Once a giant in the research world, the company’s dominance has eroded.
Updated on Tuesday May 12:
One of Hollywood’s most powerful movie research firms, National Research Group, has laid off 30 staffers in the past month, and is said to be preparing to be absorbed into a larger unit in its corporate parent, Nielsen.
The layoffs in early April, which were not previously reported, represent more than 10 percent of the company’s staff, and is at least the second cutback in staff in the past year, indicating declining market share at the once-dominant research firm.
A Nielsen spokesman confirmed the layoffs on Sunday, saying it mainly involved operational staff.
"Business has been impaired because of the poor economy," said spokesman Gary Holmes. "There has been some cutbacks in studio research."
Meanwhile, rumors are rampant in Hollywood research and marketing circles that NRG is preparing to be folded into Nielsen IAG, a consumer-oriented research group that mainly measures the effectiveness of TV advertisements, bought a year ago by Nielsen for $225 million.
IAG executive Derek McLay is already heading up NRG, moving to run tracking at the research firm in early May, according to executives within the company and those who work with them. McLay, a former MGM executive and a veteran of exhibition, is working to reorganize the company.
That will be the second shift in strategy for NRG in a year. Almost exactly a year ago, Nielsen announced that NRG was being folded into its BASES organization, which focused on innovation in packaged goods and other consumer markets.
Current executives at NRG are already reporting to managers at IAG, Holmes said.
The staff cutbacks reflect the declining fortunes of a research group that once monopolized Hollywood movie research under the leadership of Joe Farrell.
For at least two decades Farrell, who left in 2003 after his contract was not renewed, used his close personal relationships in the industry to maintain the company’s primacy, and made his weekly ‘positioning report’ a necessary business tool for every major studio.
Although NRG continues to be used by the studios for tracking, the post-Farrell regime has seen its position eroded by MarketCast – owned by Reed Business Information – and OTX, an online research company, both of which have poached key talent from the company.
“What is NRG anymore besides the tracking?” asked one industry executive accustomed to dealing with NRG. “In this business you’ve got to have people on the other end of the phone to talk to marketing executives at the studios. And if there’s nobody to talk to at NRG, who cares what it’s folded into?”
The movie market research business represents about $100 million in revenues spent by major and independent studios every year. Research has grown in the television business as well, but is still not as large.
National Research Group has seen an exodus of veteran talent in the past few years. Kevin Yoder, who once ran NRG, was recruited to MarketCast. Kevin Goetz went to head up movie research at online research company OTX Research.
And Howard Ballon, who headed Nielsen film and home entertainment, Ballon has also just joined OTX as EVP managing director, OTX West.
Ballon was replaced by Marc Lagrois, who had led BASES’ Asian business and was not previously well-known in Hollywood.
Lagrois did not respond to an email seeking comment.
The Hollywood marketing rumor mill has been rife with speculation of what NRG will become. “I believe they’ll keep tracking,” said one research executive. “I don’t see them in the testing and custom research business much longer.”
The structure shift is only one of a series of changes going on in the landscape of Hollywood market research. Republican pollster Frank Luntz said in recent weeks that he is aggressively seeking to break into the Hollywood movie research business.
And many feel that the age of the Internet requires an overhaul of the research industry as a whole. Tracking for this weekend’s blockbuster is a good example of the debatable dependability of the prediction business. One of the leading research firms predicted “Star Trek” would take in box office revenues in the high $50 million range.
The film took in $76.5 million in its opening weekend.