Merchandising The Movies

By CBSNews.com staff CBSNews.com staff

July 4, 1998 / 6:28 PM EDT / CBS

It's do-or-die time for the latest of the big budget summer movies, reports CBS News Correspondent Elizabeth Kaledin.

Armageddon must draw in the crowds on its first weekend, because Disney spent $150 million to make, and $75 million to market, the film.

But spending money like that is no longer unusual, as studios try to recoup what it costs to make a Hollywood hit. In the last year, production costs for top-grossing films nearly doubled - from $350 million to $620 million. Ticket sales for the same films grew a paltry $200,000.

That means that promoting a film and selling movie tie-ins has become almost as important as the movie itself. Entertainment and character merchandising is a $16-billion-a-year business in North America, so the question is, with so much at stake, are the movies themselves becoming an afterthought?

"The movie business is correctly characterized by being a smaller and smaller part of these giant media companies," says Harold Vogel of SG Cowen Securities, "and advertising and cable and broadcasting and merchandising and theme parks all take a larger and larger portion each year."

Just take Godzilla. To promote the monster's commercial potential, Sony Pictures spent more than it cost to make the film. Now, disappointing ticket sales mean action figures, a planned animated series, and even the soundtrack will be key elements to the movie's financial success.

But audiences are getting hip to the hype, and next time a studio screams a slogan like "Size does matter," movie goers may shout back, "Quality matters, too!"