Jack Valenti's state-of-the-industry address at ShoWest today (Mar 4) was startling not only for the fact that 2002 admissions were the highest in the US since 1957. Despite stabilising production costs over the past few years, negative cost of films released by members of the Motion Picture Association Of America (MPAA) were up a dramatic $3.9bn in 2002 - an upturn which was only partly offset by a small drop in the average cost of releasing them.

In a speech entitled Emerson's Doctrine: The Very Good, The Not So-Good, The Brooding Menace And The Wonder And Beauty Of Human Behaviour, Valenti hailed 2002's $9.5bn domestic box office and 1.64 bn admissions as modern records. Key drivers behind the figures were state-of-the-art theatres with digital sound and stadium-seating, strong content and relatively stable ticket prices.

Valenti said last year's box office represented a rise of 13.2% over 2001's $8.4bn, with nine pictures grossing more than $50m in their opening weekends and an additional 11 taking more than $30m. Spider-Man led the way with the all-time record opening weekend of $115m last May.

The 1.64 bn admissions represented the highest level since 1957, with 166 m Americans classified as moviegoers because they had seen a picture at least once during the year. Ticket prices averaged $5.81 in 2002, representing a 2.7% increase from $5.66m in 2001.

The not-so-good part of Valenti's address concerned production levels. The $3.9bn production cost (or "negative cost") rise from $9.3bn in 2001 to $13.2bn in 2002 was driven by two factors: a year-on-year rise in the number of films from 196 to 225 and a 23.3% or $11.1m rise in the average production cost from $47.7m in 2001 to $58.8m in 2002.

Combined with marketing costs, which fell by 1.2% from $31m in 2001 to $30.6m last year, the total production and marketing cost in 2002 was $20.1bn, which represented a rise of 30.4% or $4.7bn from $15.4bn in 2001. Average production and marketing costs rose by 13.6% or $10.7m from $78.7m in 2001 to $89.4m in 2002, representing the largest percentage increase since 1997.

"In the global marketplace wherein the American movie eclipses its competition, films are becoming more expensive," Valenti said. "Costs are an ungloried fact of the creative business landscape, planet-wide."

Theatre admissions comprised 38% frequent visitors with at least 12 visits, 47% occasional visitors with two to 11 trips and 15% infrequent visitors who saw a theatrical release at least once a year. The average number of visits per capita was 5.7. Broken down by age group, half of all admissions came from the 12-24 demographic, 17% were aged 30-39 and the over-40s accounted for 32%. Ticket prices rose by 2.7% over 2001 compared to a national inflation rate of 2.4%.

"You achieved this admissions boost in spite of the most relentless, lacerating competition inflicted on any enterprise, every hour of every day," Valenti told delegates. "Competing for the entertainment eyes and ears of consumers are 72.2million cable households, inhabited by 34.4million homes with premium cable; 17.6million homes on satellite; 38.8million households with DVD devices with access to over 20,000 titles; 97.6million homes with VCRs; 66.9million homes with internet access."

International admissions climbed 7.5% from 2001 to 7.3billion, with increased attendance levels in Europe, Latin America and the Asia-Pacific region. Box office rose by 20% to $9.64bn, with Europe, the Middle East and Africa accounting for just over half that amount, followed by Asia-Pacific on 40% and Latin America on 10%.

Turning to piracy, which he described as the MPAA's number one priority, Valenti told delegates the MPAA and its industry partners were working on ways to reduce the effects of internet abuse and DVD counterfeits. However with no consolidated solution in sight and an international educational trailer still months away from release, there was not much more he could say.

"We will succeed because it is in the long term interests of this nation to preserve the vitality of America's most wanted trade export. It is in the long-term interests of everyone who creates and markets intellectual property to stand guard against the theft of valuable creative works in the tomorrows that will soon be upon us."

Valenti praised the voluntary ratings system, on which MPAA consults with the National Association of Theatre Owners (NATO), citing a 74% approval rating among parents with children under 13.


- Total box office: $9.5bn in 2002, $8.4bn in 2001 (13.2% increase from 2001)

- Admissions: 1.64billion in 2002, 1.49billion in 2001 (10.2% increase) - highest increase since 1957

- Average ticket cost: $5.81 in 2002, $5.66 in 2001 (2.7% increase)

- Per capita admissions: 5.7 in 2002, 5.3 in 2001

- Highest grossing picture: Spider-Man, $403.7m

- Highest opening weekend: Spider-Man, $115m (May 3 2002)

- MPAA films released: 225 in 2002 (includes five re-issues), 196 in 2001 (includes eight re-issues)

- Other distributor releases: 242 in 2002 (includes 13 re-issues), 287 (includes 13 re-issues) in 2001

- Total releases: 467 in 2002, 483 in 2001

- Average box office of MPAA new releases: $32.5m in 2002, $34.8m in 2001

- Average box office of all releases: $21.2m in 2002, $18.2m in 2001

- MPAA member average theatrical costs (production only): $58.8m in 2002, $47.7m in 2001 (23.3% increase)

- MPAA member average theatrical costs (production and marketing): $89.4m in 2002, $78.7m in 2001 (13.6% increase)

- Total screen count: 35,280 in 2002, 36,764 in 2001 (4% decrease)

- Indoor theatre count: 5,635 in 2002, 6,596 in 2001 (14.6% decrease)

- Digital cinema screens: 124 in 2002, 45 in 2001