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This topic comprises 5 pages: 1 2 3 4 5
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Author
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Topic: The Myth that DVD makes all the money
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Lyle Romer
Phenomenal Film Handler
Posts: 1400
From: Davie, FL, USA
Registered: May 2002
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posted 06-18-2008 09:57 AM
I don't understand something. It is always said that the DVD release is so important because that's where the studios make all the money. This has led to the shorter DVD windows and even talk of "premium" video on demand (which is unclear when it would actually be released but sometime before the DVD release).
I decided to take a look at five recent successful movies from the winter season, I Am Legend, National Treasure: Book of Secrets, Cloverfield, Enchanted, and Alvin and the Chipmunks.
Movie-------Domestic Gross--Int'l Gross--DVD Sales---Rentals
I am Legend---$256M------------$327M--------$108M------$50M
National Tr---$220M------------$237M--------$78M-------$16M
Cloverfield---$80M-------------$90M---------$26M-------$28M
Enchanted-----$128M------------$211M--------$75M-------$40M
Alvin/Chipm---$217M------------$142M--------$90M-------$38M
In all of these cases, the domestic gross was higher than the DVD sales and rental gross combined. I'm not sure what percentage of the DVD gross goes to the studios (I think the major rental chains are on a 50/50 type share). I assume they get a little higher percentage of the DVD sales.
My point here is that a large percentage of the income for a film comes from the theatrical release yet the studios almost seem intent on eventually eliminating theaters. I understand also that there are distribution costs (prints add up) but in a few years, once the VPFs expire, digital releases will cost very little to distribute.
If you ask me (and who am I), the studios should be trying to get theatrical grosses up. Even though the movies can be pirated while in theatrical release, the experience of a theater can't be pirated.
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Mike Olpin
Chop Chop!
Posts: 1852
From: Dallas, TX
Registered: Jan 2002
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posted 06-18-2008 11:02 AM
quote: Lyle Romer
the experience of a theater can't be pirated
Which is why I don't think theatres will be going anywhere, even if, heaven forbid, the studios start releasing day-and-date. There might need to be an evolution for theatres though.
A large number of the movies I run at the theatre I'm working at now have been on DVD for some time, yet we still do fairly good business with them. We ran a full week of Across The Universe to heavy crowds 3 weeks after its video debut. We have earned a reputation for having a high quality experience (no ads, curtain, perfect picture and sound) at a reasonable price, and that has served us well.
The real danger is that theatres kill the experience by throwing 20 minutes of advertising, 6-8 trailers, and low quality presentation.
The bottom line is that people will always want to get out of the house and see a blockbuster on a huge screen with incredible sound, but even I would prefer to watch it in my home on DVD if the only theatre in town bombards me with ads and plays the movie out of focus in and in Dolby A.
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Scott Jentsch
Phenomenal Film Handler
Posts: 1061
From: New Berlin, WI, USA
Registered: Apr 2003
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posted 06-18-2008 01:52 PM
Your point of view is based on the assumption that a theatrical run is required and always will be required for a movie to be credible. I do not believe that this is the case.
Right now, direct-to-video releases have a bit of a stigma attached to them. Usually, big stars aren't in them, A-list directors don't make them, and the studios don't push them very hard. They are often derivative movies or sequels of movies that didn't do all that well in the first place.
That stigma is just a marketing challenge, and one that I believe one or more studios will attempt to overcome in the next couple of years. Magnolia Films is already doing a home video release of first-run movies as a "sneak peek" on HDNet to build awareness for the theatrical release and test the waters of simultaneous release to theaters and home video.
If "The Incredible Hulk" were available on Blu-ray and DVD at the same time as it was released in theaters, how many people would choose to attend a movie theater instead of watching at home? My guess is that the largest percentage would be in the home video column.
You also point out that the DVD rentals and sales are a result of double-dipping the fans of the theatrical release. I believe that this is true to an extent, but I also think that there is a growing number of people that judge where/when they are going to see a movie based on whether it's worth going to the theater right now to see it.
For example, Get Smart looks like it could be funny, but it might not be. Some people will look at the publicity for it, and decide that it's probably worth renting, but not worth going to the theater for. At that point, it then becomes a question in their minds as to whether to buy the movie or rent it, and going to the movie theater to see it is no longer in the decision process. I would be curious to know what percentage of home video sales and rentals are first-time viewings of that movie...
Your comment that the "theater experience can't be pirated" is on the money. That's the biggest leverage that movie theaters have with their customers, and it is more often squandered than not.
People build home theater systems and rooms to gain that "ideal" theater experience at home. They want the big picture, the big sound, and some even take it to the level of decorations, mini concession counters, etc. From that perspective, the "theater experience" is being changed (pirated) by the customer.
Too often, movie theaters do not provide the ideal movie theater experience. In those cases, the theater has failed the paying customer. Not only will that customer consider patronizing another theater instead, they may decide to forgo the theatrical experience altogether and wait for it to come out on video instead. Sooner or later, studios are going to go after that money even more quickly than they are now.
If theaters want to remain in the loop, they need to constantly improve the movie-going experience so that they are the first thought when someone finds out about a new movie coming out. If the industry as a whole can be successful in being first and foremost in the minds of their paying audiences, studios will not abandon that money. But, if the industry continues to use the exclusive release window as a crutch, its role as middle-man could come to an end.
From what Mike is saying, it sounds as though he's really treating his customers right. He's able to compete with movies when they're already released on DVD, which is a great accomplishment! I'm certain that it's a result of paying attention to the movie-going experience and making it the best he can.
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Scott Jentsch
Phenomenal Film Handler
Posts: 1061
From: New Berlin, WI, USA
Registered: Apr 2003
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posted 06-23-2008 03:11 PM
The release window continues to shrink, but at a much slower pace than a year or so ago. It's down to about 109-120 days.
The comment that so many movies are released directly to DVD in relative obscurity is exactly what I'm talking about. It's all about marketing!
How do you think songs become popular? Radio playtime, positioning on iTunes and Amazon.com. Billboards. Radio ads. Newspaper and Magazine ads. Online advertising.
Differentiation in the marketplace is almost all about marketing to the right people at the right time with the right message.
For example, "My Mom's New Boyfriend" was released on DVD last Tuesday. Even though it has well-known stars in it (Antonio Banderas, Meg Ryan, Colin Hanks, and Selma Blair), I don't think more than a handful of people know about it. Is it any good? I don't know, but I will have an opinion after I review it.
My guess is that it will pass into obscurity without much awareness, no matter how good or bad it is. Now imagine if the studio had put even a small percentage of the marketing budget allotted for a traditional theatrical release...
If you're seeing a billboard for the movie every time you go to work, then see the ad when you're browsing your favorite movie web site, the morning radio team is talking it up, and you see ads for it during primetime TV, you might be interested enough to check it out.
It's all about marketing. Right now, theaters still play a part in the marketing of movies, but I don't think it's a wise idea to assume that they always will, just because they always have.
Re: Incredible Hulk on home video simultaneously with theatrical release
I deliberately didn't mention what price such a release would have, because I don't think that pricing it at the same price as traditional home video releases would be successful. It would cannibalize sales because there wouldn't be a double-dip situation.
But what happens if the studio goes to DirecTV and says that they want to release Incredible Hulk on PPV for $xx.xx?
PPV policies on DirecTV are now such that recording on DVR's only saves that movie for a short period of time, so the time exclusivity factor is still there; giving them the ability to release on DVD/Blu-ray at a later time. Services like the Xbox Marketplace, Sony PlayStation Store, Amazon Unbox, Vudu, Roku's Netflix player, and even AppleTV make delivering movies directly to the home under controlled scenarios more possible than ever.
I don't know what the magic price is for such an approach, but I'm sure that studios already know. If I had to guess, I would say that they would use an average viewers per household to be around 2. Take that number times how much they would see from ticket sales at a movie theater ($12-15 for two people?), and that would be a reasonable PPV price for them. Heck, I'd easily pay $15 to watch WALL-E at home in HD instead of the movie theater. Since my family would want to see it as well, I'd probably be willing to pay upwards of $25-$30. That's roughly the same amount as I'd pay in a movie theater for admission for two adults and two kids.
Again, I'm not trying to bash (too much) on movie theaters, but I do think it's important for movie theaters to understand that they are a line item on a marketing campaign budget, not a sacred cow that is completely safe from sacrifice in pursuit of more money by the studios. They just need to realize how they fit into things and how they can make themselves so valuable to both movie studios and moviegoers that they lessen the risk of being on the wrong side of the budget spreadsheet.
Any theater that is using their exclusivity of product as a crutch to run their business instead of delivering a real value-added service to their customers should be very concerned about their long-term viability. If word of mouth doesn't kill them outright, the shifting marketplace will do the job.
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