Sony Pictures CEO Says DVD Tough to Replace22 Apr, 2009 By: Erik Gruenwedel
Despite a decline in DVD sellthough — offset by growing Blu-ray Disc sales — through the first quarter in 2009, Sony Pictures Entertainment co-chairman and CEO Michael Lynton thinks studios will find a new way to exploit their movie library.
In an interview with Forbes.com, along with studio co-chairman Amy Pascal, Lynton said DVD has been a “gold mine” to Hollywood that average consumers coveted more than they actually consumed. He said typical consumers would regularly purchase and rent multiple titles on DVD that they didn’t necessarily watch.
“That’s a good business to be in,” Lynton said.
The executive said the transition to Internet-based distribution of movies and TV programming presents a double-edged sword in that consumers will only pay for what they actually watch. Lynton considers electronic sellthrough more as incremental revenue to the current entertainment distribution food chain.
Lynton told Forbes he remains hopeful that consumers will replace their DVD libraries with Blu-ray Discs, but is unsure of its boost to the studio bottom line. He said ongoing price erosion of the format is bad for margins.
“That makes consumers more likely to buy Blu-ray but less likely to pay a premium for it,” he said.
Pascal told Forbes the DVD slump is causing studio chiefs to rethink how they put deals together and how they pay people.