Harvard business reports (1930)

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450 HARVARD BUSINESS REPORTS and consequently the booking of trailers rested entirely with the exhibitors. Percentage price policies, in that they provided for an equitable distribution of box office receipts between the distributor and exhibitor, changed the nature of this situation. As a result of this development the need for a company trailer service became apparent to Warner Bros. Pictures, Inc. In the first place, the company realized the advisability of showing not only a trailer for each Warner picture but one that could produce maximum results. The possibility of increased box office receipts was of much greater importance than the production costs of trailers or the prices paid for them by exhibitors. It was recognized, furthermore, that the exhibition of a complete Warner program on a percentage rental policy might warrant the free distribution of trailers to the theaters booking such programs. Obviously an independent trailer company would not fit into such a situation. For aforementioned reasons it would not be sound practice for Warner Bros. Pictures, Inc., to purchase trailers for exhibition by percentage accounts. According to its decision Warner Bros. Pictures, Inc., organized, as a division of the advertising department, a department for the creation and production of trailers. Since members of the company's regular staff could be employed in such production, the personnel of this department was not large. Distribution was effected through the regular channels by the company's 35 exchanges without increasing their general operating expenses. Selling was conducted by the regular salesforce in conjunction with the sale of feature pictures. Trailer price policies varied in accordance with the contract for the feature picture which a trailer represented, and for other of the company's product. In general, however, trailers were distributed to exhibitors either for a flat rental price or without charge. Free service was granted to the larger theaters that exhibited a complete Warner program (not including newsreels) on a percentage arrangement. When fees were charged for trailers, the prices involved were much less than those charged by independent trailer companies. The company followed much the same policy in dealing with its own theaters as it did with the theaters of its competitors. After several months' trial Warner Bros. Pictures, Inc., was satisfied with the results achieved by its trailer department.