The ‘Monsters’ $58M Rip-off

The New York Times’ Monday report on the weekend box-office grosses  suggests that the populist outrage directed against the AIG bonuses might find a new target in CEO of DreamWorks Animation Jeffrey Katzenberg. The story of how "Monsters vs. Aliens" took in $58.2 million on its opening weekend sounds less like a success when you […]

The New York Times’ Monday report on the weekend box-office grosses  suggests that the populist outrage directed against the AIG bonuses might find a new target in CEO of DreamWorks Animation Jeffrey Katzenberg.

The story of how "Monsters vs. Aliens" took in $58.2 million on its opening weekend sounds less like a success when you take note of the inconvenient facts. Even though only 2,100 of the 7,000 screens the movie opened on were equipped with 3D technology, reports Brooks Barnes, the 3D screenings "carried premium prices of up to $4 above the standard admission. So about 30 percent of the screens delivered 56 percent of the gross."

Those numbers aren’t false, but they are inflated.

Pumped up by premium ticket prices, the grosses for "Monsters vs. Aliens" are, like the money made by now-tottering banks and investment firms, made by picking the pockets of average-income Americans — in this case, the families who make up the audience for DreamWorks Animation.

Parents who take their kids to the new 3D animations probably don’t discover until they’re at the box office that they’re being charged an extra $2.50 (the surcharge I shelled out for "My Bloody Valentine” in Times Square) — $4 per ticket. And then they’re on the spot, not wanting to disappoint their kids but on the hook for an extra $10-$16 for a family of four.

Let’s say, though, that they know about the surcharge because they’d taken their kids to see last summer’s "Journey to the Center of the Earth" or "Coraline" earlier this year. Those moviegoers have already paid for their RealD glasses. But because theaters are not offering a two-tier admission price allowing people who have already purchased glasses to simply buy a standard-priced ticket, they’re shelling out for glasses all over again.

A piece by Richard Verrier in last Thursday’s Los Angeles Times makes clear the money at stake here.

There are 40 3D features scheduled for the next three years, including 17 from Disney — which, through Roy Disney’s Shamrock Holdings, has invested $50 million in RealD, the company that pioneered the new process — and every release from DreamWorks Animation. And though the credit crunch has slowed the installation of 3D projection systems in theaters, RealD’s revenue nearly doubled in 2008.

With so much Hollywood money bet on the success of RealD, with investor money tied up in the conversion of theaters to 3D projection systems, studios need the films released in the process so far to show big profits.

How better to do that than to add a surcharge which inflates the box-office numbers? And to ensure that moviegoers pay that surcharge every time they go to a 3D movie.

Many of the upcoming 3D movies are family films. And at a time when the economy is so bad that going to the movies has become a luxury many families can’t afford, Jeffrey Katzenberg is displaying lousy business sense by putting already strapped families on the line for an extra $2.50-$4 per ticket per movie.

Theaters that lease the RealD process (for about $5,000-$10,000) have to pay the company 50 cents for every ticket sold. But even allowing for that and, it’s fair to guess, allowing for the manufacturing cost of a pair of plastic glasses, the studios are obviously making money off the surcharge.

Katzenberg, John Lassetter at Pixar, and the other studio heads who will release movies in RealD are simply indulging in the carny barker tradition of squeezing whatever money they can out of the public who flocks to their attractions. But they’ve chosen the worst possible time to do it, and because they are selling a family product, this naked grab to inflate profits and protect their investment seems particularly venal.

The studios should immediately drop the surcharge for 3D movies or, at the very least, allow people who hold on to their glasses to pay regular price.

Otherwise, to an already enraged public, Katzenberg and his colleagues may find themselves regarded as so many non-Hollywood execs already are: schmucks who soaked the public for their financial gambles.