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The Postwar Domestic Marketplace

million films percent movie

Hollywood’s initial postwar optimism was fueled by a huge box-office surge in late 1945 and into 1946. The surge actually accelerated immediately after the war, thanks to millions of returning servicemen, increased courtship activity, the easing of wartime restrictions, and a generally upbeat populace with both time and wartime savings on their hands. The postwar era was ushered in by three huge late-1945 hits, SSPELLBOUND , THE BELLS OF ST.MARY’S, and ROAD TO UTOPIA , 1946 closed with three even bigger hits, THE JOLSON STORY , DUEL IN THE SUN , and THE BEST YEARS OF OUR LIVES . These hits capped off what was by far Hollywood’s biggest year ever in terms of box-office revenues and studio profits. The studios’ year-end gross revenues rose from a record $1.45 billion in 1945 to just under $1.7 billion in 1946. And while revenues were up some 10 percent over 1945, profits were astronomical. After record profits of just over $66 million in 1945, the studios’ total net in 1946 shot up to $120 million.

Hollywood’s staggering profits in 1946 were due in part to its overseas income. But the principal factor was the domestic market, spurred by long-running hits and also by the release of major productions that had been backlogged during the later war years. Top revenues could be earned from pictures that, already “in the can” and awaiting release, had been made when production costs were considerably lower, in fact, three of the top ten hits of 1946, MGM’s THE YEARLING, Warners’ SARATOGA TRUNK, and Paramount’s ROAD TO UTOPIA, had been on the shelf and ready for release for quite some time—over two years in the case of SARATOGA TRUNK.

By late 1946, however, the war boom had peaked and the domestic market began its postwar readjustment. The Hollywood trade papers and the Wall Street Journal began to note the decline in early 1947, and by summer both attendance and gate receipts were falling sharply. 15 Many in the industry refused to believe that the boom was over, but in fact the industry had entered a period of serious decline, owing primarily to falling attendance and, despite ticket price hikes, falling box-office receipts. 16 Meanwhile, rising production and operating costs meant eroding profit margins for studios and exhibitors alike. Thus, all sectors of the industry were feeling the squeeze in the late 1940s, as the figures in table 9.1 well indicate:

Figures on theater attendance for this period vary widely, but they all signal a decline. In 1946, Film Daily and the MPAA both gauged weekly admissions at 95—100 million, while Gallup’s ARI put weekly attendance at only 66 million. 17 By 1949, even the ever-optimistic MPAA acknowledged the slide, reporting a drop from 90 million per week in 1948 to 70 million in 1949—a one-year decline of nearly 30 percent. 18 Wall Street Journal figures, meanwhile, indicated a steadier decline, with weekly admissions falling from 80.5 million in 1946 to 78.2 million in 1947, 67 million in 1948, and 62 million in 1949. That 1949 total jibed with the ARI’s figures, and in fact most estimates put weekly ticket sales in the 60-65 million range.

Along with declining attendance and revenues, Hollywood saw a decline in the number of top box-office hits as well. In 1946, as the war boom peaked, five films earned over $5 million; THE BEST YEARS OF OUR LIVES and DUEL IN THE SUN both surpassed $10 million. At that point, the succession of big hits simply stopped, and even the mid-range hits tapered off severely. No release earned over $6 million in 1947, although there were a few in the $5-6 million range. In 1948-1949, however, Hollywood’s output of big hits—and even modest hits in the $3-5 million range—fell dramatically, as these figures indicate:

The sharp decline in major hits in the late 1940s brought changes in production and market strategies as rising costs and falling attendance discouraged producers from taking on big-budget pictures designed to clean up at the box office. The postwar era also saw the employment of more defensive market strategies, notably an increase in both  pictures and reissues, in fact, reissues became a veritable programming staple in the late 1940s. While only a half-dozen or so films were re-released in the later war years, the studios reissued twenty in 1946 and forty in 1947. By 1947, remarkably enough, some theaters had gone exclusively to first-run reissues. Exhibitors complained about the increasing number of reissues being offered only on a percentage basis (a sales practice usually reserved for A-class product), but audiences clearly were buying, in fact, a few A-class reissues—MGM’s THE GREAT WALTZ (1938) in its 1947 reissue, for instance—were earning more than they had initially. 20 The trend accelerated in the late 1940s: Variety reported 105 reissues in 1948 and 136 in 1949." While reissues could scarcely turn around Hollywood’s fading postwar fortunes, the booming business for reissues clearly was a major development in the postwar movie industry. Business was so good, in fact, that Paramount’s Barney Balaban considered selling “reissue rights” to old pictures, and in 1948 he refused to rent or lease the company’s products to television for fear of reducing their theatrical reissue value.

The falloff in major box-office hits signaled much more than simply declining attendance. It also indicated changes in the tastes and composition of movie audiences, changes in the lifestyles and media habits of middle-class Americans, and changes even in movie theaters themselves. Postwar trends in theater construction are especially revealing. In the months immediately after the war, with the movie industry’s war boom still going strong, several hundred movie theaters were either under construction or being planned. Those plans were stymied in March 1946, however, when the Civilian Production Administration put a freeze on all construction except low-cost housing. That freeze lasted until June 1948, and by the time it was lifted the movie industry’s economic climate had changed drastically. 23 The earlier plans for theater construction were not revived, and in fact theaters were now closing by the hundreds. From 1945 to 1949, the number of movie houses operating in the United States fell from more than 20,300 to about 17,350, a decline of 15 percent—the first decline since the early Depression era, and nearly as severe.

While traditional indoor theaters were closing, however, outdoor theaters underwent an explosive growth. The drive-in theater phenomenon, begun in the 1930s but stalled by the war, quickly took off in the late 1940s, and by 1949 drive-ins had compensated for the decline in operating indoor theaters:

The drive-in explosion was propelled by several crucial postwar factors: suburbanization, affordable automobiles, interstate highways, and, most of all perhaps, the “baby boom.” Designed to accommodate from 250 to more than 1,000 cars, drive-ins clearly were geared for family traffic. Besides alleviating parking and baby-sitting problems, drive-ins included playgrounds and elaborate concession stands, in fact, concession stands still were considered undignified by many indoor exhibitors, and it was the drivein that demonstrated the tremendous cost benefits of selling popcorn, soda, candy, and the like to movie patrons. 25 Thus, the postwar rise of the drive-in coincided with a marked rise in exhibitors’ concession income, which steadily climbed from $34 million in 1946 to $128 million in 1949. 26

The drive-in phenomenon gave the movie industry a moderate boost; continuing through the following decade, the number of outdoor theaters reached 6,000 in 1961. But the drive-in was yet another sign of the changing times and overall decline of the motion picture industry—at least as it had evolved since the 1910s. With its clientele of young marrieds getting out of the house for a few hours with the kids in the family car, the drive-in heralded the rise of the suburbs and the passing of the downtown area as the center of social and cultural activity for most Americans. And thus, it signaled the passing of the downtown deluxe movie house, which had been the lifeblood of the motion picture industry for decades.

There were other signals of the downtown theater’s imminent extinction as well. The Wall Street Journal reported in 1947 that the once-denigrated “nabes” (neighborhood theaters) were beginning to do better business than the downtown houses—a remarkable development after the tremendous growth of urban markets during the war. Moreover, the Journal noted in 1948 that the burgeoning drive-in was a “competitive headache” for neighborhood theaters. Clearly both the nabes and drive-ins were siphoning off the traditional first-run audience. A Gallup study in early 1949 found that the number of “average A customers” had declined from about 16 million in 1946 to 13 million in 1948—a decline of nearly 20 percent in only two years—and that over 60 percent of A-picture customers were now under 30 years old. Variety reported in 1949 that the ARI’s long-held view that the teenager was the “most faithful” (i.e., habitual) movie-goer was now widely accepted in the industry. And industry studies late that year indicated that the drive-in provided one means of recapturing that “lost” (i.e., over 30) movie audience.

Hollywood’s struggle simply to adapt to the changes in the composition and behavior of movie audiences, let alone exploit them, was especially galling because the "lost"—or fast disappearing—audience of young marrieds and suburbanites was remarkably affluent. Variety reported that revenues fell 21 percent between 1946 and 1949, while the disposable income of Americans increased 22 percent. 28 Some argued that postwar conditions still compared favorably to prewar levels, but this was scarcely the case. Although Hollywood’s 1948 box-office gross of $1.5 billion was up 34 percent over 1941, the increase was due primarily to a 60 percent increase in the average ticket price; meanwhile, attendance was falling despite a population increase of over 10 percent since the prewar era. In 1948, as Hollywood’s decline accelerated, personal income in the United States was up 172 percent over 1940, and the gross national product was up 153 percent.

Movie attendance also comprised an ever-smaller portion of Americans’ recreational expenditures in the late 1940s. Moviegoers were growing more selective, and they also were opting for other activities as a wider range of amusements and diversions became available—from night baseball to bowling to night classes on the GI Bill. Through the 1930s and into the war years, moviegoing amounted to 20 percent of Americas recreation expenditures. That figure climbed to 25 percent during the war but then declined steadily in the late 1940s, falling to 12.3 percent by 1950.

The import of foreign films reflected yet another telling aspect of the changing postwar marketplace. As in the war years, a number of top British films enjoyed considerable success in the United States; most were relatively modest dramas in much the same style as the wartime pictures—David Lean’s BRIEF ENCOUNTER (1945; U.S. release 1946), for example, and Carol Reed’s ODD MAN OUT (1947). But a number of more ambitious British pictures were released in the United States as well, notably HENRY V (1944; U.S. release 1946), CAESAR AND CLEOPATRA (1946), GREAT EXPECTATIONS (1946), HAMLET (1948), and THE RED SHOES (1948). All of these prestige-level productions were critically well received and did roughly $2 million in the United States, and all were nominated by the Academy for best picture—which H AMLET won in 1948. Moreover, both GREAT EXPECTATIONS and HAMLET were Anglo-American coproductions released via Universal, which underwent a complex merger in 1946 giving such British-made films direct access to the U.S. market. Similarly, Britain’s Eagle-Lion in 1947 purchased Producers Releasing Corporation (PRC), a B-grade producer-distributor, to secure access to the U.S. market.

While these Anglo-American deals provided mainstream release for quality English-language imports, the postwar era also saw the rapid rise in the United States of an art cinema movement which catered to foreign-language imports. For the most part, these imports were far more obscure—and far less lucrative—foreign films playing in smaller, more exclusive venues geared to the growing ranks of American cinephiles. Most of the art cinema venues, in fact, were second- and third-run downtown theaters whose owners turned to foreign-language fare rather than close down.

The 1948 Film Daily Year Book stated that the trend was catching on “because of an alleged product shortage; because some of the low-budget films were disappointing; and because many of the better films were only available as third and fourth runs.” The exhibitor operating an art house also did not have to rely on a neighborhood clientele, “since devotees of the foreign film will travel from one end of town to another to see an import.” 32 According to successive editions of the Film Daily Year Book, 118 foreign films were imported in 1947, 93 in 1948, and 123 in 1949. One major distributor of imports, Vog Films, gauged the number of theaters regularly playing foreign films in 1947 at about 250. Variety reported a similar total in late 1949 (226 theaters) and put the total of “strictly artfilm theaters” in the United States at 57. The center of the artfilm universe was New York, which had over 30 theaters devoted to foreign films and to the burgeoning market of cinephiles.

The art cinema movement was keyed to the gradual recovery of film production overseas after the war, especially in Western Europe. French and Italian films dominated the movement, and Italian neorealist films such as OPEN CITY (1946), SHOESHINE (1946), and THE BICYCLE THIEF (1949) garnered most of the critical attention and box-office support. By the late 1940s, because European art films were well publicized and actively promoted by major film critics, a few were able to break into major distribution in the United States. Bosley Crowther’s rave review of THE BICYCLE THIEF in the New York Times in late 1949, for example, and his naming that film and Frances DEVIL IN THE FLESH (1946; U.S. release 1949) as the “best foreign language films” of 1949, helped propel both films into the mainstream market.

For the most part, however, foreign films were consigned to play in the marginalized art-house circuit, where both the exposure and economic prospects were limited. Many overseas producers and distributors, in fact, considered that circuit little more than a dumping ground for foreign product—a means, essentially, of preventing foreign films from gaining a foothold in the United States, while the Hollywood studios satisfied market demand with B’s and reissues. Even quality British pictures were “not getting proper distribution in America,” said Alexander Korda in a blistering tirade in the New York Times in late 1946—a situation that would only get worse as the U.S. market declined.

While these complaints were often justified, the Hollywood studio powers actually grew more sensitive to them as the domestic market declined and foreign sales became more important. Never before, in fact, had the American producer-distributors been so keenly aware of both the importance and difficulty of selling their pictures in foreign markets, and of maintaining favorable relations with their overseas clients.

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