NATO CEO Predicts 'Substantial' 2012 Box Office Improvement

6:35 AM PST 03/15/2012 by Georg Szalai
Ethan Miller/Getty Images

John Fithian says that after last year's public "food fight" over premium VOD releases, studios and exhibitors have held private talks about how to grow the business together and says 3D has settled into a stable growth pattern.

NEW YORK - National Association of Theatre Owners head John Fithian on Thursday predicted "substantial" U.S. box office and attendance growth in 2012, argued that 3D business has setted into a good growth pattern and said that exhibitors' relationships with studios have improved after last year's brouhaha over the premium VOD window. That window saw some studios release movies for $30 only about 60 days after the start of the theatrical run.

Speaking here at Gabelli & Co.'s fourth annual Movie & Broadcasting Conference, the NATO president and CEO said that last year's challenges also included questions about the digital conversion of screens. "Each of those issues have improved tremendously," Fithian said in a bullish presentation.

He pointed to the strong box office start to 2012 as latest proof that film product is the key factor in the short-term ups and downs of the industry. Last year's movies were good, but the industry did not have enough good product and did not spread it well enough across the year, he said. That is why it was wrong that after a 3.7 percent box office decline and lower attendance last year, some observers once again started writing obituaries for the theatrical film business. "The epitaphs were in," Fithian said.

But now the box office is up in the double digit percentages year-to-date, receipts crossed the $2 billion mark this Sunday, and the first quarter will probably come in more than 20 percent above the year-ago period, Fithian said. Overall, he predicted a "substantial" up year both in box office and admissions.

He lauded upcoming film product as looking "even stronger," predicting that Hunger Games, which opens next week, in particular, will be "gigantic."

Fithian pointed to the CinemaCon industry gathering in Las Vegas late next month as a sign of how broad the content strength is this year, saying that for the first time in about a decade all major studios will showcase their wares there. "They're very, very confident how powerful their movies are going to be," Fithian said.

Fithian also cited last year's premium VOD showdown between studios and exhibitors after studios' unilateral announcement of the new window, which his members saw as cutting into the theatrical business. Calling the result a "very large public food fight over an arcane issue," the NATO boss reiterated that he felt for studios that was a "fairly dangerous" move, which is why exhibitors "responded very strongly."

But now, "calmer minds have prevailed," exhibitors and studios "have sat down privately to discuss how we can together grow the business" and these talks are "cooperative," Fithian said. He didn't provide further details, saying he won't go public, because that was the problem last year. But he said he was optimistic that the industry partners would find a way to grow the business together.

Is the theatrical window safe? "We have moved out of the war mentality," Fithian said. "I hope for now the theatrical window is safe."

Discussing 3D, Fithian said it is "settling into a very important value-add for our members." Expectations for 3D were very high after Avatar, then crashed to the floor as some studios released weak 3D product. But now Hollywood seems to understand that "you can't just slap 3D on a bad movie," and exhibitors have learned how to get light sources and other theatrical factors right for 3D showings, the NATO boss said. Overall, 3D has now settled into a "very good stable growth pattern," is doing good business, and it looks like the industry will be able to grow here long-term.

Digital cinema is now at critical mass, with just shy of 27,000 U.S. theater screens out of 39,000 or so now digital, according to Fithian. That opens up new opportunities for alternative content, and the NATO boss said that exhibitors are particularly "looking to get more sports up on screens" in negotiations with sports leagues.
Predicting that this is "a big potential ticket seller," he said that "we haven't cracked that nut yet."
 
Asked about AMC's and Regal's Open Road Films distribution venture, Fithian said that other exhibitors could also down the line do deals to get talent's productions directly to the screen.

Another focus for exhibitors when it comes to digital cinema must be to teach consumers that movie theaters these days are not just that, but really entertainment destinations, Fithian said.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai

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