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UPDATE 2: 'Shrek,' 'Monsters' Rip Up the Record Books

8 Nov, 2001 By: Thomas K. Arnold

It was the weekend for ugly-yet-loveable computer-generated beings, as consumers spent nearly $200 million to watch Shrek on home video and Monsters, Inc. in theaters.

Shrek, the animated feature from DreamWorks that is the top-grossing movie of 2001 ($267 million in domestic receipts), set a new record as the fastest-selling DVD of all time, with more than 2.5 million units sold in the three days since the title’s Nov. 2 release, according to the studio.Factor in VHS cassette sales and DreamWorks sold nearly 7 million copies of Shrek between Friday and Sunday, an estimated 1 million of which entered the rental channel (650,000 cassettes, 350,000 discs).That translates to approximately $110 million in consumer spending, DreamWorks says.

“We had a unique movie with Shrek and felt it was an event movie that would allow us to bring back the event of buying a movie,” says Kelley Avery, DreamWorks’ head of worldwide video. “The fact that Shrek broke all video records of the past six years in its first three days not only demonstrates the strength of the title, but also the strength of the video market.”

Shrek is hot on the heels of The Lion King, home video’s all-time sales champ, which sold 20 million units its first week in stores and ultimately sold nearly 30 million units. The Lion King was released in March 1995, before DVD.

The release of Shrek was backed by what Avery says is the “biggest video campaign in DreamWorks’ history,” with heavy media buys and nine promotional partners. At retail, the title also created a tremendous buzz. Blockbuster Video stores invited kids to paint murals of Shrek characters on store windows. Kmart had a chainwide coloring and bean bag toss Nov. 4, two days after Shrek’s unusual Friday street date.

“Across all channels, retailers came up with unique marketing programs to drive Shrek sales,” Avery says.

In a posting on the Home Theater Forum Web site, Jason Pugh of Garland, Texas, says he was surprised at Blockbuster’s strong push to get people to buy Shrek.

“I never see people buying DVD or VHS movies at Blockbuster,” he writes. “[But] they were lined up to get Shrek due to the $25 for Shrek and 10 DVD movie rentals [offer]. Just in my close relatives I know three people who bought it due to this promotion who probably would have just rented it.”

John Thrasher, v.p. of video purchasing at Tower Records and Video, a 100-store audio-video combo chain based in West Sacramento, Calif., says he sold through 40% of his initial buy in three days. “It started out even stronger than Phantom Menace,” the previous record-holder, Thrasher says, noting that 75% of Tower’s Shrek buy was on DVD. “It’s a great title,” he says, “and it certainly crosses every demographic. It appeals to young and old alike.”

A minor flap ensued when DreamWorks broke tradition and, in its print ads, publicized not the suggested retail price, but the minimum advertised price ($15.95 for the cassette, $19.95 for the DVD). Most mass merchants typically sell at or below MAP. In fact, a Best Buy in Costa Mesa was selling the title at $16.99, dollars below MAP. But independent video retailers were upset.

“People are coming into the stores asking if it’s $15.95, why are you selling it for $19,” says David Bleiler, video buyer for TLA Video in Philadelphia. “It’s definitely confusing customers.”

A DreamWorks spokeswoman says unlike previous sellthrough releases, Shrek did not have a suggested list price. Further, she notes, “we made it clear in the ad that actual prices may vary.”

Avery won’t predict how many copies of Shrek will ultimately sell, but notes that nearly 50% of the initial shipment of more than 15 million units sold through to consumers in the first three days. “A title typically does 30% to 35%, so we’re very optimistic — particularly since we haven’t even yet hit the holiday gift-giving season,” Avery says.

DreamWorks and its sales and distribution partner, Universal Studios Home Video, are now in “allocation mode” in regard to the Shrek DVD, Avery says. “We’re out of the DVD and replicating them as quickly as possible,” she says.

Universal president Craig Kornblau says Shrek’s success will only add to what is shaping up to be a banner year for Universal, which kicked off the fourth quarter with The Mummy Returns and still has several other heavyweights in the home video pipeline, including Dr. Seuss’ How the Grinch Stole Christmas (Nov. 20) and Jurassic Park III (Dec. 4).

Meanwhile, Monsters, Inc. generated an estimated $63.5 million in theaters between Nov. 2 and 4, setting a new record for a cartoon — and for Disney. The previous topper was Toy Story 2, which grossed $57 million its opening weekend in 1999.

Shrek, which opened theatrically last May, took in $43 million its opening weekend.

Kornblau says the fact that both Shrek and Monsters, Inc. scored high with consumers is indicative of the times.

“They are all scary with humor, and they appeal to a wide audience,” he says. “In times of stress or difficult times, diversions are important and entertainment has always streamed upward because entertainment provides relief through fantasies,” he says. “You can’t see it anyplace better than what happened this weekend, with record box office and record video on the same weekend. It’s a nice place to be.”

Additional reporting by Joan Villa.

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