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Warner to Bow Same-Day DVD/VOD Releases

4 Jun, 2007 By: Erik Gruenwedel

Openly questioning the 15% to 20% studios get from DVD rental, a Warner Bros. executive June 4 told an investor group the studio plans to release historical epic 300 simultaneously on cable video-on-demand and DVD in select European countries later this year.

Kevin Tsujihara, president of Warner Bros. Home Entertainment Group, said he based the decision in part on six months of VOD/DVD movie release tests conducted by cable operators Comcast Communications and Time Warner Cable in Denver and Pittsburgh.

Comcast saw a 50% increase in consumer purchases of VOD movie rentals in addition to a 10% surge in DVD sellthrough, according to Tsujihara. In addition, he said the studio would receive 60% to 70% of each consumer dollar spent on VOD compared to lower margins with DVD rentals.

“When you look at what can impact our margins and bottom line over the next 24 months, we think VOD on a global basis is probably one of the most significant pieces of our business,” said Tsujihara, speaking at the Deutsche Bank Securities Media and Telecommunications Conference in New York.

The executive described DVD rental as an inefficient means of distribution that required shipping product and dealing with returns with a third party beset with rent, labor and previously viewed inventory.

“All I'm saying is don't get in your car,” Tsujihara said. “Watch it at home on cable or satellite. I don't have to fight through all these inefficiencies for consumers to get 24-hour access to my movies.”

He viewed the transition to same-day VOD/DVD as a huge incremental opportunity (versus incremental spend) in the $8 billion domestic rental market — a move Tsujihara said could be replicated globally as well.

Warner will street 300 simultaneously on VOD and DVD in Belgium and Scandinavia with additional international markets to follow. The title, which could not be recorded on a digital video recorder (DVR), would be available for a 24-hour viewing period for an undisclosed price.

He said he hoped other studios would also participate, thereby making it easier to market the concept to consumers as an industry-wide initiative.

“I think we have just scratched the surface,” Tsujihara said. “We want to pull the rest of the industry with us or we'll go it alone. We have done it before.”

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