Harvard business reports (1930)

606 HARVARD BUSINESS REPORTS pictures produced by one producer for five years in advance. The argument advanced in the commentary on the Elder Film Corporation case3 is not without point in this connection. The exhibitor agreed to take all sound motion pictures up to 52 per year. This was quite irrespective of how good or how bad such pictures might be. Considering the variability of quality in pictures commonly produced in the past, both within a single year and also from year to year, the exhibitor might feel that he was forced to take a considerable number of pictures either of distinctly poor quality or very ill adapted to his local market. The fact that he might, under the Allied Franchise Agreement, pay a lower price for such pictures, which it was anticipated would have somewhat less box office value than other pictures, does not solve the difficulty. Poor pictures and pictures not well adapted to particular communities are a poor investment regardless of price. It should be noted that other difficulties might develop. If the producer decided to make pictures exclusively for the enlarged screen, the exhibitor who for any reason found it impossible to use the larger screen might find himself in rather serious difficulties. It might, however, be safe to assume that the closest of cooperation between producers operating under the franchise agreement and the exhibitor interests could be expected since the interests of the former would become more and more closely allied with those of the independent theaters. Furthermore, every producer can be expected to make every effort to create the very best pictures of which he is capable with the funds and talents available. In the present instance, the larger the number of franchises sold the more money the producer had at his command. Just what this figure might be cannot be determined at present. It must be remembered that the franchise applied only to sound pictures. A recent survey indicated that of 22,624 theaters in the United States only 10,000 were wired for sound pictures. It may be assumed that a vast majority of the affiliated houses were wired. This would reduce still further the number of theaters available for the Allied States Franchise. Published statements indicate that the particular producer in this case had set a goal of 5,000 franchises. It is believed by the commentator that this estimate was perhaps somewhat overly optimistic. However, between 3,000 and 4,000 franchises might reasonably be anticipated. Under favorable circumstances, this number should provide funds adequate to finance a substantial number of good pictures. There is some question as to whether the estimate in the case to the effect that the independent theaters could provide business for three producers is altogether sound. See page 316.