This classification includes establishments primarily engaged in performing auxiliary services to motion picture distribution, such as film delivery service, film purchasing and booking agencies, and film libraries.
512199 (Other Motion Picture and Video Industries)
512120 (Motion Picture and Video Distribution)
Services allied to motion picture distribution faced challenges on a number of fronts in the late 1990s. Shifting patterns in the theater market threatened to undercut film booking and purchasing agencies; film technology was forcing film carriers to rethink their operating strategies to accommodate emerging trends; and major motion picture distribution companies were quickly encroaching on the traditional film-library market.
Businesses in this industry are allied to the process of film distribution, instead of directly providing services to film distribution companies. In other words, these firms contract with companies in the film exhibition industry, including theater houses, rather than with the distributors. Industry players tend to specialize in their particular market segments, which include film booking and purchasing agencies, film libraries, and film delivery services. Companies in this industry tend to be small; many serve only regional areas.
Film Booking and Purchasing. Film booking and purchasing agencies were contracted by movie theaters to act on their behalf in the process of acquiring and negotiating the terms to rented feature films from motion picture distribution companies. (The terms "purchasing" and "buying" do not mean the actual sale of films, but a form of rental.) Traditionally, the term "booking" referred to agreeing which films to play, while "buying" referred to negotiating the payment for the film and its length of run. Both activities, however, were performed by the same agencies. Accordingly, booking and purchasing agencies were synonymous designations. Agencies also helped theaters select films by screening them first when possible. Booking agencies occasionally offered additional business services to theaters, such as market research, consulting, accounting, and bookkeeping. Booking agencies were hired by a majority of independently-owned theaters, whereas larger chains of theaters tended to perform their own booking.
Booking agencies tended to be very small companies, many serving only a handful of theater clients operating a total of 20 to 30 cinema screens. While most booking agencies employed few workers, some were simply self-employed agents. Larger agencies occasionally operated branch offices and served theaters in different parts of the country but rarely employed more than a dozen workers.
Especially with the move toward megaplexes — large movie houses featuring a number of screenings simultaneously — film booking agencies are likely to play a diminishing role in the U.S. film industry. The number of movie screens has increased by about 4,000 since the mid 1990s; however, during the same period, theaters housing 16 or more screens grew by 400 percent. Leading theater operators like Carmlike Cinemas and Regal Cinemas, Inc. typically negotiate with distributors directly.
Film Libraries. There were several different types of entities that were all called film libraries. Film libraries that were independent companies involved in renting out films tended to serve the non-theatrical market, namely educational institutions and other non-profit organizations. They differed from the film exchanges that distribution companies used by holding their collections for longer periods of time, and having complete control over their distribution and rates. Since they served a non-profit market, film libraries charged a relatively low flat rental fee, instead of requiring a share of the profits, as did commercial distributors. Film libraries increasingly offer film on videotape in addition to reels. In addition to film library companies, there are also non-profit organizations that rent film free of charge to educational institutions.
The term film library was also used to designate the film collection held by a motion picture production company or distributor. These film libraries, however, were not independent enterprises, but represented the assets of the companies. Theaters showing older films contracted with the company whose library contained the desired film. For films dating back several decades, the owner was not necessarily the original producer, since film studios and distribution companies have at times acquired the rights to each others' older films. In fact, the term "film library" did not necessarily correspond to the physical location of the films, but referred to the ownership of the copyrights.
The issue of film copyrighting came into play when copies of film were to be sold, rather than rented. A market for the sale of film, especially shorter film clips, existed among the producers of television programs, commercials, and videos, which incorporated the old clips into their new productions. When producers were unable to purchase film clips directly from the film libraries of the studios or distributors, they turned to a third type of film library. Stock-shot and archival footage film libraries owned and licensed film clips of interest to other producers.
Finally, there were film archives. These tended to be non-profit organizations that preserved original prints of films for posterity. Some exhibited their films on a limited basis, while others did not exhibit them at all, in order to preserve the films' quality. Thus, archives were not involved in the distribution process.
The 1990s witnessed a large-scale rearrangement of the ownership structure of the film-library market, as libraries were rapidly bought and sold, often in merger deals. Independent film libraries, meanwhile, have been swept up in the rapid consolidation of the major film studios. The film-library market has thus been characterized by the scramble to find buyers.
Film Delivery. Film delivery services, also known as film carriers, were usually classified under the transportation services industry, in particular SIC 4213: Trucking Except Local, but belonged under both classifications because of their unique services. Film carriers were specialized transportation companies serving the needs of motion picture theaters by delivering and picking up rented theatrical films. Film was transported between the cinemas and the national network of film exchanges (also known as film depots), or directly between theaters, based on their booking schedules. Metal canisters of 16 mm or 35 mm film were delivered to the theaters, usually on a weekly basis. Unlike other delivery services, film carriers had keys to the theaters they supplied so they could drop off and pick up film when the theater was closed. Most delivery was done by truck or van because of the heavy weight of the film canisters, which made them impractical for air freight, except in rush circumstances. Film carriers served only theaters, since other organizations that screened films tended to use the more easily transportable videotape format, or else had only occasional film needs, which could be handled by any non-specialized delivery service.
There were fewer than 30 major film delivery companies throughout the country that served nearly the entire theater market. Most served up to a couple hundred theaters, some covering a region comprising several states. There were also a commensurate number of smaller film carriers that exclusively served single theater chains of around 15 to 20 theaters. Films generally weigh about 62 pounds, and are often accompanied by large cardboard stand-up displays and other promotional items theaters place in lobbies.
Film Booking and Purchasing. The greatest developments in film booking and purchasing occurred in the booking process itself, and in the terms negotiated. Issues of negotiation in film rentals included the percentage of the gross income paid back to the distributor during consecutive weeks of a film's play, and the sum excluded the percentage that was turned over to the distributor to cover the theater's expenses. Other issues included the amount of the non-refundable guarantee paid by the theater up front to secure the film, the amount of the refundable advance, and the guaranteed extended playing time for the film.
In the past, block booking was common practice, in which the larger studios would rent out a block of good and mediocre films at an all-or-nothing deal to theaters. A proportion of the films would be rented at a flat rate while others would be paid for in a percentage of the profits. The practice was banned between 1921 and 1932, but continued again until the Supreme Court outlawed it in 1948.
An old practice of blind bidding resurfaced in the 1970s. Distributors convinced theaters to buy films before production was completed, and thus theaters could not view the film before deciding if they wanted to purchase it. Studios had turned to blind bidding to cover their growing expenses, but states began to outlaw it. When nearly half the states forbade blind bidding, the practice was discouraged by the late 1980s.
To avoid competitive bidding among theaters in the same region, theaters devised a practice called "product splitting" by which they agreed among themselves how they would divide the upcoming films. This practice was made illegal following an anti-trust lawsuit in 1977.
Film Delivery. Film carriers quickly became a specialized service within the transportation industry with the emergence of the motion picture theaters in the 1920s. By 1933 the trade association Film Carriers Conference (later renamed National Magazine and Film Carriers Inc.) was formed. Later, film carriers gradually began to diversify into magazine transportation, beginning with services to Time magazine in the 1940s, as the film carriers' routes and delivery schedules fit well with the needs of magazine wholesalers. Film carriers diversified into delivering other theater supplies, including popcorn and candy sold at theater concession stands.
The effect on the services allied to motion picture industry of digital film, and the expected introduction of digital film projectors, is yet to be determined. The new technology, which analysts expect to overtake the film industry early in the twenty-first century, poses a particular concern regarding the control of delivery networks. Eventually, digital films could be transmitted electronically or even by satellite, though in the short term it seems likely that theater operators will favor physical distribution precisely because of the greater degree of delivery control afforded the theaters. Meanwhile, film libraries can expect to reap rewards from the conversion of their collections to digital format.
Equally nebulous was the impact of emerging technology aimed at delivering quality film footage over the Internet. Technology was rapidly developing to turn the World Wide Web into a film-viewing medium, thus creating an inexpensive outlet for filmmakers without significant financial backing. With decreased production costs and inexpensive computer software, these filmmakers only need space on a Web server to bring their films to public exposure. The electronic distribution of film over the Web would, of course, render delivery companies unnecessary. Meanwhile, online entrepreneurs have put out the word that they are in the market for film libraries. While Web film distribution will face legal hurdles in the form of licensing formalities for transmitting films over the Internet, this development could prove attractive to independent film libraries, which have the greatest difficulty finding consistently stable distribution networks.
The segment of film libraries renting for nontheatrical exhibition was being seriously hurt by the conversion of film to videotape and the subsequent growth of video rental outlets. Although it was technically illegal, teachers saved money by renting videos from a consumer video shop instead of renting the film through a film library.
Smaller booking agencies also felt the pinch of new technology and rapidly-consolidating Hollywood's growing concern for the bottom line. An intensified focus on first releases or "event" films in major markets squeezed out many smaller exhibitors, putting pressure on the companies who served them. Theater business was rapidly ushered into large multiplexes throughout the 1990s. At the same time, satellite-distributed digital movies and home videos were reducing the number of trips to the cinema. Over the long term, continuation of this trend was expected to reduce the cultural diversity of film product and downgrade the market to only a few thousand screens, charging exorbitant prices for exclusive runs of event-scale films; ticket prices increased more than 20 percent between 1992 and 1999—8 percent during 1999 alone.
In an effort to reverse this trend, innovative new companies sprang up that took advantage of the rapid development of computer networking technology in the mid 1990s to offer low-cost booking and promotional services via the Internet. Companies like Maine-based Cinema Links used computer technology and computer networks to link hundreds of exhibitors and distributors nationwide, promising to significantly lower the costs associated with booking and promoting films and thereby to increase profit margins. Plot summaries, screeners' advisory notes, release schedules, distributor terms, and other critical booking information were available daily via modem, telephone, or FAX. Box office reports were uploaded daily, computerized, and then forwarded to the distributors.
The number of stock-shot and archival-footage libraries, on the other hand, increased significantly in the early 1990s. There was a continued drive to archive and restore classic films, interviews, and footage for use in documentary materials and revived screenings. This segment also felt the impact of the World Wide Web; an enormous stock footage library called Footage.net cropped up online. The site is linked to dozens of film libraries around the world, and acts essentially as an online intermediary between the physical libraries and consumers. There also was a growing foreign market for stock footage. The growth of the field was attracting innovative newcomers to the stock footage film library business. Many such film libraries have also started producing their own stock footage to complement their collections by shooting city scenes and natural vistas. Meanwhile, the Film Department at the University of California at Los Angeles allied with Robert Redford's Sundance Institute to initiate a project devoted to archiving, preserving, and presenting independent films. It will be incorporated into the Sundance collection and make films available to film makers and educational programs.
The leading film delivery company was Airborne Express, which held exclusive deals with Universal Studios, Miramax, Disney/Buena Vista, and a host of other major and minor film distributors through its partnership with Technicolor Entertainment Services. The firm delivered to more than 8,000 studios nationally and generated $25 million in revenue from its Technicolor-related operations in 1998, registering annual growth of 30 percent since its formation in 1993. Another major film carrier was Benton Express Inc. of Atlanta, Georgia with $35 million in revenues, some of which derived from its trucking operations.
A leading non-theatrical film library was Films Inc. of Chicago, with 120 employees and 1998 revenues of $10 million. Leading stock footage film libraries include Film Search Inc. of New York with $11.0 million in revenues and a payroll of 340 employees, and Archive Films Inc. of New York, which employed 120 and garnered sales of $14.3 million.
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