Stability is new growth in nontheatrical sector
Contrary to claims made by some pundits back in the downturn of 2001, the homevid business isn’t necessarily recession-proof.But with numerous estimates for 2008 revenues down only 3%-6% from the nearly $23 billion generated in 2007, peddling discs has gone a lot better than, say, selling Detroit-made SUVs or condos in Miami. Entering the fourth quarter down only about 2.4% from the previous year, things could be a lot worse. Even though they haven’t reported a calendar year of growth since 2005, homevid mavens entered 2008 with at least one major headache figured out: In early January, Blu-ray won the format war and everyone could get behind it. There was hope that with HD DVD cleared out of the way, Blu-ray would quickly take off and propel the biz back into growth mode. But then the rest of the year happened. The overall consumer economy went from sluggish at the start of 2008 to bailout-bad in the third quarter. The standard DVD biz, meanwhile, continued to sprout gray hairs. The hits, for example, aren’t what they used to be. In 2003, “Finding Nemo” broke first-week sales records, moving 17 million DVD and VHS copies. This past year’s big hit, Warner’s “The Dark Knight,” sold about 13.5 million combined copies in its first week. And Blu-ray, even after getting HD DVD off its back, has still found plenty of obstacles in its way. For one, the strategy of making Sony’s PlayStation 3 vidgame console the Trojan horse that gets the format into homes hasn’t worked out for a number of reasons, most of them tied to Nintendo’s blockbuster Wii system. In fact, not only has Wii’s phenomenal success helped limit PlayStation 3 adoption, but the family-targeted gaming system has taken away some of the consumer energy and enthusiasm that previously belonged to the DVD biz. Go into any Best Buy or Wal-Mart store and compare the crowd at the Wii section with the one for Blu-ray. Still, even with factors working against them, Blu-ray title sales might have hit 800 million by the time all was said and done in 2008, and there have been some pops. “The Dark Knight,” for example, sold a reported 1.7 million Blu-ray copies its first week. And with Blu-ray player prices dipping below $200, overall unit sales tripled this past Black Friday compared with the same day in 2007. Netflix, meanwhile, said in December that Blu-ray adoption was going more quickly than it had expected, with the online disc rental service now boasting 500,000 Blu-ray equipped subscribers. Indeed, overshadowed for several years by the once-explosive sell-through side of the business, rental has been eroding at a much slower pace of late, with third-quarter revenue only off 1.2%. For its part, Netflix touted better-than-expected fourth-quarter revenue. Maybe the homevid biz is somewhat recession-proof after all. “The economy has been very much our friend,” said Barry McCarthy, chief financial officer for Netflix, speaking at the UBS Global Media confab in December. “We’ve had a remarkably strong quarter.”
Want Entertainment News First? Sign up for Variety Alerts and Newsletters!