‘Hunger Games’ success spells trouble for TV ads

Reuters: The success with which ‘The Hunger Games’ film harnessed social networks, en route to becoming 2012’s biggest blockbuster, underscores a growing threat to billions of dollars in movie-advertising revenue on which broadcasters rely.

The futuristic movie about children fighting to the death has scared up more than $375 million at the US box office since it opened in March, in part because Lions Gate aggressively stoked interest on social network sites like Facebook and Twitter.

That meant Lions Gate marketers likely spent $15 million to $20 million less than a larger Hollywood studio might have, using a campaign heavier on television advertising, Lions Gate Entertainment Corp (LGF.N) Chief Executive Jon Feltheimer said during the Milken Institute Global Conference in Los Angeles this week.

Movie studios will likely buy fewer TV ads in the future, and look more to online promotion, he said in answer to a question.

“The mix will change,” said Feltheimer. “Companies that are conglomerates, with large broadcast networks or a bouquet of cable channels are going to have to adapt. And it will be disruptive.”

Lions Gate devotes 10-15 per cent of its budget to online promotion, he said. To stoke interest among its target audience of under-30 moviegoers, the studio’s efforts included a channel on Google Inc’s (GOOG.O) YouTube, a blog on Tumblr dedicated to the movie’s futuristic fashion, and a contest in which fans collected pieces to the film’s poster on several sites.

In all, the studio spent $45 million to market the film’s opening, according to people with knowledge of the expenditures.

TV networks “face a huge, huge risk” down the road, agreed Mel Karmazin, CEO of satellite radio service Sirius XM Radio Inc (SIRI.O) and a long-time advertising executive.

“It won’t happen in 2012 or 2013 but in the longer term it will hurt them,” he said. “People listen to what their friends say they like. Word of mouth is what advertising is about.”

Movie studios spent $2.9 billion last year to advertise their movies on TV, according to Kantar Media, which advises agencies and brand owners on media strategies. That was up 15 percent from 2007.

“The demographic that social networking really plays to is the ‘twilight’ late teens to early 20s,” said Kenneth Wisnefski, founder and CEO of internet marketing company WebiMax.

“When they see something they like, they go online to tell their friends about it.”

In contrast, he said bad word-of-mouth reviews among social network users doomed the 2009 Sacha Baron Cohen film ‘Bruno’, which opened strongly with $30.6 million on its first weekend but stalled and ended with $59.9 million.

“A lot of those viewers went online to tell their friends it was terrible,” said Wisnefski.

Chase Carey, deputy chairman and chief operating officer of News Corp (NWSA.O), which owns cable channels and the Fox network, downplayed the threat of social networking sites.

“TV will have a truly important place in generating interest in new movies,” he said at the conference. Users of social networks “don’t like pop-ups and other ads.”

Feltheimer said Lions Gate’s online marketing was especially successful in Australia, where the movie will likely generate $35 million in ticket sales, among its larger foreign markets.

The studio surveyed ‘The Hunger Games’ moviegoers, said Feltheimer, and found that 55 percent of them got “the majority of the information about their movie” online.

“That made me think that the paradigm is changing even faster than we thought,” he said.