The picture is more muddled than a bad script.
Hollywood kissed a pretty record in 2009 — $10.6 billion in ticket revenue, thanks, in part, to moviegoers flocking to theaters to escape their economic worries. Despite box office success, however, 2009 also was the year that some studios sat temporarily idle or even slashed jobs, production companies were shuttered, fewer films were released and DVD sales lagged.
Confused? Let’s cut to the chase. The oddly conflicting trends atop the movie industry can be partly explained in two words: Paranormal Activity. We’re talking both the movie of the same name and the ghosts of Hollywood past. Paranormal Activity,” about a house haunting told via “found” video footage, was filmed for only $11,000 yet grossed $100 million-plus for Paramount, plunking it among the year’s top 30 earners. But talk about a horror movie: That juicy-fat margin spooked many studio chiefs, signaling a massive economic shift was underway inside their backlots.
With “Paranormal Activity” taking an unprecedented underground route to blockbuster heights, “Many in Hollywood realized that their old rules don’t apply,” said Tim Gray, editor of Variety. “But what are the new rules? Nobody knows.”
Last year was a game-changing year for Hollywood, and no one quite knows what the future holds for the movie industry.
“Every 20 or 30 years, there is a revolution in the way that entertainment is delivered,” Gray said. “It happened with the ‘talkies,’ with the popularization of radio, the introduction of television and home video. And it’s happening now. There is both excitement and fear ... a sense [of]: ‘I know something is happening but I don’t know what to do about it, and I don’t want to get left behind.’ ”
New revenue modelWhat it comes down to is not what the studio thinks matters but what consumers will pay for, said Jeff Cox, chief executive officer of ARSGroup, an Evansville, Ind.-based communication research agency. As DVD sales — a major source of revenue for studios — continue to slide (down 13 percent in 2009), and Video on Demand grabs a tighter toe-hold with movie lovers, Cox predicted: “a whole new revenue model” will shape the film industry.
Need hard evidence? Look again at “Paranormal Activity,” which was boosted largely by Internet chatter and friend-to-friend reviews spread via Facebook and Twitter.
“The explosion of ‘Paranormal Activity’ proved to motion picture studios that word-of-mouth could make or break a film and that viral marketing is a very low cost way to entice people to the movie theaters,” said Marjorie DeHey Daleo, president of MediaVix, a Los Angeles company that specializes in managing brand relationships.
The reason is as simple as a neighborly chat. People trust their friends’ film reviews — and their online friends’ opinions — more than they do slick movie advertising, according to a July 2009 study by the Nielsen Company. Nine out of 10 Americans rely most on the consumer recommendations of folks they know — or even people they know only through Facebook — while 62 percent trust TV ads, and only 52 percent are swayed by movie ads, the study found.Of course, that shift can work to the advantage of the studios — especially those, like Paramount — that already are attracting audiences through social media pipelines. Simply put, Facebook and Twitter offer cheap advertising. That dynamic also played into the industry’s glowing, albeit somewhat misleading, 2009 revenue numbers, some experts said.
“A generation ago, publicizing and marketing a movie on a global scale involved hundreds of people spending thousands of man-hours around the world — advertising agencies in every continent, stars hustling to interviews in every major market, millions of dollars to take out ads in major publications. Today, five people can set up a Web site and do it all from the comfort of an air-conditioned office,” said Mario Almonte, a New York PR strategist and Huffington Post blogger.
