July 12, 2005

Europe also suffering box office blues

By Peter Kiefer and Scott Roxborough

ROME/COLOGNE (Hollywood Reporter) - The North American box
office is not alone in suffering a protracted slump.

The double-digit downturn in cinema admissions for the
first half of the year across most of continental Europe has
the region's industry wondering whether lackluster movies,
Hollywood-imposed release strategies or piracy are to blame. Or
is it just down to the good weather?

In Germany, box office admissions are off nearly 20% to 58
million in the first six months of the year compared with the
same period last year. And Italian admissions have slumped 17%,
sparking hand-wringing throughout the local industry.

French cinema attendance for the first six months plummeted
17%, while in the Netherlands, box office receipts are off more
than 18% from last year. Spain looks to have gotten off
relatively lightly, with a 12% drop to 49.9 million admissions.

Only the U.K. seems exempt among major European
territories, with admissions through June expected to be down
only fractionally, to about 80 million.

In Germany, even surefire blockbuster "Star Wars: Episode
III -- Revenge of the Sith," the top release in Germany so far
this year with receipts of $41.9 million, couldn't stop the
downward trend.

German multiplex exhibitors point to the disappointing
performance of such potential Hollywood tentpoles as "Batman
Begins," which has made just $5.8 million since its June 16
release, or "The Pacifier," which earned $8.3 million.

Even "War of the Worlds" failed to live up to its sky-high
expectations. The film's $6.6 million opening weekend was the
third-highest of the year but about $1 million behind Steven
Spielberg and Tom Cruise's 2002 team-up, "Minority Report."

Some movie theater owners are blaming not the films but the
studios' releasing strategy for the decline. Specifically, they
complain that simultaneous global releases involve imposing a
U.S. schedule on foreign territories with no thought of the
differences in local moviegoing habits.

"The big blockbusters all come out in the summer in the
U.S. because in the summer in the states everyone goes to the
movies because it is nice and cool and that's the tradition,"
said Eva Matlock, managing director of German independent
exhibitors group AG Kino. "But in Germany, most of the theaters
don't have air conditioning, and when it gets hot, we don't go
to the movies, we go outside to the park and the beer gardens."

Another potential culprit is the DVD boom, which has forced
a tightening of release windows and, some argue, lessened the
"uniqueness" of the big-screen experience. Indeed, while box
office sales have slumped, DVD sales continue to rack up
double-digit growth.

"We have to emphasize the exceptional quality of a movie
experience to ensure that cinema will remain at the first level
of the exploitation window for feature films," said Marlis
Kieft, managing director of Greater Union Filmpalast, one of
Germany's top multiplex groups.

In Italy, where first-half admissions were down to 43.9
million according to tracking agency Cinetel, the drop is
especially disheartening. This year, exhibitors and
distributors had lined up what was thought to be a strong slate
of films in May, June and July in the hope of reversing the
traditional late-spring/early-summer slump.

Despite the success of "War of the Worlds," which has
pulled in an impressive $9.8 million since its June 29 release,
the other major Hollywood films -- "Star Wars" ($10 million),
"Batman Begins" ($6.2 million) and "Sin City" ($4.8 million) --
have underperformed.

Italian distribution executives ascribed the crisis
variously to Italy's general economic woes, piracy and, perhaps
most importantly, the shortage of quality offerings.

"In my opinion, 7%-8% is due to the quality of the films,
and in that way we are similar to (the rest of) Europe," said
Paolo Ferrari, president of Warner Bros. Italy. "I think
another 7%-8% is due to the economic crisis in Italy. When you
consider that there is a 5% drop in spending on groceries in
Italy, it is obvious that Italian families are very attentive
to what they are spending their money on."

The general reluctance of Italian filmgoers this year
appears to be affecting Italian and U.S. fare alike. Market
share for U.S. and Italian films during the first half remained
unchanged at around 55% and 23%, respectively.

Although French cinema attendance slipped to 87.5 million
tickets sold, exhibition body the National Federation of French
Cinemas was not alarmed about the fall, in part because 2004
marked a 20-year high in Gallic cinema attendance.

"We're still above 2003 levels, which is reassuring," FNCF
director Olivier Snanoudj said. Market share for local films
was around 41%, with the U.S. cornering a 55% share, roughly
even with 2004.

The federation said that a sluggish economy combined with
glorious weather across France in the second quarter had not
helped the situation. But the lack of strong releases, French
and U.S., was the main cause for the slump, the FNCF said.

"For us, it's not structural. There was simply a lack of
strong titles. There's no element to suggest that this is a
major crisis. You can't really say piracy is to blame," said
Snanoudj, who observed that the overall general economic
situation had led to lower spending on such other cultural
products as theater, books and music.

A strong lineup of tentpole titles for the second half,
including "King Kong" and the fourth "Harry Potter" movie, is
fueling hopes that this year might be salvageable.
Additionally, Italians are looking forward to the October
release of Roberto Benigni's "The Tiger and the Snow."

Reuters/Hollywood Reporter