Photoplay (Jan-Jun 1920)

Moving Pictures and Big Business Strong financial interests coming into amusement field in substantial way, but small investor should still avoid the professional moving picture promoter. A FEW years a.go Photoplav MaoAZINE erected a "Look-out-forthe-cars'' signboard regarding the seller of motion picture stock. Enormous profits had been made in photoplays. A serial company had literally made hundreds of thousands. The sudden wealth of the individuals holding the patents company was compared to the gold of Croesus. In a night, almost, the once-despised "movie" had come to be the greatest, most productive, most profitable amusement force on earth. Accordingly, the sharpers threw out their bait, and the suckers bit. Organizations that sounded perfectly tremendous were formed, almost in a day. The amusement press trembled and glowed and scintillated with its weight of dazzling news — news of combines, amalgamations, great directorial unions, imposing new studios, heaven-aspiring production plans, great argosies of authors, fleets of directors, squadrons of imposing actorial celebrities. It was the Mississippi Bubble period of the picture, and there never will be one just like it again. There were thousands — perhaps hundreds of thousands — of investors in these stocks. Possibly a small group made a little money from its investments. A few got their money back. The great majority saw their cash disappear like water thrown on sand — and, sinisterly, some of this money lives today, in great studios built one wonders how, or in great capital behind long-established production enterprises which have never yielded a dollar to any but their promoters. We are now entering the second stage of the motion picture giant's expansion. This is the stage in which the picture is officially recognized as Big Business, and in which its highest counsellors take place in the vast affairs of the world, while the men of these vast affairs no longer think it beneath their dignity or a danger to their purses to openly participate in picture manufacture. It is because of this deserved recognition, this officially acclaimed solidity of our American Art, that we choose this moment in which to tell a few plain truths about an honest, creative industry which in its exuberant and healthy youth is ever inviting the harpies, the idlers, the grafters, and all their kindred birds of prey. There are, and will continue to be, two opposite but necessarily allied forces in photoplay manufacture. The creator: the artist who makes the picture, whether he be author, director or actor; and the distributor: the man who organizes and maintains the forces necessary for profitable, steady, systematic handling of the artist's product. The Nineteenth Century began an age of specialization which the Twentieth Century is perfecting, and the business and creative forces of the photoplay industry must go on, in peaceable 76 Do not fall for get-ricli-quick talk from moving picture promoters. From the "Wall Street Journal" WALL Street is goin? into amusements in a financial way. The newly incorporated Loew's Theatres numbers among its directors: W. C. Durant, head of the General Motors Corp.; Harvey Gibson, president of the Liberty National Bank; and D. E. Pomeroy, vice-president of the Bankers Trust Co. The Famous Players-Lasky Corp. is being provided with $10,000,000 of new capital with Kuhn, Loeb & Co. backing, while the du Fonts and the Chase Bank interests have entered the Goldwyn Pictures Corporation. In view of these developments, some statistics on the motion-picture industry should prove interesting to investors. Gross revenues of picture theatres in the country are estimated at 800 millions this year. They were 67s millions in 1918 — comparing favorably with 700 millions gross of thirteen leading rubber companies — against but 65 millions in 1907. In this country there are 15,000 picture theatres with 8,000,000 seats, nearly every town of 1,000 population having at least one theatre. Twelve hundred new houses are being built at a cost of $72,000,000. Good theatres cost $300 a seat to build at present prices, so that at a conservative calculation of $100 a seat, the investment in motion picture theatres totals about 800 millions. All other countries of the world now have about 17,500 theatres, an indication of the expansion possibilities of the industry, considering the fact that American made films now predominate both here and in foreign lands. The 5-cent motion picture show is gone — admission tickets now run as high as $2. Change in public taste has resulted in a demand for higher grade pictures, and people are willing to pay higher prices. The first week's box office receipts of the Capitol Theatre in New York were $70,000. Prohibition has proven a big boon to picture theatres, the business doubling in one western city of 450,000 population when the dry law closed 2,700 saloons. and practical co-operation, as long as pho i toplays are made. At the present time, the most money is t made out of distribution. Of course we are not considering, in this discussion, the; large salaries paid the stars and their conductors, nor the increasing gratuities^ which at last, in all justice, are being extended the authors. We are considering,, the returns on the stock of producing or1 ganizations versus the returns on the cap-;| ital of distributing organizations. Natureally some one must remain actively! concerned in the manufacture of photoj plays, or the distributor would have nothing to distribute, but as a whole it is' financially better to sell than to originate. Just why this is so need not bej| fully discussed here — the demand for pic-| tures and the certain and comparativelylf easy return on them, as against the tedious processes and uncertain expenses ofi3 picture-making, are some of the factor Now the people who are making thi money as distributors only are inviting no partners. If they need money, are sound and have good financial records, they can get it on a business basis from their bankers. The bona-fide distributor is selling no stock to the public, nor is he giving away any territories. The lines of the producing firms which can operate on a profitable basis, and are so operating, are equally well drawn. There are only a few, a very few, great organizations which are consistent successes. These are solid, compact corporations. There are only a fewsmall producers who win, and the small producer — the independent manufacturer •who puts all his eggs into one basket of comedy, or one stellar nest, or one direc-i toral hat — is certainly in no frame of! mind to share his limited gains unless tke participator is also in a position to venture very generously upon his possibly unlimited losses. During the past six months Wall street, for the first time, has become seriously interested in motion picture possibilities. Some tremendous deals have resuHed. Some colossal financing has been done. Some unexampled expansion has been undergone. As one result, the newspapas have printed scare-head stories about the sky-high expansion of the picture industry, and a chance of riches for every man, woman and child who has a doDar to invest. Unconsciously, these reporters have played right into the hands of the few get-rich-quicksters who stfll hang forlornly about the outskirts of this exceedin^y lively industry business. But by the same; token the very friendly hand of Wallj street, extended toward the established and reputable picture interests, has made unnecessary and unwanted the hand andj aid of what we may term the itinesanl investor — the man who looks ior a littlf (Concluded on page 114)