StudioCanal CEO: DVD Still Going Strong14 Oct, 2016 By: Erik Gruenwedel
Perennial punching bag in an age of Netflix, packaged media continues to generate bulk of retail revenue
In an era of digital distribution and subscription streaming, packaged media — DVD and Blu-ray Disc — has seen its future written off on more than a few walls.
Yet, it continues to drive studio bottom lines. Speaking Oct. 12 at the 10th annual Film London Production Finance Market confab, Danny Perkins, CEO of StudioCanal UK, reiterated packaged media’s enduring strength.
“For the last 10 years, people have been saying there are two years left in DVD and it’s going to drop off a cliff. Here we are 10 years later and it is still going strong,” Perkins said in a keynote reported by Cue Entertainment.
Indeed, despite the popularity of Netflix and Amazon Prime Video, consumers in the United Kingdom still covet packaged media, buying nearly 120 million discs for £1.1 billion ($1.7 billion) in revenue — 48% of total (£2.24 billion) home entertainment spending in 2015, according to the British Association for Screen Entertainment.
In the United States, consumers spent 4% more on buying movies and other content on disc as well as digitally in the second quarter of this year than they did in the second quarter of 2015, according to recent data from DEG: The Digital Entertainment Group.
Disc sales, which for years have been declining, rose 3% to $1.2 billion, buoyed by a 35% increase in Blu-ray sales.
Michael Burns, vice chairman of Lionsgate, in August told an investor group that DVD continued to add to the bottom line, in addition to buttressing underperforming theatrical titles.
Burns remarked that 2011 fight-themed release Warrior lost the most money of any Lionsgate theatrical release, despite starring Tom Hardy, Nick Nolte and Joel Edgerton. The studio was able to offset the $28 million hit through packaged media and digital.
“The movie kept going on [financially with] packaged-media and digital sales. The DVD business is going to be around a lot longer than people think. It’s still a massive business for us. It’s not going away,” Burns said.
Indeed, erstwhile packaged-media replacement electronic sellthrough, also known as Digital HD, saw a 9% increase in quarterly sales to $466 million — just 38 cents of every $1 spent on disc.
In fact, Digital HD, which has been growing steadily over the past couple of years boosted by early digital-release schemes — looks to be leveling off.
After gaining steadily on VOD, EST revenue is projected to total $2.01 billion to VOD’s $2.07 billion in 2016, which industry veteran Mitch Singer calls a “troubling number.” Given the EST growth pattern in previous years, projected revenue for 2016 should be higher, he said.
“Something has happened; it looks like [digital] ownership has stalled,” Singer told an industry group in early October.
StudioCanal’s Perkins says that while DVD margins have fallen from their heyday, they remain strong — even rivaling previous highs when factoring in major box office hits.
Indeed, StudioCanal’s Paddington was the top-selling U.K. video in 2015 with sales of nearly 1.2 million discs.
While suggesting (self-servingly) Britain’s recent vote to embrace nationalism and exit from the European Union could mean a 20% surcharge on American movies distributed in the U.K., Perkins quipped that Paddington, about a Peruvian bear that migrates to England, underscored the pitfalls of the Brexit vote.
“We failed, really. [The movie is] about an immigrant who comes to the U.K. and is welcomed with open arms. So many people bought the DVD, and not enough of them took that message to heart.”