Theaters raise revenue, tensions by charging to show trailers
Coming soon to a theater near you: a multimillion-dollar battle over coming attractions.
Theater owners are squeezing extra coin out of film companies by charging them to play the trailers for their upcoming movies.
Traditionally, theater owners were happy to run the advertisements for upcoming movies on the understanding that they drove box-office receipts and concession-stand sales. Studios paid to make the trailers, and cinemas screened them. Each movie came with two coming attractions attached, while others ran at the discretion of the theater, often as a result of lobbying by Hollywood marketers.
Now theater owners, realizing the value of having Hollywood's target audience in the theater, have begun charging movie companies to run their trailers.
Although some trailers still run for free, movie distributors complain that they're increasingly being asked to pay to get their trailers played — or get shut out.
“We've reached the tipping point,” said Jeffrey Neuman, chief executive of Verites, a Burbank, Calif., company paid by studios to check theaters to see that trailers are being shown and that marketing materials such as lobby cards and standees are in place.
“If you're not one of the ones paying for trailers,” he said, “you're left struggling for placement.”
In one controversial move, the nation's largest cinema chain, Regal Entertainment Group, recently cut the number of trailers that studios can run with their own movies for free from two to one. Some studio executives are privately grumbling about the practice, upset that they are being asked to pay still more to a supposed partner that typically keeps half of the box-office receipts.
“It's logical a theater operator has an obligation to market studios' movies, when we're spending hundreds of millions of dollars on (making) each one,” said one studio executive who asked not to be identified because of the sensitive nature of the topic. “But they have gone all the way around to wanting to be paid.”
Four of the major studios — 20th Century Fox, Sony Pictures, Universal Pictures and Warner Bros. — reportedly have made annual marketing deals worth several million dollars with theater chains such as Regal and AMC Entertainment. In exchange, the studios are exempt from the one-free-trailer-only rule and get the best possible placement.
Walt Disney Studios and Paramount Pictures don't have such deals.
, while smaller studios may pay as much as $100,000 to play a trailer for one film.
Some coming attractions still make it on the screen through studio executives lobbying and cajoling contacts at theaters with whom they have long-standing relationships. Such old-fashioned methods that don't involve payments are increasingly rare.
Large theater chains won't publicly acknowledge that they charge for trailers, nor will the studios that pay them. Spokespeople for Regal and AMC declined to comment, as did representatives of Cinemark Holdings Inc. and Carmike Cinemas Inc., the next largest national cinema chains.
But within the film and exhibition industries, it's common knowledge — and a growing source of resentment.
“Everybody says, ‘No, no, there's no money ever paid to show trailers,' but we know that's not the case for some of the big boys,” said Rafe Cohen, president of Galaxy Theatres, a Los Angeles-area chain that operates 115 screens. “For us little guys, we'd love to charge for trailers, but we don't have the leverage.”
There are no official stats on how many trailers make it to the big screen, thanks to a payment, but the practice has become increasingly common. Verites checked on about 100 trailers in 2012, compared with 30 in 2009, Neuman said.
The dispute marks the latest flare-up between film companies and exhibitors, whose symbiotic relationship has been strained in recent years. Turning trailers into a business, some fear, could add to the tension.
“What makes this business run are trailers,” said Chuck Viane, a former president of distribution for Walt Disney Studios. “When the right trailers aren't seen by the public with the right movie, that can hurt the box office.”
Although Regal's one-trailer-only rule is new, the free trailer system began to break down in 2001, when Sony paid to advertise its comedy “The Animal” in front of the hit Universal movie “The Mummy Returns.” That aberration soon became the norm, with pay-for-play accelerating in the past two years.
As they rose in value, the total number of trailers shown before a movie started going up. Three or four was the norm a decade ago. Regal and AMC theaters now run six or seven before every feature.
“The number of trailers has absolutely exploded,” said Federico Ponce, owner of High Res Hype, a graphic and design company that has worked on trailers for such movies as “The Avengers” and “Iron Man.” “When we started out, we'd work on one or two trailers every four months. Now we're doing three or four trailers at the same time.”
The competition is fierce and prices are high to run a trailer in front of popular movies such as “The Hobbit.” Theater chains typically receive $25,000 to $100,000 to run a spot before a popular film at half their theaters, saving an equal amount of time at the other half of their theaters for another paid trailer.
Theater owners charge more for the final trailer before a movie starts because, Neuman said, “there's a big difference between how many people see the first trailer and the last.”
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Developer hopes to make Allegheny Center a tech hub
- Murray Energy expects to lay off as many as 1,800 more
- BNY Mellon promotes executive
- Home sales slipped in April on tight supply, high prices
- McDonald’s CEO ‘proud’ of pay hike
- BNY Mellon to pay $180M to end foreign-exchange lawsuit
- Equifax, Experian, TransUnion agree to improve fixing mistakes on credit reports, OK $6M settlement
- IRS refunds $10M to tax preparers who paid to take competency test
- Market inches further into record territory as oil price jump boosts energy sector
- CVS to enter elder-care market with acquisition of drug distributor Omnicare
- Minorities lose out on lending, survey reports