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Discs ease risk

DVD is the niche player's ace in the hole

A major movie event is competing with “Bend It Like Beckham” and “Whale Rider” for indie title of the year.

It’s called “How DVD Is Saving Independent Film.”

The impact of DVD in the specialty arena is massive, where edgy content, cult material and even documentaries make for a precise fit with the format’s capacity to tap into an avid collectors market.

The discs have uncovered a huge consumer base of buffs eager to own pristine copies of their favorite pics. And for indie distribs, that biz helps patch the revenue craters formed when less durable financing schemes implode.

While DVDs of top-grossing pics can move between 7 million and 12 million units, arthouse discs from the smaller nonstudio labels generally sell units in the four- to five-figure range. For studio specialty labels, generating sales of 200,000 units with an arthouse title is decent business — and if units hit the low millions, that’s exceeding great expectations.

“DVD is augmenting the business and giving independent film companies the opportunity to revisit titles in their library,” says Peter Block, Lions Gate’s president of home entertainment, acquisitions and new media. “It gives you an additional core revenue stream after you’ve taken certain risks.”

Pumped up

Additional, indeed. When arthouse thriller “The Boondock Saints,” co-starring Willem Dafoe, was released in 1999 by indie distrib Indican, pic grossed a paltry $31,000. Pic’s estimated DVD/video sell-through sales are close to $6 million.

Last year’s skateboarding doc “Dogtown and Z-Boys” earned $1.3 million at the domestic B.O. A fourth-quarter DVD release, “Dogtown” has raked in close to triple its B.O. in estimated sales.

Artisan’s “Standing in the Shadows of Motown” sold 640,000 copies. At an average unit price of $24, the title has brought in over $15 million — nine times what it generated at the domestic wickets ($1.7 million). And the company’s “Roger Dodger” has sold 171,000 units. At $24 a unit, DVD has cumed more than $4 million (vs. $1.3 million at the box office).

Last year’s “Auto Focus,” from Sony, which earned $2.1 million at the B.O., has more than quadrupled that take on DVD, according to its distributor Sony Pictures Classics.

“A lot of times, with the profit-loss of independent pictures, the theatrical doesn’t necessarily tell the story,” SPC co-prexy Michael Barker says. “There are specific pictures that lend themselves almost more to DVD. ‘Auto Focus’ is the kind of picture people hear about but think might be kind of edgy and slightly nasty so they prefer to wait until it becomes something they can see in the privacy of their own home.”

And this year’s success stories aren’t confined to traditional small indie shingles.

Fox Searchlight has been able to leverage big names into major DVD success. Denzel Washington-helmed “Antwone Fisher” has sold 2 million units, and at a retail price of $23.99, DVD sales are more than double pic’s domestic B.O. of $21 million. Company’s Robin Williams starrer “One Hour Photo” had combined homevid sales and rentals of $73 million vs. a domestic B.O. take of $32 million.

Lions Gate’s Oscar-honored “Monster’s Ball” earned $31.3 million at the B.O., and an estimated homevid revenue of $68 million.

And when it comes to making the distinction between video and DVD revenues, the disc format is the obvious hot zone for indies.

“Homevideo is still there, but I think for independent titles, it’s dying a much faster death than for studio titles,” says IFC Entertainment prexy Jonathan Sehring. “With ‘Y tu mama tambien,’ we saw home entertainment returns that were at least 99% of what we did theatrically and that was by far majority DVD, not video.”

Rockin’docs

Documentary titles are poised to take advantage of the add-on opportunities presented by DVD. Sehring says the additional footage shot by the directors of “Lost in La Mancha” and “A Decade Under the Influence” — which IFC will release under New Video’s Docurama label — allows those releases to be considerably enriched, creating added consumer interest in two already buff-friendly titles.

Similarly, director Andrew Jarecki is sifting through reels of unseen home movies shot by the troubled Great Neck clan for the DVD of docu hit “Capturing the Friedmans,” and Barker foresees the inclusion of making-of segments in birdlife docu “Winged Migration” to be a huge draw.

Some observers, however, feel it’s a stretch to claim that DVD is a savior. It is, however, greatly enhancing the rev stream from home entertainment, which is especially vital to a filmmaking sector that often struggles to recoup theatrically.

“There’s a direct correlation between theatrical and ancillary performance and to think that DVD is the panacea — that you should buy and make more movies just to feed the DVD marketplace is not a sound business strategy,” says Miramax chief operations officer Rick Sands. “It’s an expanded revenue stream that is greatly expanded when you have theatrical success.”

“If you say that the business is being saved then you’re acknowledging that it was in trouble, which I don’t know that it was,” says Lions Gate’s Block. “But I do think it’s better now with the advent of DVD.”

Given its eclectic mix of genre fare and more upscale titles, Lions Gate is among the key indie beneficiaries of the DVD boom. According to Block, between $150 million and $200 million of the company’s $302 million in revenues for the past year were generated by the home entertainment division.

“We have the benefit of this money coming out of home entertainment so we look at how we can use it to work with the other departments to buy more and better films, release films wider, get involved with other strategic partnerships,” continues Block. “We look at it in a more company way than perhaps other distributors do.”

Lions Gate alone estimates that most of its video and DVD titles perform 120% above their theatrical box office. A film such as “Frailty” that grosses $13 million, can clear as much as $30 million in take-home revenue.

While little evidence exists of DVD creating new opportunities for indie filmmakers, companies like Film Movement and Sundance Channel have stepped up to buy passed-over indie titles for DVD and, in certain cases, limited theatrical releases.

For other niche players such as Palm Pictures and Wellspring — the latter of which has more than 500 DVD titles — home entertainment is a primary focus, with returns frequently outweighing theatrical earnings. Titles like Matthew Barney’s “Cremaster” cycle from Palm seem tailor-made for long DVD shelf life.

Longer shelf life

Industryites across the board agree that the sector shows no signs of plateauing. “People who go to independent films tend to be collectors,” says Barker.

“They tend to savor a certain type of film so five or 10 years from now, the DVDs on titles like these are going to ship in larger numbers than on the mainstream titles that tend to be this weekend’s extravaganza.”

Given the low cost of producing DVDs and the storage-friendly size, many are predicting the demise of rental and the arrival of a sell-through-only market. The latter already has become a majority. Even disposable DVDs are in the works.

“Last year was the first year when sell-through eclipsed the rental market by a good amount,” Sands says. “It will eventually be a sell-through market.”

But others can’t envision a rental disappearing act. “One of the phenomena taking place is that all these new players are entering the marketplace and there are opportunities to own movies because they are aggressively priced,” says Andy Reimer, head of acquisitions for Blockbuster subsid DEJ Prods. “But there may also be another element that comes into play when people start asking how many times they watch that movie they bought for $17.95 or $19.95. Rental is still a huge business and is extremely viable.”