HIVE EXCLUSIVE: Remedy for Writers' Block?

6 Apr, 2001 By: Joan Villa

Video, already the workhorse in Hollywood that accounts for half the revenues and most of the profits on a given theatrical release, may have to work a little harder for the studios if a Writers Guild of America strike materializes next month.

Home video divisions are feeling pressure to pick up the slack for any revenues lost if writers’ stalled negotiations turn into a strike on May 2, when their contract runs out, followed closely by the Screen ActorsGuild, with a contract deadline of June 30. If writers walk, actors willlikely follow because the two groups are seeking similar economic concessions.

"We’ll need to make more money," sums up one marketing executive. "Last time there was a strike, the video group had to work harder to maintainthe cash flow."

Like most other studios, this executive is confident the supplier can "work smarter not harder" by simply mining the vast amount of videoproduct in the vault. "Your library is your life jacket. [It] will keep you afloat."

If suppliers face a lack of new releases, observes Jeffrey Fink, president of sales and marketing for Artisan Home Entertainment,"Obviously there’s going to have to be higher concentration on promotingcatalog product and generating higher revenue from both VHS and DVD."

With video under the spotlight, more marketing dollars and promotionalopportunities could flow to retail, offers a distributor. However, no concrete plans appear to be in the works to boost advertising, co-op orother consumer awareness vehicles, according to interviews with studios,distributors and retailers.

Universal Studios Home Video, like most film suppliers, has upped production in anticipation of a strike, but has not changed release ormarketing plans, according to Ken Graffeo, senior v.p. of marketing.

"Everyone has reviewed our plans, our release schedules and our marketing, and there hasn’t been any reactionary mode by the studio to have us change anything," Graffeo adds.

He anticipates "one of the biggest third and fourth quarters ever" based on product already in the theatrical pipeline. Plus, "with DVD growth and how we’re marketing our catalog, it will pick up any void," he says. "As long as we can maintain product flow to the retail market, the business will be pretty healthy."

Privately, however, most studios admit to combing their libraries forpotential unmined opportunities, including special anniversary editions.

The length of the strike is undoubtedly the heart of the issue. Impact to the retail marketplace — and on the fall television shows or nextyear’s theatrical market — will be minimal unless the strikes last six to nine months.

"There’s no question that if the strike is prolonged, our studio will not be able to keep on track, and there will be a point in time wherewe’re not going to get the big product," notes Robin Russell, executive v.p. of Columbia TriStar Home Entertainment. Columbia, for example, has amped up both acquisitions and production to last through the end of theyear.

Other studios say they have taken the same precautions.

"My pipeline is full well into 2002 so I don’t expect any problems as a result of the strike, unless the strike lasts six months to a year," adds Joe Amodei, executive v.p. and general manager of USA Home Entertainment. With approximately one theatrical video release per month, USA can also draw from direct-to-video and sports lines thatwould not be affected by the strike.

MGM Home Entertainment’s executive v.p. of sales Robert Wittenberg points to a string of successful box office titles in the pipeline, from Hannibal to Heartbreakers, that will fill in the company’s release schedule over the next 18 months. In addition, he says, "We have this vast library of films that has never been released on DVD, and frankly, so does every studio."

However, Wittenberg cites MGM’s six consecutive profitable quarters — duein large part to DVD special editions and collectors’ series releases — as proof that the studio has "already exhibited our ability to perform in the absence of theatrical product." A disruption in product flow would only occur with a long-term walkout, he adds.

But the idea that studios intend to squeeze higher revenues from home video is not accepted across the board.

"What that assumes is video isn’t already maximized," counters one high-ranking executive at a major studio who asked not to be identified.

Studios’ first line of defense is to lower operational costs by puttingthe production departments and other "underutilized" staff on shortened weeks, he says.

"I don’t think you can go to the video operation and say, ‘Give me 30% more.’"

Distributors and major retailers say the studios have not discussed special contingency plans with them. "We don’t foresee a major impact," explains a Blockbuster spokeswoman.

"In the short term it could be good" for retailers, speculates one distributor. "It’ll push some stuff out to video faster. Maybe studios will pay more attention to video and throw more marketing dollars atit."

Additional reporting by Kyra Kirkwood.