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Iger: $300 Blu-ray Player Could Jumpstart Home Video Revenue

6 May, 2008 By: Erik Gruenwedel

No Country For Old Men

Calling household penetration of Blu-ray “modest,” Walt Disney Co. chairman and CEO Bob Iger May 6 told analysts the media giant remains a “true believer” in the format and patient regarding its success.

He said industry home video revenue would increase significantly if Blu-ray players retailed around $300. Sony's PlayStation 3 game system with a Blu-ray drive currently is the cheapest player on the market at $399.

Iger said the average retail price for a Blu-ray movie is currently $5 higher than standard DVD, which he said boded well in the short term.

Disney hardly required Blu-ray to boost second quarter results.

Strong DVD sales of Enchanted, The Game Plan and Oscar winner No Country for Old Men helped Disney's studio entertainment division post a 61% increase in second-quarter (ended March 29) operating income to $377 million, compared to $234 million during the prior-year quarter.

CFO Thomas Staggs said he expected DVD unit sales in the quarter had increased 15% compared to last year.

The division, which includes Walt Disney Studios Home Entertainment, reported Disney's highest internal revenue growth at 18%, followed by parks and resorts (11%), consumer products (10%) and media networks (5%).

When asked about Warner Bros.' decision to release a majority of its new DVDs on cable video-on-demand the same day, Iger said he shared the enthusiasm despite calling ongoing tests between studios and cable operators, “neither negative nor positive.”

“They're not particularly conclusive,” he said.

The CEO described current VOD revenue as incremental and said he expected same-day DVD/VOD rollouts from the studios to occur over the next five years.

He said for Disney movies, families still prefer owning the DVD so their children can watch them repeatedly in the car and home.

“The sale of physical goods [DVD] will continue to be important for a long time and will continue to dominate the marketplace,” Iger said.

Studio entertainment revenue topped $1.8 billion, compared to $1.5 billion last year, driven by lower theatrical distribution expenses and continued box office success of National Treasure 2: Book of Secrets and Hannah Montana and Miley Cyrus: Best of Both Worlds Concert Tour.

Overall, net income topped $1.1 billion on revenues exceeding $8.7 billion, compared to income of $931 million and revenues of $7.9 billion in the prior-year quarter.

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