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THE MORNING BUZZ: As Go the Movie Houses, So Goes Video

26 May, 2002 By: Stephanie Prange

With all the changes our industry has endured over the last five years -- revenue-sharing, copy-depth, DVD, the sellthrough versus rental formula, aggressive chains, dying independents - it's heartening to know that one thing remains constant.

If there's a boom time in the nation's theaters, six months or so down the road there will be a similar boom in home video.

This axiom was never more apparent when one considers the dismal days of early 1997, when studio after studio blamed "a weak slate of theatricals" on sinking video revenues - and used this weak slate as an excuse to re-engineer the rental business, bringing us such lovely tidings as copy-depth and studio-direct revenue-sharing.

The inverse was true last year, when the summer movie season hit new revenue heights. The DVD factor gave home video a double whammy when the fourth quarter rolled around, with almost everyone proclaiming that business was good - so good, in fact, that studios temporarily stopped bitching and moaning about rental cannibalization and other not-so-pleasant byproducts of the DVD boom and for a time there, simply reveled in the good times.

If the out-of-the-gate success of Spider-Man and Star Wars: Episode II are any indication, the summer of 2002 may shape up to be the mother of all hit theatrical seasons. And that means the fourth quarter of this year could be every bit as remarkable as the now-legendary fourth quarter of '01, with consumers spending more money on video rentals and purchases than in any previous quarter in history.

Maybe that's why we're seeing so much tinkering and experimenting now, with studios cutting distributors, reshaping revenue-sharing policies and trying everything with rental cassettes short of throwing up their hands and burying the poor beasts in some Nevada landfill.

Before long, you're not going to see any more changes to the status quo, at least not until next year.

Studios will soon be far too busy laying out release and merchandising plans for the fourth quarter so they can maximize sales and, more importantly, profits.

Of course, that's always been their goal. It's just that in the fourth quarter, they've got enough product to stay focused.

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