October Surprise27 Oct, 2006 By: Thomas K. Arnold
After more than a year of bad tidings, the home entertainment industry appears headed for a rebound that even the most optimistic studio executive wouldn't have predicted as recently as the summer.
October is poised to set a new record for consumer spending, studio sources report, thanks in no small part to one of the most powerful slates of theatrical titles coming to video in any October.
Sixteen theatrical films with total box office earnings of $1.1 billion have either already arrived in stores or are coming out before the end of the month, including such blockbusters as 20th Century Fox Home Entertainment's X-Men: The Last Stand, which grossed $234.4 million in theaters and sold 5 million units its first week in stores.
And that's not counting a handful of marquee catalog titles such as Buena Vista's The Little Mermaid Platinum Edition, which sold more than 4 million units its first week out.
Studio estimates say consumer spending on video during the first three weeks of October was up a healthy 6% from the first three weeks of October 2005, while DVD spending rose 9.4%. Unit volume is up 3.3% overall, while DVD units are up 10%. (Retailers tracked by Nielsen VideoScan report a more modest unit sales gain of 5.5%)
While at the end of the third quarter, total consumer spending on home video for the year — rental and sellthrough, DVD and VHS — was running slightly behind 2005, the “October boom,” as executives are calling it, is expected to lift spending for the year firmly into positive territory.
“The summer box office was up 7% this year, which is translating into a strong fourth quarter for home entertainment,” said 20th Century Fox Home Entertainment president Mike Dunn. “The release of X-Men set an industry record for a single day and first week in October, and was clearly a happy foretelling of what's followed.”
Dunn said he expects to see “the year ending up at least 3%.”
Craig Kornblau, president of Universal Studios Home Entertainment, shares Dunn's optimism. The October rally “has finally turned the year-on-year comparisons up,” he said. “With the tremendous slate of product coming between now and the end of the year, it's safe to say we will finish the year up and on a decidedly positive note,” he said.
Studio and retail sources see three factors behind the apparent rebound. Gas prices are falling rather than rising, as they were last year. More big titles have been pushed into October. And, perhaps most significantly, the summer box office slate packed a lot more muscle than last year.
“The industry's strong summer box office slate is beginning to hit DVD,” said Kelley Avery, president of worldwide home entertainment for Paramount Pictures. “We know the fourth quarter typically represents about 40% of yearly consumer sales. Based on October results, including strong week-one sales for Over the Hedge, the industry is off to a great start.”
October began with the residual effect of two late-September titles from Universal Studios, Curious George and The Fast and The Furious: Tokyo Drift, which together generated $60 million in consumer spending. Then came the Fox's X-Men: The Last Stand and Buena Vista's The Little Mermaid, which, in a single day, generated $80 million in spending. They were joined by another DVD heavyweight, Sony Pictures' Click, the next week, and week three found DreamWorks' Over the Hedge, distributed by Paramount, selling nearly 4 million units in six days, generating some $65 million in on in spending.