Sree's Stories

What Is A Hit Film? Moviefone May Know

Monday, June 2, 1997
p. D9

By SREENATH SREENIVASAN

The record-breaking Memorial Day opening weekend of "The Lost World:
Jurassic Park" has brought renewed attention to the importance of not just
the first few days of a Hollywood film, but also to the business of
predicting a movie's box-office prospects.

In movie marketing, an opening weekend is as important as Election Day
is to a political campaign. A movie's entire future can depend on how it
performs at the start.

Now a potential new forecasting tool is getting some notice: the
telephone service of movie listings called Moviefone (777-FILM in many
cities). Because of the high volume of calls it receives each week,
anywhere from 1.5 million to 2.5 million, producers are beginning to
discover that data buried in Moviefone's records might be quite useful.

For instance, the ticket grosses of $92 million for "The Lost World"
represented 60 percent of all ticket sales for Memorial Day weekend. This
figure mirrored the percentage of inquiries to Moviefone about "The Lost
World" in the days before it opened. Similarly, when New Line Cinema's
"In Love and War" opened in late January, its sales of $5 million
represented a mere 8 percent of total ticket sales in its opening weekend.
It had received about 7 percent of all inquiries by Moviefone users.

Just as advance polls of voters allow candidates to focus their final
campaigning, advance word about how a movie is going to do can allow
studios to redeploy their last-minute marketing dollars.

"There is no doubt that the Moviefone data base is a leading indicator
of how an opening weekend is going to turn out," said Drew Marcus, an
analyst at Alex. Brown & Sons. "While most of the movie industry isn't
sure until Friday and Saturday how a movie is going to do, a look at the
Moviefone data can give you a strong indication earlier in the week."

According to Mr. Marcus, the reason Moviefone can be relatively
accurate is that "Moviefone is tracking people who are ready to buy and
are specifically looking for information on movies."

Moviefone is also the only national service of its kind, covering about
11,500 screens in 30 major cities, accounting for 60 percent of the
country's movie theaters. Sixty million inquiries were made to Moviefone
in 1996, and this year the company predicts it will get 75 million calls.

Studios value accurate predictions of how a movie is going to do on its
opening weekend. All the major studios employ a variety of research groups
and movie-tracking companies. Moviefone currently makes its data available
free to its advertisers, which include Disney, MGM-UA, Warner Brothers and
Universal.

"A solid opening can make for a solid performance at the box office,"
said Perry Katz, a producer and former executive vice president for
marketing at Universal Pictures, the Seagram Company unit that produced
"The Lost World." He should know. Under his watch, the original "Jurassic
Park" in 1993 had one of Hollywood's biggest openings.

"In today's marketplace, you have to make an impression that opening
weekend, or you're going to be left behind," he said.

But predicting the winners and losers on opening weekend is not easy.
The biggest movie tracking company, National Research Group of Los
Angeles, depends on extensive interviews with a sample of potential
moviegoers to project interest in movies. That method reportedly has a
plus-or-minus error margin of 5 percentage points. The results are similar
for other tracking companies. National Research declined to comment on
its sampling methods, and calls to its chief executive, Joe Farrell, were
not returned.

Andrew Jarecki, chief executive of Moviefone Inc., which is based in
New York, said his service provides better information than the tracking
companies. "The difference between us and the other services is that they
ask people to predict how they think they will behave, while we measure
how they actually behave," he said. "That's an important distinction."

Mr. Marcus of Alex. Brown attributed much of Moviefone's growth to a
decline in newspaper readership, especially among younger people who are
the prime audience of movies. "Twenty years ago, everyone had a newspaper
available in which to check local listings," he said. "Now they prefer to
use their telephones to check the listings."

Still, Moviefone usually arranges a partnership with a newspaper and a
radio station in each of its markets, exchanging a promotional mention on
its recorded message for advertising space and time. In New York,
Moviefone is sponsored by The New York Times and WNEW-FM.

Moviefone pulls in part of its revenue by providing studios with a way
to advertise their movies (16 cents a call). It also derives revenue from
its service fee on ticket sales, ranging from $1 to a $1.50, depending on
the market.

The actual sales of the tickets themselves are the smaller part of
Moviefone's business. According to the company, roughly 10 percent of
callers buy tickets over the phone, but during openings of certain movies,
a larger percentage of callers use the service to reserve their seats.

For example, when "The Lost World" opened on the Friday before the
Memorial Day weekend, numerous shows in theaters like the Ziegfeld in
Manhattan were sold out entirely through Moviefone.

It also has a similar service on the Internet, called Movielink
(www.movielink.com), that offers movie listings and sales. According to
the company, Movielink attracts up to 250,000 individual users a week.

While Universal does not use Moviefone data for advance tracking of
movies, Alan Sutton, Universal's vice president of distribution, said the
studio did use the service "to target moviegoers with advertising and to
stimulate ticket sales."

Currently, Moviefone does not charge its advertisers for access to its
data. "We are just in the process of getting it formalized," said Mr.
Jarecki, who is looking into ways of making this a viable revenue stream.

Despite the volume of calls and the increasing familiarity of its brand
name, Moviefone, which was founded in 1989, has not yet reported a profit.
It is still a small company, and in the first quarter, it reported a net
loss of $960,000, or 7 cents a share, although its revenues rose 61
percent, to $5 million. In that quarter, a one-time charge of $1.5
million, or 12 cents a share, for legal expenses was primarily responsible
for the loss.

"I expect them to be profitable this year," said Mario Cibelli, an
analyst with the investment firm of Robotti & Company. "Three years ago,
they were not a very important business model. But they cannot be ignored
anymore."

GRAPHIC: Photos/Graphs: "Predicting Hits and Misses The tools used to
predict how a movie is going to perform at the box office are inexact, at
best. But the service of movie listings called Moviefone, with anywhere
from 1.5 million to 2.5 million callers a week, is emerging as a useful
indicator of what a movie's opening day box office receipts are going to
look like. Chart lists the shares of inquiries to Moviefone that three
movies garnered, and their actual share of the box office take during the
weekend it opened. (Source: Moviefone, Exhibitor Relations)