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Sony and Reef Check celebrated the DVD release of Surf’s Up at Malibu Bluffs Park in Malibu, Calif., on Oct. 6.
Fox celebrated the DVD release of Fantastic Four: Rise of the Silver Surfer on Oct. 2 with a “Surfing in New York” event in New York.
CBS and Paramount hosted a release party for the first season DVD of Jericho with cast and crew members at Crimson in Hollywood.
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By Marcy Magiera -- Video Business, 3/10/2006
MARCH 10 | It’s fitting that the Motion Picture Association of America last week released its annual theatrical market statistics report on the heels of the Academy Awards, where I’m sure it was lost on no one who makes a living in the home entertainment business that DVD was swiped at by no less than best supporting actor nominee Jake Gyllenhaal and Academy of Motion Picture Arts and Sciences president Sid Ganis.
Oscar producers need only take a look at the show’s lackluster ratings—third-lowest of all time—to see that DVD plays a lot better in Peoria than Hollywood’s annual kudocast.
The MPAA report is a valuable analysis of the movie business, and it provides a wealth of data about economic trends in Hollywood. It also, like the Oscars, seeks to position the local multiplex as Americans’ preferred—the preeminent even—venue for watching movies. Nevertheless, I would argue the specter of home entertainment is invisibly woven throughout the report.
For the fourth straight year, the report says, “domestic cumulative box office from all studios continues to hold near $9 billion.” In fact, U.S. box office fell to $8.99 billion in 2005, from $9.54 billion in 2004, a drop of 6%. Theater admissions fell 8.7% during the year, to 1.4 billion. What the report doesn’t say is that consumer spending on DVD and VHS sales and rentals, however, fell just 1% (really “continuing to hold”) to $23.8 billion—two and half times the box-office take.
The MPAA report also shows that eight films grossed more than $200 million (think big but low-margin sell-through hits on DVD), up from five films in 2004. Movies below that lofty mark under-performed relative to 2004 though, with six fewer films in the $100 million to $199 million range and five fewer logging between $50 million and $99 million, the group that can often be counted on to significantly over-perform on DVD.
The total number of new films released in 2005 increased by 5.6% from 2004, but that’s down from a surge of 13.3% more new releases between 2003 and 2004. That’s as good a trend for retailers with over-crowded shelves as it is for exhibitors with over-crowded screens.
The average theatrical costs of MPAA member companies were down less than 1% overall, driven by a 3.8% drop in production costs that was offset by a 5.2% bump in marketing coin. The average film cost $60 million to make in 2005 and another $36.2 million to market.
The upward curve in costs—the average film cost just $17 million to make and another $7 million to market 20 years ago—is one of the primary reasons for the shrinking of the theatrical window. Films are making their way from theaters to DVD in as little as three months nowadays because studios are bent on getting more mileage out of their ever-increasing theatrical marketing spend.
All this money spent is not for naught, however. The MPAA says 81% of people who go out to see a movie consider their time and money well spent, while only 15% prefer DVD.
But for most movie fans, it’s not an either-or proposition. Among moviegoers, half said they decided immediately after seeing a movie to buy it on DVD—pointing up the power of the box office as a home entertainment marketing vehicle.