Advertising- Maintenance of Broadway Exploitation Theater. A producer and distributor of motion pictures had maintained at a loss a Broadway exploitation theater in New York City. At the expiration of the lease in 1929 the advisability of renewal was questioned. The president of the corporation opposed the renewal of the lease on the grounds that a successful New York run was frequently not indicative of the reception that the country outside New York City would give to the picture. Although some executives of the company believed the losses of operating the theater were more than offset by the advertising value, it was the president's opinion that the exploitation theater was not fulfilling its purpose of enabling the company to secure higher than average film rentals for the pictures shown there.
(1929)
In December, 1929, Goldstein, Incorporated, considered the advisability of renewing its lease on the Cairo Theater, the company's Broadway exploitation house. Broadway exploitation houses comprised a group of theaters located in the Times Square area of New York City, which the larger motion picture companies used as "show windows" in which to give prerelease exhibitions of their new pictures. Such exploitation, they believed, tended to develop a market for the picture so shown. Since 1925, the Cairo Theater had been used for the exploitation of outstanding Goldstein pictures, many of which had enjoyed runs of from four weeks to three months. Admission prices ranged from $1.50 to $2. Although a profit had been sought on such exhibition, the primary purpose had been to exploit the company's pictures in such a manner as to increase their distribution throughout the country, and at the same time secure higher than average rentals. In 1929, a number of the company's executives, doubtful of the merits of the Broadway exploitation theory, opposed a renewal of the lease on the Cairo Theater.
Goldstein, Incorporated, was a well established producer and distributor of motion pictures, operating a large chain of various types of theaters located throughout the United States. Over 50% of the company's annual sales volume was derived from theaters other than its own. Distribution was effected through 35 exchanges situated in the important key cities. Annual production comprised about 35 feature pictures and an equal number of short subjects. Goldstein pictures, as a general rule, were of excellent quality.
The introduction of the Broadway exploitation plan in the motion picture industry antedated the period of development of producer-controlled theater chains by a number of years. At that time, Goldstein, Incorporated, and several other large distributors were confronted with numerous problems, two of which were of immediate importance. The first was that of producing a few superspecial pictures which would stimulate the then waning public interest in motion pictures. The second problem involved the exploitation of these pictures in such a manner as to increase patronage and at the same time insure widespread distribution at rentals commensurate with the value of such pictures. The production of superspecials, although a difficult and expensive task, was, nevertheless, accomplished. All companies, however, found the independent exhibitor unwilling to exploit the exhibition of these pictures in any other than the customary manner, much less to pay higher than average rentals for them.
Confronted with this situation, Goldstein, Incorporated, and other producer-distributors conceived the idea of a motion picture roadshow. Roadshow motion picture productions, as defined in the Warner Brothers Franchise Agreement, were, "any motion pictures released by a distributor which shall be exhibited in the main theatrical district of New York City and one other key point, on a prerelease basis; that is to say, on a basis whereby only two shows a day are given at advanced admission prices. Such exhibition in the main theatrical district of New York City shall not be for less than four consecutive weeks." The roadshow plan was similar to that of typical theatrical roadshows, with motion pictures substituted for the customary troupe of actors and actresses. To carry out the plan, each producer formed a special department consisting of a manager, assistants, exploiters, operators, checkers, etc. Legitimate theaters, in the larger cities throughout the country, were engaged for limited periods, usually on a percentage basis. As a general rule, two performances were given daily with admission prices ranging from $1 to $2. To avoid booking complications, pictures roadshown were designated as such, their general release sometimes being withheld for as much as a year after they had first been roadshown to the public. Naturally producers endeavored to make a profit from this special type of exhibition. The primary motive, however, was that of stimulating consumer and exhibitor interest in the pictures so shown, and to obtain, thereby, higher rentals for them.
The following are excerpts taken from the new Standard Exhibition Contract:
The distributor shall have the right to exhibit, or cause to be exhibited, as a roadshow, at any time prior to the exhibition thereof, hereunder, such photoplays selected by the distributor provided, however, that such roadshow exhibitions shall be in theaters at which admission prices for evening performances are not less than $1 for the majority of orchestra seats, and further provided that except in the cities of New York and Los Angeles, not more than two such photoplays shall be so roadshown.The distributor has the right to exclude not more than two pictures roadshown, in New York, from general release in the territory served by the distributor's New York exchange, provided that the distributors have been notified eight weeks after the commencement of such roadshow exhibition, and further provided that the distributor shall by a like notice exclude such photoplays from exhibition in all other theaters in that territory. The same ruling applies to pictures roadshown in Los Angeles.
Distributors, in order to roadshow photoplays in cities other than New York and Los Angeles, must notify contracted exhibitors in those territories to that effect, 14 days after the commencement of such roadshow exhibition. This applies to all theaters within the United States.In general, the roadshow plan accomplished its purpose. The public's response was favorable and higher rentals were subsequently received from exhibitors. Furthermore, many independent exhibitors were stimulated to better and more vigorous exploitation. From a financial standpoint, with but few exceptions, the roadshow plan resulted in sizable losses. Mystic2 was the only roadshown Goldstein picture that had returned a profit. On all others, more or less heavy losses resulted. Since Goldstein, Incorporated, classified all deficits from roadshowing as advertising expense, such losses were added to the distribution costs of the films so shown prior to the establishment of their regular release rental quota. In the case of Mystic, the profit was deducted from the cost of distribution, the exhibitors benefiting thereby from slightly lower rentals than they otherwise would have paid.For each photoplay that the distributor shall except and exclude as aforesaid, the Exhibitor is hereby granted the option to exclude from this license one of the other photoplays licensed hereunder, only, however, if the Exhibitor shall give the distributor written notice to that effect not later than 14 days before the date fixed for the exhibition hereunder of such other photoplay.
As originally conceived, Broadway exploitation theaters were a part of the roadshow plan. For several reasons, however, they came to be of a more permanent character. In the first place, New York offered a large market which was both accustomed and willing to pay higher than average theatrical admission prices. Secondly, practically all the business functions of the motion picture industry were centered in the Times Square district. Finally, and of greatest importance, was the common belief, prior to 1929, among many in the industry, that a New York long-run success at top prices not only provided valuable advertising propaganda, but in itself assured country-wide popularity for the picture. For these reasons and despite the fact that rather general losses resulted from such exhibitions, practically all the large producers were induced to lease and to operate such theaters as the Cairo Theater. The total cost of operating Broadway exploitation theaters had been estimated conservatively to be between $15,000 and $20,000 per week. Receipts from pictures of average quality shown at these theaters ranged between $9,000 and $14,000 a week. Only the exceptional pictures returned a profit from such runs.
With the advent of large national theater chains, and to a lesser extent with the introduction of sound pictures, the popularity of the roadshow plan diminished rapidly. Satisfactory exploitation, de luxe theaters, and first-class equipment were assured producers through their own or their affiliated theaters, or through the theaters of competing producers. Furthermore, since it was natural that the regular motion picture theaters would be wired for sound first, it followed that in many cases the legitimate theaters could not be used for roadshow purposes, since they were not equipped for exhibition of the new type of production. Finally, the public at large became less willing to pay higher prices to see motion pictures which at a later date could be seen at popular rates.
Despite this rather general disappearance of the motion picture roadshow throughout the country, the New York exploitation theaters continued to operate. They were among the first to be wired for sound. Producers controlling them insisted on their sales promotional value, concurring in the opinion that Broadway's tastes in motion pictures were indicative of the tastes of the rest of the country. Further, there had not been any noticeable reduction in their patronage.
Evidence indicating that some producers had changed their attitude toward Broadway exploitation houses appeared with the practice of exploiting and exhibiting numerous regular feature pictures and several superspecials in some of the larger cities throughout the country, prior to their exhibition in New York City. In the latter part of 1929, several motion picture periodicals conducted surveys to determine the attitude in the trade on the merits of the Broadway exploitation plan. In general, the consensus of opinion among exhibitors was divided.3 Producer distributors declared that they would strive to make outstanding photoplays, but that since a New York run had little value unless associated with a superb attraction, in general, they would exercise discretion in the selection of films for special runs. According to the Film Daily, September 22, 1929, the Paramount Famous Lasky Corporation and Metro-Goldwyn-Mayer Pictures Corporation were inclined toward fewer roadshows. The Fox Film Corporation planned to relinquish the Gaiety Theater and, therefore, temporarily at least, would not have a Broadway extended-run house. Warner Brothers, Incorporated, and First National Pictures, Incorporated, since they had achieved unusual financial success with their advanced price engagements on Broadway, planned to continue such runs as they deemed suitable to that trade. The Radio-Keith-Orpheum Corporation, the Columbia Pictures Corporation, and Pathe Exchange, Incorporated, each planned several pictures for Broadway showing at advanced prices, as did Tiffany Productions, Incorporated, which recently had acquired a lease on the Gaiety Theater. The question of Broadway advanced price showings of United Artists pictures rested entirely with the individual producers.
In considering their specific problem regarding the Cairo Theater, the executives of Goldstein, Incorporated, advanced arguments both for and against the advisability of renewing the lease.
The Cairo Theater, located in the heart of the Broadway theatrical district, had a seating capacity of approximately 1,600. Although of an obsolete type of construction, it had been renovated and equipped with modern devices, including refrigeration and sound reproducers. The acoustical properties were excellent. The proscenium arch and general layout of the theater would not require alteration for the exhibition of wide films. The property owners suggested lease renewals for either 5 or 10 years. The rentals involved, based on comparative values, were considered exceptionally low.
The president of Goldstein, Incorporated, was definitely opposed to a renewal of the lease. In his opinion the losses on the Cairo Theater were not justified. He believed that Broadway exploitation had passed the period of usefulness and that people outside New York City and its adjoining areas were not particularly interested in what New York liked in motion pictures or in what it paid to see them. It was his opinion, furthermore, that the public at large judged all motion pictures primarily on the basis of their material content, that is, the star, the supporting cast, and the story, and to a lesser extent on their local exploitation. He proposed that rather than schedule a few superspecials for Broadway exploitation-runs, the company should endeavor to produce a constant flow of good box office attractions for general release.
Several additional arguments substantiated the president's opinion. First, the company's records indicated that since the latter part of 1928, higher than average film rentals had not been obtained on all pictures prereleased for Broadway exploitation. As a matter of fact, only two pictures so shown had commanded appreciably higher rentals. These pictures were unquestionably of outstanding quality. Another factor was the retardation of the general release dates. In some instances three months had elapsed before a film, after having been exploited on Broadway, was placed in general circulation. Aside from the interest charges accruing on the investment during these periods of inactivity, the problem of obsolescence had to be taken into consideration. The latter problem was particularly important in 1929, because of the rapidity with which technical improvements were being made.
The company's sales manager, expressing the opinion of the distribution department, stated that he found it increasingly difficult to sell pictures on the strength of a Broadway exploitation-run. Such runs, in his opinion, could not make a success of a poor picture. He believed that producers had nullified a large part of the value of the plan in booking a large number of program pictures for Broadway exploitation-runs. The public had become aware of this practice and, therefore, was little influenced by publicity based upon it. Furthermore, the scope of New York publicity was confined to a definite area which did not include the Midwest, South, and Far West. In his opinion, the publicity radiating from the various key centers was far more important than Broadway exploitation, principally because of local customs and preferences. He believed that a typical Broadway picture seldom proved of outstanding value in the country at large and that the company should, therefore, endeavor to avoid producing an unreasonable number of pictures that dealt in particular with the New York point of view.
Another executive, while recognizing the value of Broadway exploitation for genuinely outstanding pictures, considered these, however, too few to warrant the operation of a theater solely for that purpose. He believed, furthermore, that an outstanding success in one or more of the ordinary, larger, continuous-run theaters carried more real advertising value for such films than did exploitation showing. In his opinion, wholly aside from the advertising value to be derived from exploitation, there was but one reason why the company might be justified in renewing its lease on the Cairo Theater, namely, to secure a temporary outlet for an occasional Goldstein film, the distribution of which was retarded because of production and booking complications.
The advertising manager enumerated several factors favoring a renewal of the lease on the Cairo Theater. In the first place, the losses from operation, he believed, were more than offset by the advertising value. In his opinion, advertisements in local trade papers telling of a New York success, while perhaps not increasing rentals, did, nevertheless, facilitate distribution by their influence on exhibitors. Secondly, since film purchases for the large national chains were made in New York City, the value of a successful Broadway pre-release showing was of vital importance. Again, there was the possibility of telling the public that it could see the best motion pictures for but a fraction of the price that New York paid to see them. Moreover, if advertisements stressing New York successes were inserted in local newspapers, the public could be influenced to talk about such pictures before their arrival. In his opinion, small town motion picture patrons were influenced by the magic of a New York success even to the extent of paying higher than average admission prices. Finally, a Broadway run provided the best method by which the company's films could be tested.
Commentary: The early success of roadshown pictures was doubtless due to the fact that such pictures were of a distinctly superior grade, as compared with the average program pictures of that period. The public would have attended certain of these exhibitions in any event, because of a belief that a picture shown in a theater that had been largely devoted to legitimate plays, would be one that had a special attraction. As time went on, however, an increasing number of pictures were roadshown, and in many cases these pictures were not notably better than many which were exhibited in motion picture houses. The public lost its interest in such pictures, therefore, particularly when it had to pay advanced admission prices to see them.
The policy of this company of adding the losses which developed on roadshown pictures to the cost of the negative, may be justified only on the assumption that such pictures were roadshown primarily for exploitation purposes. It is interesting to note that this company deducted from the cost of the negative the profit made on at least one picture, and sold the picture to exhibitors at a lower price in consequence. If the picture was so successful as a roadshow that it made a profit when most of such pictures resulted in losses, it might be argued that the company was in a position to charge exhibitors more, rather than less. One suspects that in most cases distributors would be likely to adopt this latter policy, especially since most distributors feel that there is little relation between negative cost and rental value.
The policy of exploiting pictures on Broadway is one which is open to some question. The case makes clear that a majority of pictures so shown result in losses to the company. The only justification for Broadway exploitation, therefore, lies in the belief that exhibitors buy pictures more readily if they have been previously so exhibited. The evidence in the case is not clear that any such advantage is derived by the distributor. In many cases exhibitors throughout the country are unwilling to pay higher prices for such pictures. Furthermore, contrary to the belief of a substantial number of producers, there is no assurance that a Broadway success guarantees success in the rest of the country. It may safely be said that many pictures, unusually successful on Broadway, have been rather poorly received in many other sections of the country. The president of Goldstein, Incorporated, expressed it as his opinion "that the public at large judged all motion pictures primarily on a basis of their material content, that is, the star, the supporting cast, and the story, and to a lesser extent on their local exploitation." The inherent value of a picture is, after all, the thing which makes it a success. The tendency on the part of distributors to exhibit on Broadway, pictures of no particular outstanding merit, to offer but two exhibitions a day, and to charge advanced admission prices to such showings, undoubtedly has lessened the value of Broadway showings.
If this reasoning is correct, the logical question to ask is whether or not an amount of money equivalent to the losses on such exhibitions could not be more profitably spent, then, on improving the quality of the picture, or in some other form of advertising. To the commentator either of these latter policies is, in the main, preferable.
Two other considerations, however, need to be borne in mind. The first relates to the independent producer who owns no theaters of his own, and who must rely for his distribution very largely upon sales to the large chain theaters. Such a producer may have an additional sales argument when he can show that his particular picture was well received on Broadway. Whether or not the value of this argument is great enough to compensate for the losses which he probably will incur in many instances, as a result of such showings, is an open question. If, as is probably true, the buyer for a chain of theaters judges the value of a picture from an actual observance of the picture and an estimate of its value, then the argument for exploitation is materially weakened. It loses still more of its force if it is realized that Broadway acceptance does not guarantee nation-wide acceptance.
The second consideration has to do with the policies to be pursued by companies who own Broadway theaters. It would be better to keep such houses open and get whatever income might be derived from them, even though some loss might be incurred, than to close them altogether and thus suffer a still greater loss. Much may be said for the policy, in such instances, of operating these houses for such returns as may be derived from them, rather than on the theory that they are primarily exploitation centers. The showing of good, high-grade pictures, particularly adaptable to New York audiences, at more moderate prices on a continuous-run policy, would seem to be a logical conclusion.
March, 1930, H.T.L.
3 Exhibitors Herald-World, September 21, 1929.
Howard Thompson Lewis (commentaries), "Goldstein, Incorporated, Advertising, Maintenance of Broadway Exploitation Theater," Harvard Business Reports, Volume 8, Cases on the Motion Picture Industry, (New York: McGraw-Hill, 1930), pages 417-425.
© 1999, David Pierce, on editing and revisions (if any)
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