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Lionsgate Eyeing Larger UltraViolet Footprint

12 Feb, 2013 By: Erik Gruenwedel

Minimajor will transition disc replication and shipping to Cinram and Fox from Sony DADC in the middle of the year

Lionsgate Feb. 12 said it expects to expand its UltraViolet presence in 2013 as the industry-backed digital storage platform in the cloud establishes mainstream traction, COO Steve Beeks told analysts on a fiscal call.

The Santa Monica, Calif.-based studio last year launched its first UltraViolet release with The Hunger Games.

Beeks believes the platform helps sales of both physical and digital media. He said disc sales have stabilized and still account for much of a new release’s initial revenue, with digital representing the bulk of revenue the further removed from street date.

"We’ve seen tremendous growth in UV in general. … We believe it has a great trajectory,” Beeks said, adding that there are about 10 million UV accounts registered nationwide.

Beeks attributed the greater awareness of UltraViolet to major retailers such as Walmart, as well as increased acceptance by digital distributors such as Xbox, Amazon and Vudu. He said the industry’s partnership with the Consumer Electronics Association to drive UltraViolet mirrors efforts to launch the DVD business back in the ’90s.

“We’re pretty excited about the prospects for UV,” Beeks said. “I think this is going to be the year you see UV become a marketplace.”

The executive said the amount of digital revenue, including Internet and VOD, has “surprised us,” resulting in increased projections for both categories. He said digital sales have longer legs than physical for both new releases and catalog.

“It’s really the first time we’ve seen digital becoming a library medium,” Beeks said.

When asked, Beeks said Lionsgate had no immediate plans to market UltraViolet sellthrough at theaters, but added that the studio wouldn’t rule it out either.

“We’re looking at everything,” Beeks said. “We’re looking at loyalty programs. We’re looking at attachments. We’re having those conversations with retailers right now as we speak.”

The COO said the March release of The Twilight Saga: Breaking Dawn — Part 2 would involve Summit Entertainment’s existing replication deal with Sony DADC and distribution agreement with Universal. That pact, which expires soon, will be replaced this summer by new replication, packing and shipping agreements with Cinram and Fox.

“Both Cinram and Fox recognized the value of our additional [disc] volume, as well as how much shipping together in the same box reduces their costs. So we were able to renegotiate those deals in what will end up being significant savings in the tens of millions of dollars per year going forward,” Beeks said.


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