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DVD Pushing More Titles Into ‘5th Quarter'

21 Nov, 2002 By: Joan Villa

This year, the holidays won't end on Dec. 25.

Instead, retailers and consumers will have to wait until well after Christmas to unwrap some of 2002's biggest hits: XXX on Dec. 31, Barbershop on Jan. 1, Signs on Jan. 7, The Bourne Identity on Jan. 21, Sweet Home Alabama on Feb. 4 and My Big Fat Greek Wedding and Spy Kids 2: The Island of Lost Dreams, both on Feb. 11. And those are just the movies that tallied more than $75 million at the box office.

“This is a 52-week business, and there's no reason that the biggest titles have to come out in certain windows,” observed Craig Kornblau, president of Universal Studios Home Video. “DVD expands the situation into January because we have a format being embraced by consumers. There are so many new machines purchased in the November-December time frame and opened the last week of December, that now there's this new gadget in the house, and consumers are really hungry for software.”

Universal's last first-quarter releases -- The Fast and the Furious and American Pie 2 -- both finished in the top five of the year's best-renting titles, and now the studio hopes to top that success with “a gigantic statement at store level” to kick off 2003, Kornblau said. First, The Bourne Identity and then a triple play on Jan. 14: Blue Crush, About a Boy and Undercover Brother, that together exceeded $120 million in theatrical receipts and provide “something for everyone,” he added.

Buena Vista Home Entertainment has also slated four broad-appeal titles for the first quarter, including the animated video premiere of 101 Dalmatians 2: Patch's London Adventure on Jan. 26 and the romantic comedy Sweet Home Alabama, timed for Valentine's Day gift-giving.

“Action speaks louder than words -- with us putting Signs on Jan. 7, that says it all,” asserted BVHE president Robert Chapek. “We're not newcomers to this time period, but we do see the opportunity, as do a lot of other folks, with the ‘Fifth quarter.’

That “lack of hesitance” to release a big title in January is backed by the reality that millions of new DVD players will expand the market after Dec. 25, Chapek said.

“That has actually caused a change in seasonality, where January was always a strong month but now it's a really, really strong month,” he explained. “I've never seen consumption this strong; it's kind of a feeding frenzy. There are way too many titles and not enough dates.”

January generally contributes more than its share of a year's total rentals -- about 10 percent to 12 percent -- even though typically that revenue comes from December titles released two or three weeks earlier, noted Robert Alexander, president of entertainment research firm Alexander & Associates. However, Alexander traces this year's change in the slate of strong January releases to a lucky alignment: new software needed to feed DVD player growth and an overflow of fourth-quarter hits.

“If you were a studio and had a title to release, you'd have to ask yourself whether you want to risk losing it in the pre-Christmas crush, or wouldn't you like to have better visibility for it in January,” Alexander noted.

Not only will overcrowding push titles to the first quarter, but the simple economics of the season means that new DVD owners in November and December will be big movie buyers in January and February, when the weather is conducive to staying at home and many college students are on winter break, he said.

“There will be 5 million people who have had their DVD players for less than three months by Jan. 1, and studios expect them to buy two to three discs a month in the first two to three months of ownership, so that's 15 million sales that weren't there a year ago,” he explained. “There's a lot of effort on the part of the supplier to play into that opportunity.”

In fact, the past two Januaries have demonstrated to studios just how powerful that month is, added Alex Carloss, SVP of marketing for MGM Home Entertainment, which is launching Barbershop Jan. 1. “It feels like January to DVD has become in the last few years what May is to theatrical, and that's a month where you can launch titles and do some incredibly brisk business.”

Opportunities extend to films with name stars and extensive publicity that nonetheless went relatively undiscovered at the box office. The Al Pacino starrer Simone, which totaled just less than $10 million in ticket sales and is due on video Jan. 21, represents less risk to consumers contemplating a $19 DVD purchase or a $3 rental versus committing the time and money to a night out at the movies, said Justine Brody, VP of marketing and promotions at New Line Home Entertainment. The studio has redesigned Simone's box art to emphasize Pacino and also worked “diligently” on packaging for Dinner Rush, due Jan. 21, to play up its theme of gangsters and food, which Brody believes will appeal to “The Sopranos” crowd.

“With Simone in particular, it seemed riskier to the actual target consumer than it will on video and DVD,” she said. “People don't see it as a luxury item, especially when you look at where most videos are sold -- people are buying their staples there and they can pick up the latest movie.”

Retailers, too, couldn't be happier with the post-holiday lineup.

“Q1 is shaping up to be a great quarter, with six $100 million-plus box office titles versus two during the prior year,” gushed Hollywood Video CEO Mark Wattles on the rental chain's recent earnings call.

Consumers coming off the holidays are “starved for something new,” agreed Ted Engen, president of 2,000-store Video Buyers Group based outside Minneapolis. Past January titles have fared better than similar films released into slower months, but this year's wide selection promises to satisfy demand and potentially boost rental revenue.

“We'll have more good titles to rent in January and February than I've seen in years,” Engen said. “Now we'll be able to actually see if putting in a good selection of titles in January and February doesn't keep the consumer walking through the door all the way through the second quarter.”

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