As DVDs become ever more important to Hollywood, sales may be plateauing. Nearly 80% of American homes have a DVD player, and these late adapters seem to be buying fewer discs.
Both Pixar and Dreamworks disappointed Wall Street recently, as "The
Incredibles" and "Shrek 2" failed to live up to the incredible hype
set for them.
The NY Times notes that we are reaching a "saturation point:"
"While sales of discs are expected to rise 13 percent this year in the United States, the salad days of 20 to 30 percent annual growth are a memory. Most movie libraries are now out on DVD, and stores like Wal-Mart are slashing disc prices, which means less profit for studios.
To jump-start growth, the studios are turning to their television archives for new material. But those sales are expected to slow, too.
This is particularly bad news for studios, which rely more and more heavily on DVD sales as the video rental business shrinks and income from theaters flattens. For example, Americans spent $9.1 billion on feature movies on DVD last year, 47.9 percent of the money studios made from those films.
That’s up from 28.7 percent in 1996, when videotapes still dominated."
Still, plus 13% is better than a shrinking 7%, as CD sales have done.
click for larger graphic
Courtesy of NYT
By next year, the studios will derive more revenue from DVD ssales
than they will from all other sources: theatrical, rentals, and other.
What has made me throttle back buys is the number of Discs that are spares in extra material: Outtakes, interviews, alternate scenes, director/actor commentary.
I can see the movie on HBO/Starz. If you are not giving the consumer something value added, they won’t shell out $15 per. The math is pretty simple here.
While some have lamented the glut of new titles, I don’t believe that’s a problem. Much of these will find a niche audience, adhering to the Long Tail thesis of consumer media. Between Netflix, Amazon and Blockbuster, there’s plenty of interest in limited run Indies.
A DVD Standoff in Hollywood
By KEN BELSON
NYTimes, July 11, 2005
Discs slip, pain studio
DreamWorks has to revise estimates of earnings because of poor DVD sales; SEC doing informal probe
BY HARRY BERKOWITZ
Newsday, July 12, 2005