May 27, 2005 With Popcorn, DVD's and TiVo, Moviegoers Are Staying Home By LAURA M. HOLSON LOS ANGELES, May 26 - Matthew Khalil goes to the movies about once a month, down from five or six times just a few years ago. Mr. Khalil, a senior at the University of California, Los Angeles, prefers instead to watch old movies and canceled television shows on DVD. He also spends about 10 hours a week with friends playing the video game Halo 2. And he has to study, which means hours on the Internet and reading at least a book a week. "If I want to watch a movie I can just rent it on DVD," he said. "I want to do things that conform to my time frame, not someone else's." Like Mr. Khalil, many Americans are changing how they watch movies - especially young people, the most avid moviegoers. For 13 weekends in a row, box-office receipts have been down compared with a year ago, despite the blockbuster opening of the final "Star Wars" movie. And movie executives are unsure whether the trend will end over the important Memorial Day weekend that officially begins the summer season. Meanwhile, sales of DVD's and other types of new media continue to surge. With box-office attendance sliding, so far, for the third consecutive year, many in the industry are starting to ask whether the slump is just part of a cyclical swing driven mostly by a crop of weak movies or whether it reflects a much bigger change in the way Americans look to be entertained - a change that will pose serious new challenges to Hollywood. Studios have made more on DVD sales and licensing products than on theatrical releases for some time. Now, technologies like TiVo and video-on-demand are keeping even more people at home, as are advanced home entertainment centers, with their high-definition television images on large flat screens and multichannel sound systems. "It is much more chilling if there is a cultural shift in people staying away from movies," said Paul Dergarabedian, president of the Exhibitor Relations Company, a box-office tracking firm. "Quality is a fixable problem." But even if the quality of movies can be improved, Mr. Dergarabedian said, the fundamental problem is that "today's audience is a much tougher crowd to excite. They have so many entertainment options and they have gotten used to getting everything on demand." Last year Americans spent an average of 78 hours watching videos and DVD's, a 53 percent increase since 2000, according to a study by the Motion Picture Association of America, the film industry's trade group. DVD sales and rentals soared 676.5 percent during the same period, and 60 percent of all homes with a television set now also have a DVD player. DVD sales and rentals alone were about $21 billion, according to the Digital Entertainment Group. Discs are now released just four months after a film's debut, and the barrage of advertising that accompanies the opening in movie theaters serves ultimately as a marketing campaign for the DVD, where the studios tend to make most of their profits. By contrast, movie attendance has increased 8.1 percent from 2000 to 2004, according to the association. Many in the movie industry point to that figure as a sign of overall health. But attendance was down in three of those five years, and the sharp increase in attendance in 2002 is attributed to the overwhelming success of "Spider-Man" and "Star Wars: Attack of the Clones." More recently, the number of moviegoers has dropped, sliding 4 percent in 2003, 2 percent in 2004 and 8 percent so far in 2005. Time spent on the Internet has soared 76.6 percent and video game playing has increased 20.3 percent, according to the association. Last year, consumers bought $6.2 billion worth of video game software, an increase of 8 percent from 2003, according to the NPD Group, which tracks video game sales. This does not mean that the $9.5 billion theatrical movie business is anywhere near its last gasp. It still plays a crucial role for the studios in generating excitement. But movie makers recognize they have to be more on their toes if they want to recapture their core audience. "There are a lot of distractions," said Jerry Bruckheimer, who produced the "Pirates of the Caribbean" in 2003 as well as the successful "CSI" television franchise. "You need to pull them away from their computers. You need to pull them away from their video games." Consider Matt Cohler, a 28-year-old vice president at Thefacebook.com, a Silicon Valley company that creates Internet student directories on college campuses. Mr. Cohler likes movies, but lately, he said, little has grabbed his attention. He liked the new "Star Wars" and a documentary about the collapse of Enron. But of the Nicole Kidman-Sean Penn big-budget thriller, "The Interpreter," Mr. Cohler said, "It was only O.K." He has few plans to see anything else this summer, and said he was content to spend his free time online or writing e-mail. "I feel quite strongly that, with a few exceptions, the quality of movies has been declining the last few years," he said. Amy Pascal, the chairwoman of Sony Pictures Entertainment's motion picture group, said, "We can give ourselves every excuse for people not showing up - change in population, the demographic, sequels, this and that - but people just want good movies." She predicted that "Bewitched," a romantic comedy about a producer who unwittingly hires a "real" witch for the lead role in a remake of the television show, would have a broad appeal. "If it was a straight-ahead remake of the show," she said, "we would have been guilty of doing the ordinary." Jill Nightingale, 37, who works at IGN Entertainment in ad sales, is the type of moviegoer - older, female and important to studios - that "Bewitched" should appeal to. But video games increasingly have taken up time she otherwise might spend watching television or going to the movies. The last two theater showings she said she attended were "Star Wars" and "Sideways," which she viewed in December. She plays a video game for 30 minutes each night before bed. Two weeks ago, five friends joined her at her San Francisco condo to drink wine and play "Karaoke Revolutions" on her Sony PlayStation, where the would-be American Idols had a competition, belting out everything from Top 40 hits to show tunes. "Party games are great for dates," she said. "A few years ago I would have been at a bar or at a movie." But what could well have the greatest impact on theater attendance is the growing interest in digital home entertainment centers, which deliver something much closer to a movie-style experience than conventional television sets. Brian Goble, 37, a video game entrepreneur, said he had not been to a movie theater in two years, except to see "Star Wars" with his wife and four friends. Instead, he stays at his home in a Seattle suburb, where he has turned the basement into a home theater with a 53-inch high-definition television screen and large surround-sound speakers. He no longer has to deal with parking and jostling crowds, he said, a relief now that he has two children. " It's really just not as comfortable and fun as being at home," he said. "You can pause, go to the bathroom, deal with a crying kid." Mr. Goble rarely watches video-on-demand ("The quality is poor," he said.) Instead he has an account with Netflix and orders his movies online. When the Nicholas Cage movie "National Treasure" was released last November, for instance, he added it to his Netflix list so he would be sent a copy when it came out on DVD. His prime regret about seeing the final installment of "Star Wars" was that he could not watch it at home. "The only reason to go to the theater these days," he said, "is because it is a movie you must see now." ---------------------------------------------------------------------- You can UNSUBSCRIBE from the OpenDTV list in two ways: - Using the UNSUBSCRIBE command in your user configuration settings at FreeLists.org - By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word unsubscribe in the subject line.