European box office slumps as local films wither

By Jeffrey Goldfarb and Karin Strohecker

LONDON/BERLIN (Reuters) – A dearth of strong, local films
severely dented box office revenue in most of Europe this year,
with only Britain holding steady thanks to a stream of
homegrown favourites such as “Pride & Prejudice” and the latest
“Harry Potter.”

German film executives expect a decline of as much as 20
percent even with end-of-year help from blockbusters “King
Kong” and “The Chronicles of Narnia: The Lion, the Witch and
the Wardrobe,” while France, Spain and Italy could end the year
down more than 10 percent, according to industry estimates.

Filmmakers and cinema owners typically blame such slumps on
everything from sluggish economies to piracy to the growing
rush to move new movies from the big screen to DVD, all of
which are said to have contributed to the 2005 fall-off.

But the primary culprit cited by industry executives this
year was a lack of quality local films. That, coupled with a
widely perceived weak crop from Hollywood, created the steep
decline in so many countries.

“We won’t see another year as bad as 2005 next year,” said
Frank Mackenroth, head of media and entertainment at
PricewaterhouseCoopers in Hamburg. “But in the medium term, we
are set to see stagnation in Germany while we expect fairly
stable growth across western Europe.”

He forecast that western European consumers would spend on
average 4.4 percent more every year at the box office from 2005
to 2009, though Germany is expected to lag with only an average
0.4 percent gain over the same span.

Some studio executives were unfazed by the declining
attendance figures, at least publicly, perceiving it as a
cyclical problem, not the start of a more permanent one.

“When we look at the ups and downs in the marketplace,
frequently they are seasonal or product-related and reflect
shifts that are all manageable,” said James Gianopulos, the
co-chairman of 20th Century Fox Filmed Entertainment.

He sees growth in places like Russia and Poland, where box
office revenue is expected to surge by about 20 percent in 2005
with the spread of multiplex cinemas and strong economic
growth, providing consumers with more disposable income.

“The U.S. is roughly 300 million people and the rest of the
world is 6 billion people, so when you think of the opportunity
of international markets, that’s the best example,” he said,
noting that about half the studio’s revenue comes from outside
the United States despite the population disparity.

U.S. box office revenue is expected to fall about 5.3
percent to $8.9 billion with admissions dropping 7.3 percent to
1.4 billion, a third straight year of decline, according to
tracking firm Exhibitor Relations Co. Inc.

BRITAIN BUCKS THE TREND

Britain is bucking the global trend, however, and expecting
flat revenue, or perhaps even a small gain at the box office,
powered by a yearlong output of local films including “Closer,”
“Hitchhiker’s Guide to the Galaxy,” “Harry Potter and the
Goblet of Fire,” “Nanny McPhee,” “Wallace & Gromit in the Curse
of the Were-Rabbit” and “Pride & Prejudice.”

“In the UK, we’ve had a fantastic flow of local material,”
said Mark Batey, head of the UK Film Distributors’ Association
trade group.

“In previous years, France and Germany have benefited from
strong local films. This year they haven’t, relatively
speaking,” Batey added. “They’ve had to rely on the
international product flowing through, some of which has
probably underperformed with audiences against expectations.”

About a quarter of 2004 German box office revenue was
generated by local films, led by the sci-fi comedy
“(T)Raumschiff Surprise – Periode 1″ with more than 9 million
viewers.

The country’s biggest domestic hit so far this year, “Die
Weisse Massai,” the story of a Swiss woman living with a Kenyan
Masai tribe, sold only a little more than 2 million tickets.

“Looking forward, we can see quite a few very hot numbers,”
said Johannes Klingsporn, chief executive of the German
association of film distributors.

The end of 2005 has brought more fans to cinemas, which
could soften the blow for Europe when the final tickets are
counted, and which could be a harbinger of good things for
2006.

“I think there has been a pick-up in the last three months
of the year, even though December is not yet done and dusted,”
said Charlotte Jones, the cinema analyst for research firm
Screen Digest.

“We’re still forecasting that admissions will be increasing
over the longer term,” she said. “We feel that cinema is a
cyclical market and we think there’s going to be a strong run
of films into 2006.”