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Google: Longer Theatrical Window Equals Bigger Disc Sales

20 Apr, 2011 By: Erik Gruenwedel

Report says Netflix becoming synonymous with home entertainment

The move by studios to tweak movie release windows, including entering titles into retail channels weeks early, could negatively affect sales, according to a Google report.

The report was cited in a note from BTIG Research analyst Richard Greenfield.

In the April report “A Window into Film,” Google analyzed consumer consumption of movies theatrically and in the home (among other topics) based on queries conducted on its ubiquitous search engine. While search activity for DVD terms remained high in 2010, it was off 45% from two years ago — a statistic that belies consumer interest in home entertainment, according to Debra Schwartz, head analyst with Google.

“A more interesting insight we garner from this search data is that consumers continue to have a strong desire to consume film content in the home post its theatrical run,” Schwartz wrote.

The report found that on average, search activity for a film builds prior to premiere, peaks at premiere and moderates thereafter until a smaller spike builds with the home video release. For movies with longer theatrical windows, consumer queries for the Blu-ray Disc or DVD reached 36% of the initial box office buzz, compared with 33% when released earlier into the retail channel.

Online search interest in a theatrical release typically lasts up to 10 weeks, compared with two weeks for packaged media.

Google compared search habits with actual box office and disc revenue for two tentpole titles (Disney’s Alice in Wonderland and Paramount’s Iron Man 2) and two general releases (Warner’s The Town and Fox’s Date Night).

Alice was released into the retail channel just 88 days after its theatrical launch, a move that angered theater operators and jumpstarted the debate on shrinking windows and premium video-on-demand. Iron Man was released into home entertainment market 144 days after its box office bow. Both films generated more than $300 million at the box office.

Similar revenue patterns did not follow in packaged media. Alice generated $35.4 million in opening day retail revenue through 2.1 million discs, while Iron Man generated $61.3 million in first-day retail sales via 2.7 million discs, according to Google internal data. Alice generated $75.3 million in total disc sales, compared with $118.6 million for Iron Man 2.

Search interest for Iron Man peaked at 28% of theatrical interest, compared with 25% for Alice.

For The Town, first-day disc sales (300,000 units) topped $6.1 million 89 days after its box office bow, compared with $10.6 million for first-day sales (600,000 units) of Date Night, released 123 days after box office. The Town ultimately did generate $4.8 million more ($28.7 million total) at retail than Date Night with $23.9 million. But the latter generated 82% of its theatrical buzz in online searches, compared with 61% for The Town. Both films generated more than $90 million at the box office.

“Our analysis indicates that consumers searching for a movie are not necessarily indicating definitive intent to see the movie but rather a desire to gather more information,” Schwartz wrote.

Separately, the report found that 60 days was the best time to bow premium VOD movies, according to search queries, which reached 94% of box office searches. The time frame also represented the period when a movie has generated 97% of its box office. Google found that releasing a movie just a month after its theatrical launch could negatively effect box office as much as 25% and online searches (down 23%).

“There are millions of searches (6-12% of total) that persist in the 45 to 60 days post theatrical release, indicating a high enough level of awareness to introduce the movie on a new format without having to fully invest in a new marketing initiative,” Schwartz wrote.

Finally, the report concluded that searches for the term “Netflix” (followed by the term “Redbox”) dominated in 2009 and 2010 (up 40% year-over-year), and reached a new peak in February.

Google surmised that search patterns for Netflix indicated the online disc rental pioneer’s growth revolved not only around subscriber growth but existing members accessing the service more often.

“Even though Netflix receives home video content with a delayed window from a film’s DVD release, search activity suggests that consumers interested in knowing what’s available in home video are shifting from searching for terms like ‘new releases’ to the brand term ‘Netflix,’” Schwartz wrote.

BTIG's Greenfield said the Google report underscores changing consumer habits regarding purchasing and renting movies.

“While the Hollywood studios continue to hope that they can create a robust electronic sellthrough business, we believe consumers simply are not interested in owning content anymore,” Greenfield wrote in his post.

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