The Motion Picture Looks Ahead

MR. STARK: The Empire Club of Canada frequently welcomes to its forum with great pleasure ambassadors from many foreign countries, but it is always a very special pleasure when we welcome a goodwill ambassador from the United States of America, like our visitor today, Mr. Eric Johnston. We are especially pleased that he has seen fit, out of his busy life, to arrange a special trip to Toronto to address our Club.

As you know, Mr. Johnston has been President of the Motion Picture Association of America for the past fifteen years. Thus, he is the recognized leader of a very powerful and influential industry.

Mr. Johnston was born in Washington, D.C., in 1896. He was trained in law and in the First World War rendered great service to his country as an officer in the U.S. Marine Corps, serving in the Far East. He then entered business in Spokane, Washington, and became active in the Spokane Chamber of Commerce. This activity led to his election in 1942 to the presidency of the United States Chamber of Commerce, a tenure of office which he held for four years and which has never been duplicated.

His public service is well known and has been recognized in many ways. For example, he has the distinction of having been awarded honorary degrees by more than a score of colleges and universities. During the years Mr. Johnston was called upon by three Presidents of the United States--Presidents Roosevelt, Truman, and Eisenhower--to perform services for the Federal Government. Mr. Kennedy has just not yet had time to call him out for duty but, no doubt, the occasion will arise.

Mr. Johnston was given the full rank of ambassador in the fall of 1953 when President Eisenhower appointed him as his personal representative to advance a programme in the Near East for the development of the Jordan River Valley. A long-time student of economic development abroad, our guest is now Chairman of the Committee for International Economic Growth, composed of leading United States citizens.

In addition to all these activities and in addition to providing leadership to the entire Motion Picture Industry, Mr. Johnston still operates his own electrical manufacturing and supply business in Spokane, and is a director of numerous banks, trust companies, and insurance companies. In his spare time he has written two books--America Unlimited and We're All In It.

Mr. Johnston still sees a great future for the Motion Picture Industry, and it it with great pleasure that I present to you Mr. Eric Johnston, President of the Motion Picture Association of America.

MR. JOHNSTON: You have asked me to discuss the motion picture. I will do this--gladly. There is nothing I like to talk about more.

But, first, I must be candid with you. For I do not plan to deliver a talk on motion pictures. I propose to talk business-the business of movies.

Perhaps you will find it interesting-or a change at least from those "burning issues" about Hollywood that fill the popular press, the fan magazines, the gossip columns.

You know these "burning issues"-things such as "Scenes They Wouldn't Let Us Film", or "The Punctuality Problem and Marilyn Monroe", or "Who Threw Whom Into Whose Swimming Pool?"

No--I leave these weighty social problems to others. Today, I want to zero in on that single word "business". I shall talk about the motion picture business as a business. Frankly, I feel quite at home in doing so before this audience.

Many people never look beyond the glamour of Hollywood. They see only the pretty pictures, the beautiful people, the tinsel or the tarnish. They see only the paint and powder on Hollywood's face.

But let us look beneath the cosmetics. Let us look at the flesh, blood, and bones that give it life. Let us talk grosses, not glamour; enterprise, not enchantment; commerce, not confessions.

Who knows-maybe there is an even more exciting, meaningful story in the business of Hollywood?

For clearly, it is a business--a business with many of the same elements that go into making and selling a bulldozer, the polish on a woman's fingernails, a breakfast cereal, or an automobile.

Yes, there is brick, stone, and mortar in the motion picture business. And it has been carefully set in place to make profits, to avoid losses, to achieve growth, and to prosper.

Does the candy store on the corner have different goals? Does the supermarket? Does the electrical plant or the steel factory?

I admit it is difficult to watch a movie queen Smile from a wide screen and think of ledgers, accounts, and sales. But her smile is a commodity-an item on the shelves of the motion picture business. And that smile has got to be marketed, distributed, and exhibited. Or it might as well be stashed away in an Iowa kitchen.

It is our job to put that smile in the store window, to advertise it, to get it to the consumer--just like any commercial enterprise. We must package that smile in film and sell it. And, believe me, a smile can be just as hard to merchandise as a can of tomatoes.

Yes, we are like other businesses in many ways. But we differ, too. We are unique in some respects. We are a world business. Our brick, stone, and mortar form what is perhaps the world's only truly international industry. The popular conception of our industry is Hollywood, its stars, its productions. That is a misconception. Our industry is more than that--much more.

It is distribution, exhibition, advertising, and promotion. It is dollars and pounds and francs. It is England, France, Germany, Japan, and Canada.

It is an industry at work everywhere, from a raw village in Africa to the blazing marquees of Manhattan. Its office is at home in every major city in the world. Its employees are citizens of all countries. Its customers are people of every race, creed, and nationality.

In one sense, Hollywood is merely the back Shop where most of the goods are produced.

Indeed, the motion picture today knows no borders. It has a passport that is valid almost anywhere on the globe. The film screen, in this year, 1961, is a world screen. Stars, writers, producers, directors, and technicians jump from one country to another to work. It is a "suitcase circuit" for anybody in our industry today. Co-production, joint financing, international distribution-these are accepted practices today.

I ask: "What other business approaches it as a world industry?"

I know of none. When other industries sell their products abroad, their work is finished. When we make a foreign sale, our work has just begun. We must follow our product all the way through-for we can realize no return on our product until it reaches audiences.

I ask also: "What other product has such universal appeal?"

Iceboxes are nice. But you cannot sell them to Eskimos. You can sell movies, however. Automobiles are wonderful. But what about those countries with no roads? We show movies there-and people will walk to see them.

Now, I know you are familiar with that old advertising gag line: "Watch Giant Alligators Eat Friendly Natives." Well, I personally have witnessed hundreds of friendly natives in Africa eat up American movies-figuratively, that is.

Certainly, in appeal, few things can touch the motion picture. From a business angle, let us look at some figures. Just what is this appeal worth in dollars and cents?

The world-wide box office for the motion pictures of all countries is about $3,000,000,000. Of this amount, U.S. films generate approximately $2,000,000,000. It take a lot of warm appeal to generate this much cold cash.

And how many people go to movies around the world? The weekly attendance rate is about 250,000,000 admissions. In the United1 States, it is 45,000,000. In Canada, it is 2,500,000.

And how about theatres? On January 1st of this year, there were 154,852 motion picture theatres operating throughout the world. That is about 35,000 more theatres than five years ago. And theatres of today have a total seating capacity of 74,000,000. You would have to have a mighty big store to accommodate that many customers.

Next, let us see how our U.S. motion pictures stack up against other U.S. industries in terms of the foreign market. The Department of Commerce tells us that all U.S. manufacturing industries doing business abroad derived a net return of $549,000,000 last year. This figure does not include the motion picture industry. We come under what the Commerce Department calls "service industries", and the net return for all service industries was $330,000,000. Now, of this $330,000,000, United States motion pictures brought back $225,000,000!

This means that movies represent an income of $225,000,000 against only $105,000,000 for all shipping, airlines, and other service industries. And it also means that just our one industry, motion pictures, draws an income that is equal to more than 40 percent of the total received by all of the U.S. manufacturing industries put together. Obviously, the motion picture is a product without peer in international appeal.

Now, suppose we stop a minute and look at some other implications of that $225,000,000 net return.

This sum represents only 30 percent of the gross receipts abroad for our motion pictures. That means some 70 percent is left in foreign lands--70 percent into the economies of other nations--money that creates jobs, stimulates business, and helps these other nations. Clearly, the U.S. motion picture brings more than entertainment into these countries.

Currently, about 54 percent of the business of our distributing companies is in foreign operations. U.S. film companies employ about 18,000 people abroad. So, you can readily see that the American movie and its foreign market are a two-way street paved with benefits in both directions. And as long as the popularity of the American film holds, this street will be kept open.

For additional proof of how popular the U.S. film has become, I want to offer some figures on screen time around the world. Screen time is the way we measure how well we are doing in relation to films made by other countries.

At the moment the percentage of world screen time devoted to U.S. films averages 60 percent--and it runs as high as 90 percent in some parts of the world.

Take Latin America as an example. Our motion pictures fill 65 percent of all screen time in South and Central American theatres-and 80 percent in the Caribbean.

In Africa, it is 60 percent.

In Canada, U.S. films occupy 75 percent of the total screen time. I like to think that this means more than your preference for our films. I like to think it is another expression of the warm respect, admiration, and friendship between us.

I would say we are more than holding our own in screen time. Without question, the moviegoers of the world do want United States films.

Couple this with the increasing rate of theatre construction throughout the world, and you see a healthy, encouraging trend. The number of theatres in Europe increased 39 percent in the last five years. In the Far East, the increase was 61 percent. And Japan almost doubled its theatres in this period. In fact, theatre construction went up 29percent throughout the world. This is solid growth for any business.

But what about our business at home? How are we doing? What shape are we in?

Undoubtedly, you hear the reports of our critics--those prophets of doom who never Stop howling that Hollywood is in its death throes. They have been predicting its death for years now. So, if we are gasping our last, if we are in the throes of death, then it is a death scene to rival the demise of Cyrano or that consumptive lark, Mimi.

Let us see just how dead we are. Let us open the ledger. Capital invested in our industry in 1960 has been estimated at $2,375,000,000--about 7.5 percent higher than in 1959. And the stocks of major producers went up in a depressed Wall Street market. I think there is life here.

Let us go on. Let us look at the years when we wereand I put this in quotes-"expiring".

Total inventories of the larger film companies went from $275,000,000 in 1950 to $344,000,000 in 1960. And today more than 183,000 people are employed in the industry--just in the United States alone. Wages and salaries increased by an estimated $101,000,000, jumping from $653,000,000 in 1950 to $754,000,000 a decade later.

In that same ten-year period, the total world gross rentals of U.S. film companies increased by some $35,000,000 to a present total of $550,000,000.

There are more. Just listen. Last year, a total of twenty-two feature pictures each attained a gross in excess of $4,000,000 in the United States and Canada. Only five films did this well in 1950.

Consider the drive-in theatres. In 1948, there were only 820 in our country. Today there are 5,000. And they account for approximately 23 percent of the total box office gross.

Next, let us look at how the American people spend their recreation dollars. As I mentioned, 45,000,000 hands push money across box-office counters every week in the United States. Did you know that the American people spend four and one-half times as much money on movies as they do on all Spectator sports?

If movies are dying, I missed the wake they held for baseball.

Let us take up also the matter of that stock, comedy character-the popcorn-munching moviegoer.

But, do not laugh too hard at him-his bag of popcorn is a million-dollar business.

Estimates show that gross refreshment sales at indoor and drive-in theatres total more than $260,000,000 a year. Popcorn brings in $126,000,000; candy, $98,000,000; soft drinks, $84,000,000; and ice cream, $24,000,000--to name just the top sellers. That is quite a hearty--and awesome--appetite for an invalid.

All in all-from the facts and figures I have tossed at you--I think it is safe to call off the undertaker. The prognosis looks favourable to me.

Yes, the credit side of our ledger is amply filled. Naturally, the debit side has some entries. We sustain losses. We worry about certain trends. We have valleys as well as peaks on our progress charts. What business does not?

But I am confident we can handle our problems. I have faith in our industry-and faith in the future of it.

Now, one thing more. I would not be doing justice to the motion picture business if I left you with only a look at the cash in its till, the customer potential, or the volume of candy sales.

There is more to our business--an "x" factor, a plus, an intangible. And it is important because it has brought us to the present--and it will take us where we want to go.

The world as we know it has been a world of revolutionary changes. The assembly line, automation, sweeping scientific advances, vast structural changes in economies change has been the pattern, the norm in our times. A noted scientist, only now in his middle years, recently remarked that 90 percent of what is known today was not in the textbooks when he went to college.

Yes, we have known changes. And one of the most revolutionary was the motion picture. It not only became a part of the business of living for every family, but it also influenced how they lived and how they wanted to live. Materially, it was the handmaiden of the assembly line. It helped to create a desire for the mass-produced goods we take for granted today.

Educationally and intellectually, it brought knowledge, understanding, music, and ideas. It brought a degree of fulfillment to the lives of people. It helped bridge the gap of illiteracy. It helped illumine dark areas of ignorance. And it did this in a way that people accepted and welcomed. The motion picture entertained--and by entertaining, it enlightened. This is the intangible--our "x" factor.

And for all of us in the Western World, it is working in the underdeveloped, emerging nations of the earth today. The motion picture is using its power to entertain, and it is successful in these new states. It does not set out to preach. It cannot. If it did--and most Soviet films do--people would turn away. That is why the propaganda-filled Soviet movies fail in these new lands.

Of course, we must do all we can to send better films to Asia, to Africa-everywhere. But let us never underestimate the good that our motion pictures are doing right now. Let us not forget that much of what we consider routine in our movies is fresh and exciting to people of other lands.

The motion picture shows clearly what a free peoplea democratic people-can do with their way of life, the standard of living they can enjoy, the freedoms that they can possess.

Our critics say that we sometimes give a distorted image of the United States. I say the U.S. film reflects all of what we are--not just the best. Those who cry out about distortion are those who themselves refuse to accept all that our nation is. Their cry stems from fear--not concern.

If we want to change what the American motion picture portrays, we had better start by changing ourselves. We had better remedy our ills, right our wrongs, improve the bad spots, and strengthen the weak ones.

This, too, the motion picture will record. This, too, the motion picture will reflect for the entire world to see. And ours will be a watching world in the years to come.

We talk of our smaller world, our shrinking world. This is just a beginning. I am certain of that. The motion picture helped to shape the world of yesterday. It is shaping that of today. And its future is unlimited. Every passing flay sees more and more entertainment on film, education through films, and communication through films.

Yes, there is a future for the motion picture business, a future that needs the contributions all of us can make. These contributions are many. The motion picture can promote understanding among human beings. It can breakdown fear among peoples of vastly different cultures. It can inform, instruct, influence, and persuade.

THANKS OF THE MEETING were expressed by Mr. R. Bredin Stapells.