Slow sales spur package deals

Sony thought a prettier picture would be enough to entice consumers to make the switch from DVD to Blu-ray and keep studio homevid divisions flush with coin.

But slower-than-expected sales of the next-generation format, now in its third year, as well as slumping numbers for DVD sales overall, have forced studios to come up with new ways to make their discs more attractive.

That’s meant adding more features like short films and extra footage, as well as interactivity and digital versions to load onto iPods and computers.

Disney’s gone one step further.

It’s packaging DVDs and Blu-rays together with digital copies in three-packs that give consumers the option to own and watch a pic however and wherever they want.

The studio started with last October’s “Sleeping Beauty,” and recently followed that up with “High School Musical 3: Senior Year” and soon “Bolt.”

In fact, the Mouse House is putting all of its weight behind the effort, planning to release around seven titles this year, including its classic toons “Pinocchio” in March and “Snow White and the Seven Dwarfs” in October.

It needed to for several reasons:

  • The Mouse House realized that an increasing number of families were holding off on investing in Blu-ray until they owned the players; but they weren’t buying as many DVDs either, knowing they’d eventually upgrade to Blu-ray.

  • Households that did purchase Blu-ray movies also wanted the option to play the discs for their kids while on the road and most in-car entertainment systems don’t support Blu-ray.

  • Most computers and portable players don’t play Blu-ray discs either, making watching a movie on the format while traveling impossible.

So, in consideration of consumers’ habits, Disney needed to find a way to enable consumers to “future-proof” their collections and not be penalized when they buy a Blu-ray title.

“Blu-ray isn’t yet ubiquitous,” says Lori MacPherson, general manager for Walt Disney Studios Home Entertainment North America. “This was meant to work around that. It gives the consumer the peace of mind that they can buy one thing and it works on everything.”

Packaging the discs and selling them at a combined list price of around $40 makes Blu-ray more attractive to cost-conscious consumers. Typically, Blu-rays are priced around $35.

Pricing will enable Disney to “drive revenue at a level that is slightly better than we might have if we had not added those basically valuable extras to the DVD,” said Disney topper Robert Iger in the Mouse House’s last earnings report.

It also meets the exec’s concerns that “the cost of both producing the DVDs and distributing and marketing the DVDs needs to be addressed.”

So far, the strategy’s paying off.

A third of the traditional DVDs Disney is selling either feature the digital copy or the Blu-ray.

But producing them isn’t cheap.

“It’s expensive,” MacPherson says. “The thought of doing it for every release isn’t realistic.”

And potentially cutting into future profits is the fact that retailers are dropping prices even more, with Amazon selling combos for around $28.

Still, the early appeal of the combos has made Disney commit to more titles, and it’s encouraged other studios to make similar packages, primarily to court family auds, as well.

Fox and MGM are releasing “Marley & Me” and “The Princess Bride,” which hasn’t been released yet on Blu-ray, as their first combo-packs.

Distribbers like Lionsgate are still going after the young male demo, with “Terminator 2: The Complete Collector’s Set,” which will have the Blu-ray, a digital copy, and Extreme and Ultimate editions of the pic’s DVDs.

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