Minutes of evidence taken before the Departmental Committee on Cinematograph Films (1936)

MINUTES OF EVIDENCE 111 30 June, 1936.] Mr. S. Row sox. [Continued. 14. The comparisons of cash earnings are naturally of much greater significance than those made in the preceding paragraphs. These seem to show that " net " box-office receipts in America were about $700 million as against about £35-£ million in Great Britain. Converting at $5 to the £ the American total is seen to be nearly four times as large as the British. And again, in relation to the number of seats, the earnings per seat in America averaged $70 (say £14) compared with £9 4s. in Great Britain. Of these sums about £36 million is paid to the various distributors in America who pay thereout to the producers a sum estimated at about £25 millions. The corresponding British figures are £12 and £9 million respectively. All these figures point very directly and conclusively to my first contention that the home market in America is so much larger and so much more productive than iu Great Britain, that the American producer starts with enormous economic advantages in competing with the output of British producers. 15. The commercial advantages credited to American producers are not confined to the possession of a large home market — the largest in the world. Owing to the similarity of language, nearly every American production is, practically without any alteration, available for and sent to every other English-speaking country of the world, including Great Britain. This additional market is by no means negligible in amount. I have attempted a rough estimate from somewhat meagre details, but the result is nevertheless interesting as a reasonable measure of the English-speaking markets directly available for English-speaking pictures. Including Great Britain, there are within the British Empire about 7,900 cinemas equipped for showing sound films and regularly showing English-speaking pictures (see Table III Appendix). The amount paid for films by all the exhibitors in the Empire is probably about £16 millions. Added to the American exhibitors' payment for films — estimated at 26 per cent, of the box-office receipts — this represents a total payment for English-speaking films of about £53 millions, by exhibitors throughout the world. These payments must provide for the cost of distribution, borne by the producer either directly or through distributing agencies in different countries. I estimate that the net amount going to producers out of this £53 millions is not less than £36 millions. This is distributed at the present time between the American and British producers in the proportion, approximately, of about £33 million to the American companies and about £3-£4 million to British producers. 16. This is not all. The same American negatives are used for producing " copies " which are available for the cinemas in every foreign-speaking country of the world. There are two methods by which the film is made intelligible to a foreign audience. The first is called " dubbing ", applied to the process of substituting a new voice, using words in the required language synchronising as closely as possible with the words of the original version. The second is the method of superimposed titles, in which letterpress caption in the new language are superimposed on the film. Somewhat exuberantly, Americans claim to provide for 85 per cent, of the world's screen time. This is probably an exaggerated estimate. It is, nevertheless, unquestionable that the aggregate additional revenue from all these foreign territories makes a very handsome addition to the total; and in this addition British producers at present enjoy a very small proportion only. In all there appears to be good justification for crediting the American industry with accessibility to markets throughout the world yielding their producers from 10 to 12 times the revenue of the British producers. To overcome or reduce this economic handicap is, in my opinion, the fundamental problem which confronts those who wish to establish British films here and elsewhere. Though difficult, it is not insuperable. 17. Owing to the enormous disparity between tho prime cost (i.e., the cost of the original negative) and the cost of reproduction, a number of consequential advantages promptly arise. If, of two competing manufacturers, one can calculate his available market to be ten times that of the other, and the value of the returns on any film to average four or six times as large, he can enter on a scale of production with which the second will find it quite impossible to compete. So far as personnel is concerned, the first can afford rates of remuneration for essential services quite out of the range, even of competition, of the other. He can therefore attract the world's best talent, in so far as the best talent marches alongside of the most highly-paid, whether it be as star, author, technician, or administrator. The press is constantly drawing attention to the enormous salaries paid in Hollywood for the services required in picture making, but these writers refrain from suggesting that the commercial value of the services they render do not exceed even the large sums which the exceptionally astute parties to the bargain have agreed should be paid. The same person can, further, commit himself to productions scheduled to cost |spectacular amounts, certainly beyond the reach of British producers at the present time. The following examples are instructive. I have been told on very good authority that " Ben Hur " cost £500,000 (even apart from the £100,000 which was lost in an abortive start on this picture in Italy); "Mutiny on the Bounty" cost £400,000; " David Copperfield " £300,000; " The Tale of Two Cities " £250,000; " Under Two Flags " £250,000; " The Great Ziegfeld " £350,000. It is true these are the sums expended on " specials," but even the normal expenditure on the great majority of the oidinary pictures ranges between £60,000 and £125,000. Each of these pictures has shown, or is expected to show, a handsome profit return to the company's investment. 18. Films of these magnitudes can be produced only in studios of corresponding dimensions. " Queen Marys 'w cannot be built in yards which never produced anything but pleasure yachts. A totally different conception of the business is called for in the two cases ; different scales of expenditure, different materials, different standards, different technical problems, different labour problems, different financial arrangements, different risks, different tests. The accumulated experience of many adventures — successful and unsuccessful — involving large scale expenditure exists in Hollywood and does not as yet exist elsewhere. It is authoritatively stated that some years ago the Universal Company designed an elaborate new camera crane at a lost of £25,000, and last year the Metro-Goldwyn-Mayer Company built a ship to represent the " Bounty " at a cost of £40,000. 19. Before leaving this particular subject, I feel I must stress another interesting and important difference between Hollywood and other film production centres. On its technical side, the business makes demands on the very highest proficiency in a large number of arts and sciences. In very few of these does the practice remain stationary. The latest discoveries and experiments in the chemical and physical laboratories of the world are assiduously studied for possible improvements in technical methods and processes. Research and experiments are proceeding continuously in and on behalf of the studios and associated laboratories, daily resulting in new mechanisms or new processes adding still one more plane to the exalted heights of technical proficiency already attained. Very considerable financial appropriations are voted for research, and these votes are repeated and continued even though failure and disappointment have marked the previous outlay. It would be churlish not to recognise the magnificent courage which led to the investment of the many millions of dollars that preceded 1he advent of " tallies." That enterprise has, probably by now, been amply rewarded. The same might be said about 37873 B 2