No happy ending in '05 for Hollywood, as ticket sales drop again

The slump, now three years running, prompts the industry to ask: 'What's wrong with the movies?'

Hollywood's year-ending good news is that moviegoers are opening hearts and pocketbooks for "King Kong" - more than $60 million on its debut weekend and counting.

The bad news is that audiences did not exactly go ape over the rest of 2005's cinema offerings, making this the third straight year of decline in Hollywood ticket sales - the first such stretch of bad news in 40 years. Because of the continued falloff - sales are down 12.6 percent from 2002 - a growing number of analysts wonder if America's movie habits are changing permanently.

"The industry has to consider whether or not American audiences are sending a message about the quality of the movies they are getting - or just the way and the place in which they get them," says Paul Dergarabedian, president of Exhibitor Relations, a firm that analyzes box-office trends. "You can bet that producers, writers, directors, and studio heads are all huddling intensely to consider what this means and change their behavior to keep it from continuing."

It could just be a continued shift away from multiplexes toward Blockbuster, Netflix, and other home-viewing options, Mr. Dergarabedian and others say.

In this scenario, consumers are changing their movie-viewing habits because of multiple complaints related to theater-going: soaring ticket costs, high parking and candy-concession prices, and, perhaps, decreased enjoyment of the movie-house experience because of unruly audiences and growing numbers of on-screen ads.

"People have had it with all the annoyance and cost of going out when they can be in so much better control of what they see at home, and for cheaper," says Nancy Snow, professor of communications at California State University at Fullerton. "That means fewer and fewer want to put up with the hassle unless they know the movie will be outstanding. So they have higher standards and expectations."

The more worrisome scenario for Hollywood is that audiences are shifting to other entertainment options. Those would include video and Internet games for youths, TV among older Americans, and other leisure options from sports to travel.

"At the same time the technological world is giving moviegoers all kinds of other entertainment options, there has been an increase in the quality of really great serial television - both broadcast and cable," says Peter Lehman, director of the Center for Film and Media Research at Arizona State University at Tempe. "That is giving audiences the kind of character development that they feel is missing from so many Hollywood blockbusters, which are overly concerned with special effects."

Still other analysts say the falloff in cinema attendance could be a combination of both developments, which can and will change with the quality and affordability of movie and nonmovie options.

"I would suggest there are lots of good reasons why there is a sea change in the nature of moviegoing and at the same time lots of reasons to believe it's not an apocalypse," says Stephen Prince, president of the Society for Cinema & Media Studies. Prior to the late 1990s, he says, US movie attendance held steady - at about 1 billion per year - for several decades. In his analysis, the increases of the past few years could be a bubble-like anomaly that is now ending.

One of the most telling developments, say analysts, will be the impact of a new idea by film Steven Soderbergh and producer Mark Cuban. The two have struck a deal to release films in three formats - theaters, DVD, and television - all on the same date. The first of them is scheduled in the next two weeks.

"Soderbergh and Cuban are projecting that the current model of theater-release, then a delay for DVD, and another delay before showing on TV is history," says Mr. Lehman. "How consumers respond to this experiment will be very telling."

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