TV nets ratings slide bad news for movie marketers

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TV tumbles: The news earlier this week that the broadcast TV networks were down some seven million viewers per night in the May sweeps versus last November is bad news not only for the networks, but also for Hollywood.

It's actually a problem for Hollywood on two levels. In today's world of global media giants, the same handful of companies that own the networks also own most of the major studios. In that regard, the fortunes of both industries are intertwined at the corporate ownership level and when one of these businesses is in trouble the economic repercussions are felt in all of the corporate corners.

At the same time, the networks' continuing decline as a mass medium poses another set of problems for the motion picture industry because movie marketers have for over 30 years made network TV their advertising medium of choice. It was a development that made perfect sense in the mid-1970's when the whole concept of wide distribution coupled with national television advertising was developed. Previously, studios released films with a much smaller distribution footprint, allowing word of mouth to spread at a time when there was no Internet or 24 hour per day news cycle or cable TV or e-mail or viral marketing opportunities on the web to help get the job done. It was a much simpler time and the release patterns of the day were designed to let films find their audiences.

There was no need for national television advertising in those days because a studio would be wasting a large chunk of that money since its films wouldn't be playing in theaters across the country at the same time. A film might open in New York and then, driven by its reviews in the national media based there, it would expand regionally and go into other key markets like L.A. or Chicago. Over a period of weeks or even months movies would add smaller markets in other regions of the country. There were no 4,000 theater openings in the mid-'70s. A wide break was, maybe, 700 theaters.

The modern age of wide movie releases is generally said to have begun with Universal's opening of Steven Spielberg's "Jaws" in the summer of 1975. Actually, "Jaws" opened limited and went wide about a month later. It kicked off June 20, 1975 at 409 theaters, grossing $7.1 million ($17,265 per theater) and then widened to 675 theaters July 25, grossing $6.2 million ($9,111 per theater). This was, needless to say, blockbuster business for its time and opened up a whole new concept in film distribution and marketing.

So national television advertising became a reality for Hollywood at the dawn of the age of blockbuster movies. Suddenly studio marketing executives were able to match up wide national release patterns with national TV campaigns. Not surprisingly, the 30 second spot quickly emerged as the preferred advertising format for selling movies to the public.

It didn't take long, by the way, for the 30 second spot to start defining the kind of movies Hollywood would make. Clearly, films whose stories could be related easily in 30 seconds were a much better marketing bet than films that had complicated storylines that needed to be explained in detail or that didn't have the strong visual elements that suddenly were so important for network TV advertising.

In any event, Hollywood thrived over the years thanks to being able to harness the powerful reach that the television networks had. It was a great way to reach a huge audience with strong quick visual messages about movies. Everything was just fine until the networks started losing their grip on the audience. The rise of cable and satellite television in the 1990s started to weaken the networks' ratings. Suddenly the television choices that were available to viewers were mushrooming. Instead of the original three legacy networks (ABC, CBS, NBC) and the new kid on the network block (Fox), there were now dozens of new viewing choices.

The television audience was now fragmented every which way as viewers discovered the wide range of choices they had. Not surprisingly, the networks' grip on the audience began to slip. Network ratings started to erode and, in the years that followed, that erosion became significant. The advent of TiVo added to the problem because it allowed people to watch network TV programming without having to sit through the commercials. The networks can say what they will about how viewers use TiVo for time shifting but then watch the commercials when they get around to playing the program back, but my own use of TiVo makes me a firm believer that the greatest advantage is being able to zap your way through all those commercials that you don't want to see. I think most TiVo users are likely to have realized that, as well.

The '90s and early 2000s also saw the rise of the Internet, which cut deeply into the networks' audience base by giving people a new screen they could depend on for free in-home entertainment. As the Internet has become increasingly interactive and as user-generated video content has become a huge source of web content, the audience for social networking websites like YouTube, MySpace and Facebook has soared. With the growth of such websites has come new opportunities for viral marketing campaigns that enable studios to spread the word about new movies without having to depend on the 30 second spot format to do so.

The double whammy of cable fragmentation and Internet competition was bad enough, but this year's Writers Guild strike and its interruption of normal broadcast TV programming represented yet another nail in the networks' coffin. Viewers who couldn't find the original series programming that they wanted to see quickly found other places to go for entertainment. As a result, broadcast network ratings are way down and likely to decline even more.

What all these changes on the network TV front should have done is trigger a seismic shift in Hollywood spending away from network TV and in favor of other types of advertising. Clearly, the networks are no longer able to deliver the huge audience base that Hollywood became accustomed to reaching. At the same time, Internet competition has severely impacted on consumer newspaper readership, greatly weakening Hollywood's other traditional movie advertising outlet.

With network TV and newspapers both suffering from declining audiences you'd think Hollywood marketers would be shifting a large proportion of their advertising dollars into newer media that are attracting increasing audiences such as the Internet and out of home television. While Hollywood is starting to regard the Internet as a key advertising medium and studios are increasingly using it as part of their marketing campaigns, the proportion of movie marketing dollars going into network TV is still much higher than what's being spent on Internet advertising and it's time that changed.

While Hollywood is increasing its use of the Internet to market movies, it really should accelerate its timetable for doing so. Given the see-saw that marketing budgets are, that would mean a correspondingly faster decrease in what is being spent to promote movies on network TV and in consumer newspapers.

Hollywood marketers should also be making greater use of a wide range of out of home television screens that in recent years have begun turning up in public places where people are then automatically exposed to their content and messages. These are the digital screens that we routinely see these days in elevators, taxis, health clubs, airplanes, airports, trains, buses, restrooms, sports bars, restaurants, sports arenas, shopping malls, race tracks, casinos and on office buildings in major markets across the country.

If you talk to Hollywood marketers you'll hear them refer to these digital screens as "play space" buys and in the next breath they'll tell you that they either don't buy them at all or that they don't make much use of them. Just the phrase "play space" tells you how little they understand about these new media outlets. They're mostly not in areas where people are playing, but in spaces where people are working or traveling. In many cases, these out of home digital TV screens reach a captive audience that can't leave the room, change the channel or TiVo through the program.

So why doesn't Hollywood make more use of such screens? The problem is that they mostly don't have ratings that media buyers can plug into their spreadsheets to "prove" they're reaching a big enough audience with their movie campaigns. The lack of ratings is a major issue for the out of home television industry and until it resolves the problem Hollywood buyers are probably going to look the other way and, as a result, miss out on good opportunities to get their message across.

The real problem is that the Hollywood marketing infrastructure that developed over the last quarter century did so when network TV was the only real game in town. Most of Hollywood's top media buyers grew up in the industry when network TV was an essential buy. Today it's looking more and more like a luxury, but the industry is being very slow to catch on. The first marketers who do so are going to discover just how much better results they can obtain by going where the audience is rather than where it used to be.

Filmmaker flashbacks: From Feb. 22, 1991's column: "The conventional wisdom may be that being nominated for and then winning a best picture Academy Award translates into many millions of dollars at the boxoffice, but that's not always the case.

"Indeed, looking at last weekend's grosses it's clear that only one of the best picture nominees benefited at all from the honor. 'Dances With Wolves,' which received 12 nominations including best picture, director and actor, was up 48% for the four days compared with the previous weekend and Monday.

"On the other hand, 'The Godfather, Part III' -- with seven nominations including picture and director -- was up only 14%, largely attributable to last weekend having been a four-day period. Worse yet, 'Awakenings' -- with three nominations including picture and actor -- declined 9%...

"Clearly, all the nominations in the world don't necessarily mean anything at the boxoffice. Even winning a best picture Oscar doesn't guarantee a windfall in additional ticket sales. To a great extent, any post-victory financial gain depends on how much business the picture in question has done prior to winning and, also, how broad its appeal really is..."

Martin Grove hosts movie coverage on the broadband television channel www.UpdateHollywood.com
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