simply don’t resonate with voters. With so many more dramas released every year compared to popcorn films, this rule simply makes it easier for the Academy to include niche dramas (think The Wrestler) that wouldn’t have had a chance otherwise.

Personally, I think this move undermines the integrity of the Academy Awards. Whether you agreed or disagreed with the five nominated films each year, there was a cachet around being nominated. There’s a little less luster on Oscar now… and five extra montages during the telecast next year.

I remember being at a friend’s house and his 8-year old son walked in with a huge trophy. When I inquired what he won for he replied, “It’s no big deal. Everyone gets one.” I don’t know about you but I don’t want the Academy Awards to turn into a 10-and-under suburban soccer league.

Come on AMPAS, is this what you’re really about? Are you so obsessed with television ratings that you are willing to sacrifice the original mission of the Academy? The real winners in this are ABC, the Oscar consultants who lobby voters for nominations and the trades. I can envision the full-page “For Your Consideration” ads for Transformers even now.

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