BOX-OFFICE FLAWS SHOWING FILM INDUSTRY REMAINS OPTIMISTIC.

Byline: Greg Hernandez Staff Writer

LAS VEGAS - Movie exhibitors and distributors gathered for the ShoWest Convention are in for a somewhat sobering but hopeful State of the Industry address today as they grapple with how to stop a drop in movie attendance and navigate changes in movie technology.

The Motion Picture Association of America has released its annual theatrical market statistics report in advance of MPAA Chairman Dan Glickman's morning address, and it notes that attendance was down 6 percent in the United States and 7.9 percent worldwide last year.

But Glickman said he is confident that, despite increasing competition for consumers' time and entertainment dollars, movie-going remains a regular part of people's lives. The MPAA head will speak at what is the largest annual convention for the motion picture industry.

The film industry "can't bury our heads in the sand," Glickman warns. "We have to do more to attract customers and keep regulars coming back. It's no secret that our industry faces new challenges, but with every challenge there is an exciting opportunity."

Looking back to 2005 when 1.4 billion tickets were sold in the United States, releases by the major studios grossed an average of $37 million, and domestic releases increased by 5.6 percent.

Movies rated PG and PG-13 accounted for 85 percent of last year's most popular releases, led by "Star Wars: Episode III - Revenge of the Sith," "The Chronicles of Narnia: The Lion, The Witch and The Wardrobe" and "Harry Potter and the Goblet of Fire."

The MPAA, citing a nationwide survey conducted last August by Nielsen Entertainment/NRG, said 81 percent of moviegoers who had seen at least one movie in 2005 thought the experience was a good investment of time and money, and just 15 percent preferred watching the movie on DVD.

The survey showed that owners of such home-theater technologies as a large-screen television, digital recording devices and DVD players were actually more avid moviegoers, and nearly half made a decision to buy a movie on DVD after seeing it in a theater.

Other points expected to be covered by Glickman include the average cost of production and marketing, which dipped slightly to $96 million. Only one 2005 major studio release, "Munich," was nominated for a Best Picture Oscar, and it had a production budget of $75 million. The other four nominated films, including winner "Crash," were independently produced for budgets ranging from $6.5 million to $14 million.

Overall production budgets for the studios were down by 4 percent from 2004. But the cost of marketing the movies rose by 5.2 percent, with the studios putting more dollars on network television and Internet advertising and less on newspaper ads and local television spots.

"Technology has not just changed the way people are able to view movies; it has changed the way our industry produces and advertises movies," Glickman said. "We are exploring new ways to reach more people using innovative methods of communication and distribution."

greg.hernandez(at)dailynews.com

[phone]