Universal Eyes Tough Q3 Home Entertainment Comps26 Oct, 2016 By: Erik Gruenwedel
30% drop in retail sales undermined by challenging year-over-year release slate comparisons
How valuable were 2015 box office hits Furious 7 and Pitch Perfect 2 to the bottom line? Universal Studios Home Entertainment reported a 30% decline in third-quarter (ended Sept. 30) revenue, due largely to tough retail comparisons with those titles (and others) in the previous-year period.
Universal owned 2015 with retail hits Jurassic World, Minions, Furious 7, Fifty Shades of Grey and Pitch Perfect 2, among others. The titles represented five of the Top 15 retail releases, generating $368 million in combined DVD/Blu-ray Disc sales, according to The-Numbers.com.
By comparison, Straight Outta Compton is the studio’s lone top-selling packaged-media title in 2016 with nearly $28 million in revenue. Indeed, Minions ($14.6 million), Jurassic World ($11.5 million), Furious 7 ($3.9 million), Despicable Me and Despicable Me 2 ($3 million each) continue to generate retail sales this year.
Overall studio revenue (including box office) declined 7.9% to $1.8 billion from $1.95 billion in 2015, and included revenue attributable to DreamWorks Animation from its Aug. 22 acquisition date.
Operating cash flow (profit) decreased 6.1% to $353 million from $376 million, reflecting lower revenue and severance costs of $50 million associated with the DreamWorks acquisition, partially offset by lower programming and production and advertising, marketing and promotion costs.
The decrease in programming and production costs was primarily due to lower amortization of film production costs in the current-year period due to a larger film slate in 2015.
For the nine months ended Sept. 30, studio revenue has decreased 20% to $4.5 billion from $5.62 billion in 2015. Operating cash flow decreased 47.2% to $576 million, from $1.09 billion a year earlier.