Paul Dergarabedian Talks About Movies With Bob Sunshine

Senior analyst at Comscore, Paul Dergarabedian.

Most elements of the ICTA seminar series focused on the technical aspects of cinema, but with a goal of expanding its member’s perspectives on industry issues and trends, several sessions were devoted to attendees hearing other points of view. One came from senior analyst at Comscore, Paul Dergarabedian. He was introduced and interviewed by the Executive Director of ICTA, Bob Sunshine, who said in his introduction: “This guy is genuine, this guy is real. I don’t think I know anyone who is more passionate about movies and the industry than Paul. You can hear him on radio, you can see him on TV, you can read his reports on line. He’s at all the conventions – listening, moderating, contributing, participating. He’s a wealth of knowledge, he’s a good friend, and he’s here today.”

Here’s Bob’s interview with Paul.

Bob Sunshine: What are your two favorite movies from last year?
Paul Dergarabedian: It was quite the year we had in 2018 at the box office. I loved First Man. I thought it was a great movie that didn’t get its due. I watched it again on the small screen which obviously didn’t have the impact of the Imax presentation that I first saw it in, but what a movie. And “Black Panther” is still one of my favorites – and not just as a super-hero movie, but as a spectacular film. It really got 2018 rolling; we had the first billion-dollar February in North America and that kind of set the stage for what would become the biggest box office share ever in North America, internationally and globally.

Bob: We needed that, didn’t we?
Paul: We did – especially after 2017 when we had a summer where we were down from the previous year. But we still hit $11.1 billion in North America that year — and the box office did $40 billion for the first time globally in 2017, so it wasn’t all bad news. But any time there is an under-performance, even if it’s for a weekend, people start saying, “cinema is dead, streaming is taking over.” I’ve been doing cinema analytics for 26 years and I can tell you, cinema is not dead, it’s thriving. We had a record year in 2018 and it wasn’t just due to increased ticket prices; we were actually up in terms of attendance – there were more people in the movie theaters.

Bob: It seems like the schedule for 2019 is also really good. How do you feel about this year?
Paul: I say this every year, but this could be the biggest year ever; I truly think that could happen. Captain Marvel is coming in March, and Avengers: End Game at the end of April, which is the new start of summer; they did that last year with Avengers: Infinity War and we had the biggest opening weekend of all time in North America — $257 million, Friday through Sunday for that movie. I think this year, we are going to beat last year. Last year, international was only up about one percent whereas North America was up 6 ½ percent; global was up about 3 – 3 ½ percent revenue year over year. I think this year hopefully we will see an increase in that international growth on top of North American growth and we could get to maybe 42 billion for the first time. So I am really hoping for another record box office year. And I think we’ll get it.

Bob: I think one of the films that really surprised us in the industry is Aqua Man.
Paul: It’s over a billion dollars worldwide, with the lion share coming from international and a huge portion of that coming from China. Everyone was worried what would happen at the end of last year because there was not a Star Wars movie, which had been there in previous years, but Aqua Man came in and helped to fill that void. Of course, in 2017 we had Star Wars: The Last Jedi, Jumanji: Welcome to the Jungle, and The Greatest Showman – and those movies — like The Little Engine That Could — just kept playing and playing. They didn’t drop out of the top 10 for a really long time and contributed a lot of dollars to 2018’s bottom line. So the holdover strength of films like Aqua Man and others will help in 2019 until the new openers come in and start generating box office as well.

Bob: I had dinner the other night with the President of Fox International and we were talking about the results of Bohemian Rhapsody.
Paul: Yeah, Rami Malek’s performance is in the pantheon of great performances and I think that raised the level of the movie; the whole movie is great. By the way I’m a huge music fan. So to have a movie like that in a year where you also had A Star Is Born – we’re seeing over the past few years, that musicals or music-themed movies are doing well. I think A Star Is Born and Bohemian Rhapsody are both perfect examples of films that really energized audiences; a movie theatre provides such a communal and immersive experience, you could feel the electricity in the air. And this year, we’re going to have Rocket Man, the Elton John story, and I’d expect that to do very well also.

Bob: The industry does well with the tentpoles, but what did you think of the independents this past year?
Paul: In 2018 specialized films were just so good, I mean Beautiful Boy, On The Basis of Sex, Green Book. There’s so many. Those are the films that require, in my opinion, a lot more nuance in the terms of the release; it’s not like you just put the movie out there in 3,000 theaters and hope for the best. You have to really nurture those films, rely a lot more on reviews. If you are a specialized film aficionado, you may not have that much marketing information other than the title and the release date; where you get the feel for those movies is really from the reviews and what people are saying about those films, and then of course from your fellow movie goers once they start tweeting or Facebooking about those movies. My hat is really off to the whole independent side of things; collectively they may not amount to even the champagne budget of a big blockbuster, but they’re hugely important in terms of prestige, They’re quality films.

Bob: Any thoughts about the Academy Awards this year?
Paul: The more people who have seen a movie, the more they have a vested interest in watching the telecast, but that shouldn’t be the motivation for giving out a Best Picture nomination. It should be based on the merits of the film. It’s not the box office awards — it’s the Academy Awards, so it should be based on the merits of the film, but films intended for the populace – Titanic and Forrest Gump and others – have won before. Now some believe that genre films, particularly superhero movies can’t be worthy of an Oscar. All it will take is for one movie like that to win and it may open a door.

Bob: By the time this interview is posted, the Disney purchase of Fox will have been completed. How you think it’s going to affect the industry and the marketplace.
Paul: Without Fox, Disney had like 26% of the market — about $3 billion in North America. This consolidation is very interesting because it could either be something where it seamlessly happens and everything is just business as usual and they just keep on going and everybody is successful and that’s great…or sometimes there are things that happen that you can’t really predict. What I love about Fox Searchlight is the incredible choices they make with their films. And what I love about Fox overall is what that team has done in terms of movies like DeadPool, DeadPool II, Logan, and others — that R-rated sensibility. I hope they continue that all that. I hope that the things that made Fox so great are bolstered and enhanced and celebrated because they have a great identity and they have done so many great things with their movies that I would love to see them continue their identity with the kind of films that pushed the envelope – supported by the great marketing campaigns that they do. I hope Disney pays proper respect to what Fox has done and looks at what worked and what they have done very successfully — and brings those ideas into the whole Disney think-tank, which is incredible. I don’t really know how that will turn out. I just hope that for the movie-going public, they keep putting out great movies because that will serve them well at the end of the day.

Bob: What’s your thinking in general about what’s happening with the potential studio takeovers?
Paul: We are going to continue to have new players in this space who have the means and the money to acquire studios – and to bring talent on board — and that’s going to change things. But that’s already happening and yet we had a record year at the box office last year and could have one this year. All of this may not the enemy that we think. I think of the small screen and the big screen as complementary and added, and not adversarial. If a streaming service like Netflix were to buy a small studio, what I would hope to see is the Amazon model — where they really honor the theatrical experience. And so, for certain movies, like Manchester By The Sea, and other big titles that require a theatrical release, they get those movies out there. I think that’s a smart strategy. But there are so many films released every year, not every small specialized film needs to make it to movie theater. For a lot of filmmakers, it’s on the stream services where at least they have a voice, where audiences can see their movie. When I watch stuff on Netflix or wherever, I get pumped to go to the movie theater. I want to go see movies, not necessarily the movies I’m seeing on Netflix, but other movies in the theater — like listening to music inspires me to want to go to a concert or buy more music or listen to more music. I just think the most important thing is to honor the theatrical experience; the theatrical window is very strategic for which films you put in a movie theater.

Bob: Netflix actually broke the mold of their normal distribution pattern by putting out a film for a two-week period exclusively. How do you think changes like that are going to impact cinema chains?
Paul: I think that’s something that is going to get worked out. It’s going to have to — because as Netflix grows and their influence increases and they invest the kind of money they are — their budget for content is $8 billion – they’ll be producing a large number of films. But, it’s knowing which movies are appropriate for theatrical – and which are not. Certain films need the theatrical experience, others can go right to streaming. And remember, if you think back ten years or fifteen, we weren’t dealing with this situation at all. And now we are. So now we are in that infancy of this where I think things are going to get worked out. What it will come down to is — is it profitable the way you’re doing business? Does this serve the audience? Are you making great content and are you working with great filmmakers to get their voice heard and get their vision out there — whether it be on the big screen or the small screen? But again, I’m a big screen guy. My preferred way of seeing everything is in the movie theater when I can — because it’s the best way to see it.

Bob: What are your thoughts about subscription services and what effect they will have?
Paul: I think subscription services are a good idea. If the theater chain thinks it makes sense and they can get enough people to sign up for it, I think there’s nothing wrong with that. There are obviously a lot of paths to the theatre and I think having that model may have inspired some of the individual circuits to do their own version of it – to take their own destiny into their own hands and control that part of it. I think the services are great because those who join them are really good patrons to have, they’re really into seeing movies. But I don’t necessarily agree with discounting the movie tickets because I feel that kind of diminishes their value; I think it’s better to add value – to give people something extra – a free popcorn or some other movie memorabilia. It’s the stuff we covet when we go to CinemaCon and Show East; give some of that to the regular movie goer. Fandango is doing some of that; some chains are doing those kinds of things. I’d love to see them get really innovative; work with Uber or Lyft to pick people up and bring them to the theater. Thinking outside the box has worked for a lot of great industries and I think that’s the way to do it. I think we are going to see more of that in the future.

Bob: So, as a final question, with all that’s happening, where do you see the industry in the next 3-5 years?
Paul: I think the industry will grow. The movie theater, the experiential part as created by all of you is really important. People go to the movie theater now as a destination. I think the food and beverage component is huge. I think the technological side, the presentation, the sound, the image on the screen, all that is better than it’s ever been. I have to give kudos to the industry for not saying, Oh, some day, the small screen is going to take over, so we’re not going to spend money here. Still, I think there’s a lot of ways to get people — and younger people, especially, excited about going to the movie theater and staying there, not just for the movie but for all the other stuff. I feel that if you don’t change, if you’re not malleable, if you don’t kind of bob and weave and figure out, take the temperature of the marketplace, you do that at your peril. But I would say that whatever the movie theaters are doing right now — in concert with these studios – is great. The content has been really diverse; if you look at a top 20 for any given weekend, it looks like a streaming service lineup in the sense that there is something for everyone.

I think the critics are very important — certainly in the independent world they are — and I love reading what they say, but it seems the influence of bad reviews wasn’t as strong last year. Maybe it’s because people want to escape, they wanted to see a brand-new movie; the movie may have rated a B in the mind of the audience, but it’s still an A-plus experience in the theater.

The numbers and attendance are up; we had the biggest Thanksgiving weekend last year. We had the biggest President’s weekend. We had the biggest February as fueled by Black Panther. We had the biggest April fueled by Avengers: Infinity War. We had the biggest June powered by the Incredibles 2. We had the biggest October fueled by Venom. Those are four record box office months. We’ve never had four record months in North America in one year. That says a lot about the robust nature of this business right now. You don’t break records like that if people aren’t going to the movies. So, in 5 years, I think cinema will be what we have now, but more focused. I think you’re going to see fewer seats, bigger seats, higher occupancy rates. There’s just something about going to a movie with your friends and family or on a date; there is just something special about that – and I don’t think that will ever go away.

Bob: I’d like to thank Paul for being with us. He’s got tremendous insight into the business. Comscore does a wonderful job of keeping us up to date with all the figures on a weekly basis. Let’s give a hand for Paul.

Paul: Give a hand for Bob.