THE PICTURE BUSINESS

Evening Post, Volume CVIII, Issue 81, 2 October 1924, Page 10

THE PICTURE BUSINESS

SPOILED CHILD OF INDUSTRY

WHERE FINANCE COMES IN.

"From now on the moving pictures will be a less spectacular business, but a safer one," is the comment of the National Bank of Commerce in New York in -.discussing the stabilisation of the motion picture industry in the September issue of "Commerce Monthly."

The- American motion picture industry, it is reported, is slowly getting out of the class of a game and more in the class of -a business, the bank points out. The .evolution is not yet complete, but to its progress the events of 1922 aud 1923,;.. have contributed notably. A settling-down 'process has been taking place during 'the past two years, resulting in. the establishment of three fundamental principles: first, that proidiiction costs cannot be enlarged indefinitely without straining the financial basis of production to the breaking point; second, that sound -financing methods are indispensable for the progress of, tho industry y and, third, that public3 approval and goodwill are itsmost valuable assets. • "

.Until 1923 tho-American motion picture industry was the spoiled child among American -industries, spending, as lavishly as it pleased on more and more costly productions, knowing ' that the generous public would foot tho bills. This conditon was not. permanent. Judging by the volume of Collections under the Federal tax on admissions to all classes of entertainments, the twelve montlis ending 30th' June,- 1921, established the record for expenditure on admissions to entertainments. Undoubtedly, admissions .to motion, picture theatres formed the larger share of this total, there are so many more picture houses than legitimate theatres; in the United States, but it is impossible to segregate; returns from any one source.1

COSTS AND PROFITS.

Costs "of production, in this industry, as in others, have* risen rapidly in the past few years. Once it was possible to produce an acceptable "feature" picture for a few thousand dollars. Now the average is between 100,000 and 200,----.000 dollars. • "Super-pictures," which have been exploited in very recent years cost from 700,000 to 1,500,000 dollars. Cost, does not determine -profits,, however. Producers, have learned that it is possible to earn ao large a profit on a good 100,000 dollar picture as oh one which.costs 200,000' dollars. ',■ Spectacular super-productions of the million-dollar class magnify ' the risk which the producer runs. They will never be the bread-and-butter earners pf the industry. The recovering of such a large investment in production takes' af longer; time than realising cost' and profits on smaller pictures. For a year or longer the producer must lose interest on his capita] which-is tied up in.the pictures, or pay interest on loans before profits begin. In the greater number of cities there is no field for pictures at which maximum admission charges are 2.00 dollars or over; neither the size of the theatres nor tho enthusiasm of audiences would support such rates, After several months of showing in the large centres a picture is retired to country-wide circulation, and the producers begin to receive returns above his outlay. A million-dollar picture may take from one to two years to bring back its cost. In exceptional eaSes, a picture may run ! for .several years.

PRODUCERS' GOLDEN HARDEST.

.:....In tho short life of the motion picture industry, American producers ln§e Sf "■; Solden harvest. Of a possible au,ooo picture theatres in the world, 15,000 aro in tho United States, with a Sf y AnnUendance • now estimated at ,S'SSS'S° 0j and weekly admissions ot 10,000,000 dollars. Annual rentals naid in the United States are conceded to be larger than rentals paid in all other countries put together. Tho fat years of tho period 1914.t0 1920, when wages wero rising, gave the industry an opportunity which may never be repeated Toward the close of 1923, overproduction, "big pictures," and Jack of cost control had brought the industry' to a point whoro its finances were not sufhciontly liquid for safety. Drastic measures of retrenchment were enforced by several of the larger companies even, to the point of closing the studios tor a number of weeks last autumn. Tho desirability of keeping production under the direct supervision of financial-de-partments which are located in the East led to an increase in activity in Eastern studios. . California's supremacy is not seriously endangered, however

THE BANgS'AND THE PICTURES,

_ Theopinibh, from high authority, that the further growth of tho industry promises to-be greater than that already attained Can be accepted only with reservations so far as the American market is concerned. It is undoubtedly true as regards the-application of motion pictures to industry, advertising, propaganda, education, and research, where only a beginning has been made. Activity in. picture production at present is devoted in overwhelming proportion to amusement. In this field tho growth of the industry is much nearer the maximum.

Only gradually is the motion picture business gaining recognition as a proper field for-tho placing of bank funds. Unitil" tho last year or two fow companies could secure loans. A Western bank in closo touch with the industry stated in 1921 that only a few out of nearly a hundred producing Concerns in its 'district were safe risks for bank loans. At present tliis^coudition is changing. Bank officers have been invited to join the directorates' of larger film companies, and the modifying of speculative features in the -industry .is resulting in a less distrustful attitude on the part of- the banks.