Washington, D.C.—Aug 18, 2005
The Real “Story”: It’s the Movies!
No Seismic Shift in Consumer Preferences Compels Unwise Simultaneous Release -
National Association of Theatre Owners President John Fithian Responds to Disney
Chairman Robert Iger on the Alleged Demand for Simultaneous Release
National Association of Theatre Owners
(NATO) President, John Fithian, issued the following statement in response to
comments by Walt Disney Chairman Robert Iger during a conference call with Wall
Street analysts last Tuesday, August 9.
“Walt Disney’s Robert Iger says American consumers demand it all and demand it
now. To placate this instant-everywhere appetite, Iger suggests it may be
necessary to release movies in theatres, on DVDs, and everywhere, at the same
“Mr. Iger knows better than to tell consumers – or Wall Street analysts – that
they can have it all, everywhere, at the same time. He knows there would be no
viable movie theatre industry in that new world – at least not a theatre
industry devoted to the entertainment products of Hollywood. And he should know
that Hollywood studios would be merely one shriveled vendor among many in that
new world of movies-as-commodities-only.
“Iger considers the slowdown in theatre box office and DVD growth a ‘wake-up
call’ for the industry. I’m not sure who was asleep, but it wasn’t the
exhibition industry. Here’s what we know about 2005 – the movies are not as
good. They’re not terrible. They’re just not as good. And so the industry has
experienced a temporary drop-off compared to 2004 – the biggest box office year
in movie history.
“Further, factor out last year’s big grossing specialty surprises – ‘Passion of
the Christ’ and ‘Fahrenheit 911’ – and add in the fact that there are fewer wide
general releases this year, and the alleged industry ‘slump’ disappears.
“Just to reinforce the point that our industry cycles are driven by movie
quality, it is interesting to note that DVD slow-down has roughly tracked the
theatrical window. That is, movies that have done poorly at the box office have
tended to fare poorly when released on DVD.
“On the other hand, DVDs that sell well benefit enormously from the advertising
platform and national conversation generated by theatrical release. Does it
really make good business sense to plunder that $25-billion-plus worldwide
theatrical window without a very solid assurance that even more DVD sales will
make up for the lost theatrical revenues? And if you answer that question based
on number-crunching in your home entertainment division, are you really willing
to bet the farm on the proposition that consumers will rush to watch even more
movies at home after you’ve whacked the advertising platform of theatrical
release? And have your number-crunchers accounted for the possibility that
consumers have basically bought their DVD libraries, and will hereafter be
increasingly conservative about their purchases?
“It’s a product-driven industry. When the movies are really good, the industry
does really well. And vice versa. New gizmos and conveniences regularly
influence consumer patterns – but there is no seismic shift in the simple fact
that good movies make people want to go see movies. Consumers are smart that
way. Analysts can get that.”