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Fitness DVDs Help Gaiam Post $1.6 Million Q4 Profit

18 Mar, 2013 By: Erik Gruenwedel

Vivendi Entertainment acquisition drives 20% increase in quarterly revenue as fitness DVD unit sales increase at largest retail vendor

Gaiam March 18 reported fourth-quarter (ended Dec. 31) net income of $1.6 million compared to a loss of $21.1 million during the previous-year period.

Boulder, Colo.-based Gaiam attributed the turnaround in part on last year’s acquisition of home entertainment distributor Vivendi Entertainment. Gaiam Vivendi Entertainment, which claims to be the third largest domestic independent distributor of non-theatrical releases behind Warner Bros. and Walt Disney Studios, helped increase total revenue 20% in the quarter to $66.7 million from $55.6 million last year.

Gaiam Vivendi recently inked a deal with Crown Media to distribute the Hallmark Channel library on disc as well as a separate agreement with the Jim Henson Co.

Gaiam Vivendi has generated about 20 million additional vendor unit sales or $200 million in gross billings, according to CEO Lynn Powers, who said the unit is on track to generate previously stated goal of $25 million in operating profit.

Branded fitness DVDs now account for 42% market share in fitness genre, up from 38% during the previous-year quarter. Powers said fitness DVDs are not following digitization patterns (rental and streaming) within home entertainment found in other genres due to the repeat use of the product.

“People watch fitness DVDs over and over again versus the single viewing for a theatrical release,” she said. “Our DVD sales still continue strong, and at our largest retailer actually up in sales for the year.”

The CEO said Gaiam manages media distribution at more than 5,000 stores nationwide and the largest content aggregator with the second-largest mass retailer in the U.S. She said the Gaiam “store-within-a-store” retail strategy is now on display at 15,000 stores.

“The improvement in our operating results reflects double-digit internal revenue growth in our business segment and the benefit from our acquisition of Vivendi Entertainment,” Powers said.

Gaiam expects to incorporate a digital app with connected TV manufactured by LG, Sony, Panasonic and Google TV-enabled devices in the second quarter. The SVOD business, which commands a 5,000-title library, is generating about $360,000 of revenue a month.

“As we invest in these technologies and now marketing, it impacts operating income,” Powers said. “We believe this is an exciting initiative that will begin to contribute to our financial results as soon as we hit break even on our subscriber base by the end of the year.”

Indeed, subscription video-on-demand platform Gaiam TV posted a quarterly operating loss of $2 million since its launch last year. The unit generated an operating loss of $5.7 million for the fiscal year. Gaiam expects to break even on the platform by the end of the year based in part on attaining 90,000 paying subscribers.

About the Author: Erik Gruenwedel

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