Stakes high for DVD divisions in fourth quarter
Tentpoles took their toll at the summer boxoffice, but their next big test comes in the DVD market.
Given the mixed messages at the B.O. and the flattening of the DVD biz, the stakes couldn’t be higher for studios’ DVD divisions in the fourth quarter.
Homevid divisions make around half their revenue during the period. And the DVD market has matured, meaning studios can no longer rely on new converts to pump up their coffers.
But execs are mostly upbeat that this year is going to be good.
“During the six months from July to December, we make 70% our revenue in homevideo,” says Fox homevid topper Mike Dunn. “(When) we can do that, we can make our numbers.”
He predicts Fox will end 10% higher than last year, when the studio scored with fourth-quarter releases of “Star Wars: Episode III — Revenge of the Sith,” “Mr. & Mrs. Smith” and “Fantastic Four.”
This year, Fox will release the “Star Wars” trilogy in its original format for the first time, put out “X-Men: The Last Stand” on Oct. 3 and release “Devil Wears Prada” and “Ice Age: Meltdown” in the period. It will also distribute MGM catalog tie-ins to the new Bond and “Rocky” movies.
“We’re set up nicely,” Dunn says.
Dunn projects an overall industry growth of 3%-5% this year. He is not alone in predicting a bullish end of the year.
Sony homevid prexy David Bishop, who has “The Da Vinci Code,” “Click,” “Monster House” and “Talladega Nights” on the way, says “it should be the best fourth quarter in a long time” for the studio.
Jim Litwak, prexy and chief operating officer for Trans World, one of the biggest sell-through chains, cited the strength of the summer’s box office. He recently predicted a 5% gain in the back half of year. Among the titles he enthused about to Wall Street analysts: “Pirates of the Caribbean: Dead Man’s Chest,” “X-Men 3,” “Cars” and “The Da Vinci Code.”
NPD analyst Russ Crupnick expects robust sales of kidvid and TV product to lift overall biz 5%-6% for the year.
But as far as selling blockbusters and tentpoles, he sings a different tune. “Interest in buying movies has been in decline and that’s not a good indicator,” Crupnick says.
Warners, which expects this year’s fourth quarter slate to come up short compared to last year, has a vibrant catalog business to soften the blow.
Even if the market is flat, it shouldn’t be considered too shabby, says Universal homevid topper Craig Kornblau. Homevid consumer spending, he notes, “dwarfs the theme park, movie, videogame and music industries.”
Most of the big summer movies are expected to be released on DVD prior to Christmas: “Pirates of the Caribbean,” “X-Men” and “Mission: Impossible III” will vie with “Talladega Nights: The Ballad of Ricky Bobby,” “The Devil Wears Prada” and “World Trade Center” for holiday sales. “Superman Returns” will also arrive in the period.
Universal will release “The Break-Up” and “Miami Vice” in the quarter, along with the latest direct-to-vid installment in its “American Pie” franchise.
Besides “MI3” — the first pic to be released on both high-def formats day and date with standard DVD — Par will release “Over the Hedge,” and likely “WTC,” “Barnyard” and “Nacho Libre.”
“We kind of look at fourth quarter like a game of chess,” says Paramount homevid prexy Kelley Avery, who last year notched the biggest fourth-quarter seller in “Madagascar,” while heading DreamWorks’ homevid operations. “The competition is the highest and tentpole titles are arriving every week.”
Mike Saksa, Warner homevid general manager of theatrical new releases, says, “Many of the announcements are coming later and later because release dates are so important,” adding that his studio is still fine-tuning its “Superman” campaign.
Some execs say the overall market for new releases has softened, but others maintain that consumers are being more selective about purchases. Recent top sellers haven’t matched those of a few years ago like “Finding Nemo,” which has sold 27 million discs since it was released three years ago, according to the Mouse House.
Then again, it has been a while since there was a $400 million-plus movie, which is why rivals will be watching how “Pirates 2” sells when it bows after Thanksgiving. The original “Pirates” sold almost 15 million discs when it bowed three years ago; Disney, though, isn’t ready to claim the sequel will top the original on disc.
Some of the titles that didn’t do as well as hoped at the B.O. are expected to shine on homevid. Warner remains bullish on “Superman Returns” and New Line believes “Snakes on a Plane” on homevid will outperform the theatrical tally.
Since it’s still early in “Snakes” run, New Line is waiting before skedding the homevid release. The studio has had great success releasing late summer hits during the first week in January, when there is less competish.
“We have the luxury of waiting to see where things land and on which dates,” says exec VP Matt Lasorsa.
Meanwhile, rivals with bigger slates are juggling their properties to make sure they get on shelves at the right moment to best maximize coin. The good news, Saksa says, is that homevid sales often come in bunches, making sole ownership of one date less important than on the theatrical side.
Notes Avery: “It’s all about getting it across the finish line.”