"A" product wanted for two thirds of tickets, but payments a problem for easterners.

It is said that it will take up to 10 years before distributors see increased revenues from the reunification of Germany. At present, the box office has increased only slightly, with no additional profits. Stan Wertlieb, sales agent for VPS Film Entertainment, a Munich-based German distribution company, said: "the unification tax (imposed on all foreign imports) has hurt everybody." Ticket prices rose from .50c to U.$5.00, a fee many East Germans can not afford. Movie-going has become an event activity. Special sales teams were hired by western distributors just to deal with East Germany and as VPS executives found out, "the buyers were eager and would order, but had trouble paying." In addition, they were no longer interested in buying, "B" and "C" type product. Like their western neighbors, they wanted to see stars... "A" movies. East German tastes however, differ. When Harry Met Sally, for instance, did well in West Germany, while in the East, it flopped. Because East Germans usually marry for life and start a family between the ages of 20 and 24, they failed to identify with the characters, and thus, the premise.

This makes it tough for distributors to predict product success. An exception to this is the newly emerged children's market. This market is fraught with its own challenges, however, as it is subject to strict rules of censorship.

"Programming practices were different in the East also, and the change hasn't been accepted well," said a source from one of the leading independent German distributors, Neue Konstantin.

"Exhibitors in the East usually had only two showings a day and often changed films every week, if not every day. It was common to see a children's film in the afternoon and a film for the adults at night. Now, with multiple week runs, moviegoers are complaining of boredom."

The exhibitor/distributor split is also profoundly different from the East to the West. In the West, the typical deal is 50/50. In the East. it's one-third for the distributor and two-thirds for the exhibitor. Suddenly the exhibitor has to pay rising overhead costs, in particular to the projectionist, whose salary is now on par with his western counterparts. Ticket sales are not computerized, requiring the distributor to phone in for his daily tallies. "The cost in time and money to bring the East up to modern standards with no immediate profits can be devastating," it is said.

VPS' Wetlieb chimes that nowadays" more companies are operating, at a loss or no profit."

In Munich, Barry Baeres. head of acquisitions and business affairs for VPS Film Entertainment. mentioned that a crucial problem affecting independents is that video and TV income potential has dropped considerably while the minimum guarantees haven't come down. This in addition to the competition from video, and the increase of television and pay television stations is creating an impossible situation for the independents."

Independents primarily operate on a movie by movie basis. Three flops can put a company under, whereas the majors amortize the profits and losses within their 10 picture package. That not only limits available product to the independents but forces them to consider the reality of "how much money can they afford to lose while waiting for one success?" American movies comprise 80 per cent of the German box office, with the majors dominating, the marketplace.

Dubbing, which is used exclusively in Germany, costs between U$20.000 to U$100,000 and P&A costs run between $1 million and $1.5 million for an average movie. Competing with the majors is expensive and a weak ad campaign can bury a picture." Because of the competition. if one doesn't pre-buy, one risks to lose the acquisition. The "track record" of the cast and/or director is becoming the thing that matters most to the buyers. Jugend Film, one of the leading German film distributors, has inked an unprecedented deal with Lightstorm Entertainment, James Cameron's company, to buy nine, as yet unknown, features

based solely on cameron's track record as a "hit" writer/producer/director. Although Lightstorm will produce all nine, Cameron is not attached to direct more than three and may direct less. According to Larry Kasanoff, president of Lightstorm, "Jugend Film is more than a distributor in this deal. They are our German partner. It's true that we don't yet know what even our first move will be, but believe me, Jorgen Wohlrabe will have full consultation on everything we make. People have asked us if we're changing the way movies are being sold. I don't think so. We are guaranteeing a certain kind and quality of film that is unique to us."