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Coming Down the Home Stretch

21 Dec, 2007 By: Stephanie Prange

Will the fourth quarter turn out to be the blockbuster many have predicted? That is the most pressing question left in the home entertainment business this year.

The box-office power of the hits coming to DVD and the high-def formats in November and especially December is unprecedented. The Q4 box office packs 20% more punch than last year's slate.

Many previously predicted it could be the biggest fourth quarter in the history of the business.

DreamWorks Animation SKG CEO Jeffrey Katzenberg called it “the greatest lineup ever” during the Merrill Lynch Media & Entertainment Conference this fall, but he cautioned that the strong competition could impact sales.

Certainly Thanksgiving-week sales proved auspicious, with Nielsen VideoScan unit numbers more than 6% ahead of last year's comparable holiday week sales in 2006.

Also, December packs a very big punch in terms of box office hits. We've got Pirates of the Caribbean: At World's End, Harry Potter and the Order of the Phoenix, The Bourne Ultimatum, Rush Hour 3, The Simpsons Movie and Superbad boosting the December take.

Will it be enough to draw us even or even grow the business in 2007? It remains to be seen.

What is clear, though, is that the past two years of the DVD business will be very important case studies in how to manage the home entertainment packaged-media market in the years to come. Without new DVD households jumping into the market, and with the high-definition formats somewhat stalled in a format war, all the industry has to depend upon is consumer buying habits on a particular slate of titles in a given year. Certainly, the industry has been putting a lot of eggs into the fourth-quarter basket in the past two years. Last year, 2006's fourth quarter stole some thunder from the first quarter of 2007 (see Ralph Tribbey's Spin, page 4).

If the high-definition formats don't blow our socks off, in coming years the packaged-media business will have to depend on managing the theatrical slate to its best advantage. That may mean ever-bigger fourth quarters of box-office hits hoping to capitalize on the gift-giving season. Let's hope it pays off in 2007.

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