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Short Windows on Top Hits Assist Sales, Hurt Rentals

3 Mar, 2005 By: Melinda Saccone



Sales soar, while rentals suffer as top box office releases debut on video in record time. The theatrical-to-video window for titles earning more than $100 million in theaters has decreased by more than 15 percent in the past five years. So far this year, the theatrical-to-DVD window has averaged 132.8 days for these $100 million plus movies — shrinking nearly 12 percent from last year.

Shorter windows boost consumer awareness, goosing sales, which dampen rentals. In 2004, 80 percent of the top 25 sellers grossed more than $100 million theatrically, while 76 percent of the top 25 DVD sellers fell into this group. By comparison, 32 percent of the top 25 2004 rentals generated a minimum of $100 million in theaters. Releases that didn't draw the huge crowds in theaters pick up the slack at rental.

Historically, theatrical blockbusters were the key revenue generators for rentailers. However, overall rental revenue for the $100 million-plus club has been slipping.

In the past three years, rental revenue for this group in their first three months of release has decreased more than 50 percent, generating an average of $40.8 million per title at rental in the first 117 days of release, down from $60.2 million in 2003 and $83.7 million in 2002.

Plaguing top titles' rental performance is competition from sales and the resulting decline in first-week rental revenue, which accounts for a much greater percentage of a title's overall performance. In 2004, debut-week rental revenue for this group accounted for 26.5 percent of the overall rental revenue generated in the first three months of release, up from 16.6 percent in 2001.

So far this year, first-week rentals of the $100 million-plus box office club has averaged $10.1 million, down from $10.8 million in 2004 and $14.5 million in 2003.

While rental demand for box office hits has fallen, rentailers haven't reduced their buy rates for top-grossing theatrical releases. They know that after rental demand is satisfied, they have a flourishing aftermarket for these hits in previously viewed title (PVT) sales.

In 2004, titles grossing more than $100 million theatrically shipped on average 2 million copies into the rental pipeline. Of the top unit shippers in 2004, six of the top 10 grossed more than $100 million in theaters.

Many of these copies made their way to the PVT section in as early as one week after street date. In 2004, each release in this group averaged an additional $25 million in PVT sales revenue.

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