The Hollywood Economist

A few weeks ago, my post about Judex and comic book movies prompted an astute reply by Suzi about the extent to which contemporary film has been distorted by an emphasis on attracting an audience of teenagers. Her comment got buried by an ensuing debate about the proper role of women characters in comic book movies, and I was about to insert myself into the comments thread to pick that thought back up, but then I figured there was enough there to justify an entire post, not just a comment.

I let it wait, because the appeal of posting something about King Kong on the World Trade Center on the eve of the 9/11 anniversary was too strong to resist, but the time has come to dig into this whole teenage audience thing.

Empty theater

Let me establish from the outset that most of what I have to say this week comes from the work of Edward Jay Epstein, the so-called Hollywood Economist. He publishes this stuff in sporadic form in his blog of the same name, and for those of you who prefer to read things printed on actual paper, he has a genuine book as well.

On to the story:

Movie crowds

It is in the living memory of most readers of this blog that a sizable percentage of the American population could be counted on to attend movies on a weekly basis. Go back far enough in time (let’s say 50 or 60 years) and that percentage was well over half of the country. This meant many tens of millions of people who formed a nearly default audience for Hollywood films as a whole. It was a naturally diverse crowd representing a variety of ages, educational levels, and socioeconomic standings.

Which is just another way of saying that it represented a mix of tastes. Therefore the natural business model to follow, if you were in the business of making movies, was to manufacture a variety of kinds of films, to cater to the various tastes of your audience. All you really needed to do from a marketing standpoint was explain why your movie was alleged to be entertaining, and then sit back and hope that a fair sized slice of the movie-going public eventually chose your film at some point during its run.

The explosion of competing media forms in recent years has had two profound consequences for movies, and I’ll address them in turn.

Number one: instead of roughly half of the country going to the movies as a regular weekly habit, now only 10% of Americans can be described as regular movie goers. And if you guessed that most of these are young folks, then go to the head of the class.

Young audiences

Now, that isn’t a sufficient audience to support the industry. If all Hollywood could count on were those regular movie goers, the whole thing would implode overnight (instead of imploding more slowly, which is what’s actually transpiring). However, that 10% is the core audience, whose tastes form the primary driving impulse of the whole enterprise. It would make no economic sense to make movies that didn’t appeal to the tastes of that core crowd of teens and twenty-somethings.
So the question becomes how to bring in a larger audience to complement and augment the core?

Audience

It costs money. Tons of it. And that money is spent on advertising.

The typical advertising budget these days is around $40 million per picture. I’m really hoping you spat out some of your morning coffee when you read that figure, but in case you’re kind of jaded and figured, “meh,” let me put it in context. The average amount of money a movie makes in its theatrical run is less than $40 million.

Have you spat yet? Ok, I’ll slice the numbers some more. That lucky rarity of a first run Hollywood feature that somehow miraculously breaks even and earns $40 million in ticket sales to off set the $40 million spent to promote it, well that’s just $40 million gross. Only a fraction of that goes back to the studio that made the film, and we havent even started talking about how much the movie cost to make in the first place.

On the face of it, it makes no sense.

Hollywood releases movies to theaters as a loss-leader intended to boost the eventual home video market for the picture, which along with international sales is where the real money is.  (For the producers–the theaters make their money off concessions)

Concession sales

This was just a long winded way of establishing that when Hollywood spends $40 million to advertise a movie, it’s because they feel they have to. It’s in no one’s interest to be careless with money. The research shows that it takes about seven distinct exposures to an ad to have the effect of motivating a viewer to go see the movie.

So now the question is one of logistics. Where do you put your ads to best maximize the chance that your target audience sees them at least seven times?

I said earlier there were two consequences of the media explosion, and I only mentioned one so far. Here comes the other one:

Younger audiences tend to be more uniform and conformist within their peer groups about what shows they watch, and they tend to watch the advertising. Older audiences are more eclectic and idiosyncratic in their tastes, and tend to work at avoiding advertising. So, an ad placed on MTV is going to be seen by millions of teens, who have leisure time to spend and are already inclined to go the movie theaters. An ad placed on Mad Men is likely to be missed by the audience skipping ads on their DVR, and those who see it may just shrug, “That looks interesting, maybe I’ll eventually put that on my Netflix queue.”

Now, if you’re responsible for spending your $40 million ad budget responsibly, which would you rather be promoting–a comic book action film whose adolescent audience is easy to identify and relatively predictable in it’s responses, or an art-film whose audience prides itself on being hard to sell?

The demographics show that the teen audience of movies is about 50%, which means that the obsessive focus on appealing to teens misses half the audience. It’s not that older audiences aren’t sizable enough to count, it’s that they are so hard to reach it isn’t worth the bother of trying.

I read Epstein’s book last year and have spent the intervening year recommending his blog and trying to help disseminate his analysis, but until last week it was an academic exercise. I understood what he was saying, and I believed it, but it was on a conscious rather than a visceral level. And then along came Apollo 18.

Poster

On the morning of September 2, my son Max rushed up to me with a sparkle in his eyes and a breathless voice: “Dad, Apollo 18 opens today! Can we go see it?”

I was dumbstruck. This was the first time in my life a loved one had asked me to go to a movie with them that I had never even heard of.

If someone had asked me to go see a movie I hadn’t heard of that was some dry slice-of-life drama, then not hearing of it beforehand wouldn’t be so remarkable. But this was a low-budget science fiction fake documentary set on the Moon, made by the producer of the Nightwatch/Daywatch films. I love low budget sci-fi! I love movies set on the Moon! I love fake documentaries! There is probably nobody on Earth more likely to enjoy this movie than me–and from the responses I’ve been hearing since, I think I did enjoy it more than most people.

Uh oh something's in my helmet!

So, what went wrong that a movie so perfectly geared to my tastes would completely escape my notice?

And the answer is MTV. I don’t watch it, but Max does. He was bombarded with ads while he watched Rob Dyrdeck’s Fantasy Factory, and was hooked. Hey dad can we go see that? Meanwhile I was watching baseball games on the MLB “Extra Innings” cable package and Doctor Who on BBC America’s On-Demand, and haven’t seen a TV ad for anything in months. I read a lot, and I read magazines, but I don’t read about pop culture. I was theoretically the perfect audience member for this film, but I’ve made myself all but unreachable.

It’s a Catch 22. A more diverse population of movie styles cannot be offered until a more diverse audience makes itself a reliable base, and that diverse audience isn’t going to go to the movies that regularly if there aren’t a supply of movies that appeal to them.  Loop back to the beginning.

I remember, back in the 1980s, my mom hated most of the tv shows I liked. To her mind they were stupid and vulgar and insulting (well, I agreed, but that’s what I liked about them), and she kept asking why don’t tv networks make shows for people like her? And I pointed out to her that she always left the room when the ads came on. She even openly admitted that she would refuse to buy any product she’d seen advertised on tv. I tried to explain that it was that very attitude that guaranteed no tv producer would ever want to make a show for her. And now I’m slowly turning into that myself.

28 Responses The Hollywood Economist
Posted By John Armstrong : September 17, 2011 9:31 am

As a tangent on that stunning 40-megabuck number, I’d recommend POM Wonderful™ Presents: The Greatest Movie Ever Sold, by Morgan Spurlock. You can put it on your Netflix queue, since (ironically) you probably didn’t see it advertised much of anywhere.

Unless, of course, you’re a regular moviegoer who makes a point to go out to see documentaries, independent, and foreign films, putting your cash on the barrelhead to say “yes, there is a market for this; show me more”. Then you might have seen the trailer.

Posted By John Armstrong : September 17, 2011 9:31 am

As a tangent on that stunning 40-megabuck number, I’d recommend POM Wonderful™ Presents: The Greatest Movie Ever Sold, by Morgan Spurlock. You can put it on your Netflix queue, since (ironically) you probably didn’t see it advertised much of anywhere.

Unless, of course, you’re a regular moviegoer who makes a point to go out to see documentaries, independent, and foreign films, putting your cash on the barrelhead to say “yes, there is a market for this; show me more”. Then you might have seen the trailer.

Posted By morlockjeff : September 17, 2011 10:26 am

I don’t know how current cinemas even survive with increased ticket prices & consessions and dwindling numbers. My wife and I were on vacation recently in Kentucky to see Mammoth Caves and went to the local multiplex in Glasgow, Ky. to see the remake of Fright Night one night (it was actually fun) and Rise of the Planet of the Apes the other night. These were week night screenings and NO ONE was in the theatre for Fright Night and only one other couple was there for Apes. But this is typical even in Atlanta cinemas on week nights. And even though many theatres have already converted to cinemas, eliminating the need for projectionists, it can’t be a very profitable operation anymore. Are people really willing to pay $6 for a small popcorn? The younger demographic is not going out to see movies on the week nights making everything tied in with opening weekend premieres and the boxoffice reports on Monday. If Hollywood continues to cater to just one segment of the population, it’s a self-fulfilling prophecy. Excellent post, David.

Posted By morlockjeff : September 17, 2011 10:26 am

I don’t know how current cinemas even survive with increased ticket prices & consessions and dwindling numbers. My wife and I were on vacation recently in Kentucky to see Mammoth Caves and went to the local multiplex in Glasgow, Ky. to see the remake of Fright Night one night (it was actually fun) and Rise of the Planet of the Apes the other night. These were week night screenings and NO ONE was in the theatre for Fright Night and only one other couple was there for Apes. But this is typical even in Atlanta cinemas on week nights. And even though many theatres have already converted to cinemas, eliminating the need for projectionists, it can’t be a very profitable operation anymore. Are people really willing to pay $6 for a small popcorn? The younger demographic is not going out to see movies on the week nights making everything tied in with opening weekend premieres and the boxoffice reports on Monday. If Hollywood continues to cater to just one segment of the population, it’s a self-fulfilling prophecy. Excellent post, David.

Posted By dukeroberts : September 17, 2011 11:39 am

I had heard of Apollo 18 from seeing trailers at the movies and from information on http://www.aintitcool.com. If you like genre movies that is a decent source for that kind of information, although it is not as good as it used to be. That’s really where I find out about a lot of new and upcoming movies.

Occasionally I will scroll the release dates at BoxOfficeMojo.com anf if I see a title I’m not familiar with I will click on it or look it up at imdb.com. RottenTomatoes usually shows upcoming titles as well. I find out information from there too.

As far as advertising goes, I occasionally see TV commercials for movies. I recently got so tired of seeing commercials for The Debt, although I didn’t make note of what I was watching. However, it was most certainly not MTV. It may have been during Breaking Bad or Sons of Anarchy. Commercials for Thor, Captain America, Green Lantern and Rise of the Planet of the Apes were everywhere. Meanwhile, commercials for Midnight in Paris were nowhere to be seen. During what shows would you advertise that? I saw all five movies.

David- Your mother didn’t like Murder, She Wrote or Matlock? Mine did.

Posted By dukeroberts : September 17, 2011 11:39 am

I had heard of Apollo 18 from seeing trailers at the movies and from information on http://www.aintitcool.com. If you like genre movies that is a decent source for that kind of information, although it is not as good as it used to be. That’s really where I find out about a lot of new and upcoming movies.

Occasionally I will scroll the release dates at BoxOfficeMojo.com anf if I see a title I’m not familiar with I will click on it or look it up at imdb.com. RottenTomatoes usually shows upcoming titles as well. I find out information from there too.

As far as advertising goes, I occasionally see TV commercials for movies. I recently got so tired of seeing commercials for The Debt, although I didn’t make note of what I was watching. However, it was most certainly not MTV. It may have been during Breaking Bad or Sons of Anarchy. Commercials for Thor, Captain America, Green Lantern and Rise of the Planet of the Apes were everywhere. Meanwhile, commercials for Midnight in Paris were nowhere to be seen. During what shows would you advertise that? I saw all five movies.

David- Your mother didn’t like Murder, She Wrote or Matlock? Mine did.

Posted By Arthur Lewin : September 17, 2011 12:09 pm

All points well taken. Yes, it is a Catch-22 situation. TCM and Netflix and similar outlets are filling the void now that the theaters are, by necessity, catering to the young.

Posted By Arthur Lewin : September 17, 2011 12:09 pm

All points well taken. Yes, it is a Catch-22 situation. TCM and Netflix and similar outlets are filling the void now that the theaters are, by necessity, catering to the young.

Posted By Tom S : September 17, 2011 12:43 pm

I have to admit, even as a young person, I almost never actually see ads for movies anymore- I don’t live in an area with a lot of movie billboards, and I don’t watch enough TV to see them there. When I do see them, it’s generally someplace like the AVClub, which advertised the above-mentioned Morgan Spurlock movie for weeks- because the AVClub audience is a great one for smaller documentaries and things.

On the other hand, I probably go to the movies 20-30 times a year (though a number of those are repertory screenings.) I generally read at least one review for pretty well every movie that gets released anywhere near me, and the movies I tend to get excited about (like the upcoming Drive) are ones I’ve generally heard of one way or another months before they’re released.

It strikes me that TV advertising is unbelievably expensive, and only really hits a market that can be reasonably counted on to go to the movies anyway. Maybe instead of blowing 40m per film on that, Hollywood could try different models of film distribution- roadshows, more 10-20m features instead of a few huge 200m ones, that sort of thing.

Posted By Tom S : September 17, 2011 12:43 pm

I have to admit, even as a young person, I almost never actually see ads for movies anymore- I don’t live in an area with a lot of movie billboards, and I don’t watch enough TV to see them there. When I do see them, it’s generally someplace like the AVClub, which advertised the above-mentioned Morgan Spurlock movie for weeks- because the AVClub audience is a great one for smaller documentaries and things.

On the other hand, I probably go to the movies 20-30 times a year (though a number of those are repertory screenings.) I generally read at least one review for pretty well every movie that gets released anywhere near me, and the movies I tend to get excited about (like the upcoming Drive) are ones I’ve generally heard of one way or another months before they’re released.

It strikes me that TV advertising is unbelievably expensive, and only really hits a market that can be reasonably counted on to go to the movies anyway. Maybe instead of blowing 40m per film on that, Hollywood could try different models of film distribution- roadshows, more 10-20m features instead of a few huge 200m ones, that sort of thing.

Posted By Arthur Lewin : September 17, 2011 4:40 pm

Tom, that’s coming from the people themselves. That niche will be, and is already being, filled.

Posted By Arthur Lewin : September 17, 2011 4:40 pm

Tom, that’s coming from the people themselves. That niche will be, and is already being, filled.

Posted By CapraFan : September 17, 2011 9:48 pm

The situation is even more interesting — or distressing — since movies today are not just made for teenagers, they’re made for teenagers in other countries, most notably Russia, India, and Brazil; over two-thirds of box-office revenues come from outside North America. See http://www.economist.com/node/18178291
This pretty much guarantees they’ll be of little interest to the sort of folks who appreciate Hollywood classics.

Posted By CapraFan : September 17, 2011 9:48 pm

The situation is even more interesting — or distressing — since movies today are not just made for teenagers, they’re made for teenagers in other countries, most notably Russia, India, and Brazil; over two-thirds of box-office revenues come from outside North America. See http://www.economist.com/node/18178291
This pretty much guarantees they’ll be of little interest to the sort of folks who appreciate Hollywood classics.

Posted By dukeroberts : September 18, 2011 12:05 am

Tom- If you haven’t seen Drive yet, it’s pretty damn good.

Posted By dukeroberts : September 18, 2011 12:05 am

Tom- If you haven’t seen Drive yet, it’s pretty damn good.

Posted By Tom S : September 18, 2011 3:25 am

Just saw it tonight, it’s definitely a good one.

Interestingly, Frank Capra III was the AD and one of the producers. As much as I liked that movie, ‘Capra-esque’ is not an adjective that came to mind while watching it.

Posted By Tom S : September 18, 2011 3:25 am

Just saw it tonight, it’s definitely a good one.

Interestingly, Frank Capra III was the AD and one of the producers. As much as I liked that movie, ‘Capra-esque’ is not an adjective that came to mind while watching it.

Posted By suzidoll : September 18, 2011 3:46 am

I go to a theater in Chicago that seems to be at crossroads of several neighborhoods, including Lincoln Park where a lot of 30-something women live. This multiplex shows mainstream films, yet it defies the standard logic of Hollywood and caters to a more diverse crowd of adults. It will keep films labeled chick flicks, which are universally panned no matter the quality, longer in one of its theaters than any other multi-plex in town because an audience of adult women will come see it. Maybe not on opening weekend but eventually.

This multiplex will play at least one kids’ film, plus something like Midnight in Paris, and any serious drama that may be out, alongside the latest horror flick. The Debt and The Help are doing quite well there. Both played on two screens for a month, probably because adults came to see them — hungry to see adults on the screen. This multiplex does show the standard teen fare like comic book movies but, oddly enough, these movies don’t always last past the first 4-week run. Captain America didn’t; neither did Conan. As a matter of fact, this is the theater where I saw the audience laugh at the previews for Conan and Thor, because they were so similar.

Tonight I saw DRIVE (which I loved) at the 10:30 show. There were 20-somethings on dates, middle-aged couples, African Americans, a couple of seniors, and young adult males. There were no teens–so no one texted, made calls on their cellphones, or got up nine times for one thing or another. Sadly this multiplex is not the norm.

I don’t understand studios who ignore large sections of the movie-going audiences, who based on my movie-going experiences, still like to go to the movies. There are diverse audiences out there for movies, but they have been insulted or ignored for so long, they are not going to come back easily.

Thanks for addressing this issue.

Posted By suzidoll : September 18, 2011 3:46 am

I go to a theater in Chicago that seems to be at crossroads of several neighborhoods, including Lincoln Park where a lot of 30-something women live. This multiplex shows mainstream films, yet it defies the standard logic of Hollywood and caters to a more diverse crowd of adults. It will keep films labeled chick flicks, which are universally panned no matter the quality, longer in one of its theaters than any other multi-plex in town because an audience of adult women will come see it. Maybe not on opening weekend but eventually.

This multiplex will play at least one kids’ film, plus something like Midnight in Paris, and any serious drama that may be out, alongside the latest horror flick. The Debt and The Help are doing quite well there. Both played on two screens for a month, probably because adults came to see them — hungry to see adults on the screen. This multiplex does show the standard teen fare like comic book movies but, oddly enough, these movies don’t always last past the first 4-week run. Captain America didn’t; neither did Conan. As a matter of fact, this is the theater where I saw the audience laugh at the previews for Conan and Thor, because they were so similar.

Tonight I saw DRIVE (which I loved) at the 10:30 show. There were 20-somethings on dates, middle-aged couples, African Americans, a couple of seniors, and young adult males. There were no teens–so no one texted, made calls on their cellphones, or got up nine times for one thing or another. Sadly this multiplex is not the norm.

I don’t understand studios who ignore large sections of the movie-going audiences, who based on my movie-going experiences, still like to go to the movies. There are diverse audiences out there for movies, but they have been insulted or ignored for so long, they are not going to come back easily.

Thanks for addressing this issue.

Posted By Matt : September 18, 2011 2:13 pm

I had a similar audience when I saw Drive the other night in LA in the Los Feliz area. White and black, 20 something couples, older people and some young guys. I hope it does well enough for its modest budget to inspire someone to start catering to that diverse crowd… But with a 3D version of The Great Gatsby on the way I fear all is lost, the endtimes are near and Satan will come to reap our souls!

Posted By Matt : September 18, 2011 2:13 pm

I had a similar audience when I saw Drive the other night in LA in the Los Feliz area. White and black, 20 something couples, older people and some young guys. I hope it does well enough for its modest budget to inspire someone to start catering to that diverse crowd… But with a 3D version of The Great Gatsby on the way I fear all is lost, the endtimes are near and Satan will come to reap our souls!

Posted By Heidi : September 18, 2011 6:02 pm

I had heard of Apollo 18 from a trailer at some other move, and it was all over the tv, and I don’t watch MTV or other channels that are aimed to tweens. I am a huge B-movie sci-fi fan, Love anything to do with moon landings or anything that NASA (back when it Was NASA) had to do with. i saw the trailer at the theater and decided right then it was not for me. I can’t really give you a reason, just gut. It seemed too…I don’t know…Blair Witch in space. But, that in itself wouldn’t normally keep me from seeing a sci-fi movie. It just didn’t grab me. I saw the trailer and it did nothing for me. I was not willing to shell out the money for it, and sit through it in the theater. Meh.

And, I am also one of the people that avoids ads, unless they are for movies, because I am always hopeful that something will come out to make my day.

Posted By Heidi : September 18, 2011 6:02 pm

I had heard of Apollo 18 from a trailer at some other move, and it was all over the tv, and I don’t watch MTV or other channels that are aimed to tweens. I am a huge B-movie sci-fi fan, Love anything to do with moon landings or anything that NASA (back when it Was NASA) had to do with. i saw the trailer at the theater and decided right then it was not for me. I can’t really give you a reason, just gut. It seemed too…I don’t know…Blair Witch in space. But, that in itself wouldn’t normally keep me from seeing a sci-fi movie. It just didn’t grab me. I saw the trailer and it did nothing for me. I was not willing to shell out the money for it, and sit through it in the theater. Meh.

And, I am also one of the people that avoids ads, unless they are for movies, because I am always hopeful that something will come out to make my day.

Posted By Jim Vecchio : September 19, 2011 7:42 am

Great Blog! I am the chief crabber when it comes to the unacceptable material that is mainly put out today on the screen. But, years ago, Gene Roddenberry spoke at a local college and he reminder his fans that STAR TREK’s purpose was not to make quality programming, but to sell toothpaste. My main concern is that when films are geared to teens and the younger crowd, do they have to include graphic sex and filthy language? Today,there are tow C-Words that are not known by Hollywood: Constraint and Creativity.

Posted By Jim Vecchio : September 19, 2011 7:42 am

Great Blog! I am the chief crabber when it comes to the unacceptable material that is mainly put out today on the screen. But, years ago, Gene Roddenberry spoke at a local college and he reminder his fans that STAR TREK’s purpose was not to make quality programming, but to sell toothpaste. My main concern is that when films are geared to teens and the younger crowd, do they have to include graphic sex and filthy language? Today,there are tow C-Words that are not known by Hollywood: Constraint and Creativity.

Posted By DBenson : September 19, 2011 3:33 pm

I remember when the plan was to make a big noise, saturate the theaters and make all your profit before word of mouth caught up with you. This seemed to be the drive behind a lot of big-deal studio epics as well as exploitation flicks.

Even “2001″ — hardly a Saturday matinee throwaway — was promoted by kiddie-show hosts and with tie-in toys as Big Sci-Fi Fun. Of course the movie made a big impression on me, but I doubt my youthful self would have lobbied so hard for such a serious and eerily quiet movie with no girls to speak of. “2001″ clearly survived, but how many other films, big and small, were sunk by mislabeling?

That kind of bait-and-switch slowly died away, but it would still crop up. I remember some strange ads selling “At Long Last Love” as a macho Burt Reynolds romp, while a pastel portrait of Karen Black positioned “Day of the Locust” as a gentle romance. Even Chuck Jones’ whimsy-heavy version of “The Phantom Tollbooth” was treated as a head film for kids (“It’s Outta Sight!”) with TV spots emphasizing a momentarily scary monster who popped up near the end.

Now you get the odd video cover that pushes a faint resemblance to a more successful movie, or a misleading image of its star (all those PD editions of the grim “Two Women” with glamour shots of Sophia Loren and evasive blurbs). But now even lousy films live forever if they fit neatly into genre-driven video or cable outlets. “2001″ and “Mars Needs Women” are near-equals on a science fiction channel.

Posted By DBenson : September 19, 2011 3:33 pm

I remember when the plan was to make a big noise, saturate the theaters and make all your profit before word of mouth caught up with you. This seemed to be the drive behind a lot of big-deal studio epics as well as exploitation flicks.

Even “2001″ — hardly a Saturday matinee throwaway — was promoted by kiddie-show hosts and with tie-in toys as Big Sci-Fi Fun. Of course the movie made a big impression on me, but I doubt my youthful self would have lobbied so hard for such a serious and eerily quiet movie with no girls to speak of. “2001″ clearly survived, but how many other films, big and small, were sunk by mislabeling?

That kind of bait-and-switch slowly died away, but it would still crop up. I remember some strange ads selling “At Long Last Love” as a macho Burt Reynolds romp, while a pastel portrait of Karen Black positioned “Day of the Locust” as a gentle romance. Even Chuck Jones’ whimsy-heavy version of “The Phantom Tollbooth” was treated as a head film for kids (“It’s Outta Sight!”) with TV spots emphasizing a momentarily scary monster who popped up near the end.

Now you get the odd video cover that pushes a faint resemblance to a more successful movie, or a misleading image of its star (all those PD editions of the grim “Two Women” with glamour shots of Sophia Loren and evasive blurbs). But now even lousy films live forever if they fit neatly into genre-driven video or cable outlets. “2001″ and “Mars Needs Women” are near-equals on a science fiction channel.

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