Katzenberg: Home Video ‘Surprisingly Strong’

17 Sep, 2008 By: Erik Gruenwedel

Jeffrey Katzenberg, CEO of DreamWorks Animation SKG, said the studio’s product, including DVD, should experience little negative impact from ongoing blows to the nation’s financial and credit markets.

Speaking at Goldman Sachs’ investor conference in New York, Katzenberg said ongoing economic woes would positively impact the movie industry as families scaled back on larger expenditures such as vacations and travel.

“Our product is, at worst, recession resistant, and more optimistically and historically, our business has been recession proof,” Katzenberg said.

He said DVD sales industry wide through August lagged just 3% from the same time last year. DreamWorks Animation DVD continued to be primarily purchased by moms and repeatedly watched by children, according to Katzenberg.

“That’s a very high value,” he said. “Our first-run releases and library continue to do well. We have not seen either price or margin erosion. The home video market is challenged but it has held up surprisingly strong.”

The CEO said the studio would aggressively support Blu-ray, including releasing Kung Fu Panda and Shrek the Third in the format.

“As the price of the hardware comes down, it should become a broadly adapted platform by the consumer,” Katzenberg said. "How quickly that happens, I don’t know yet.”

He said the studio preferred to “wait and see” results from ongoing trials between studios and cable operators regarding releasing movies on VOD and DVD the same day.

While admitting to the “tremendous” opportunities, promise and growth in digital delivery, Katzenberg questioned the financial returns in the near term.

“In 2009, total sales of all digital content, movies, rental and sales, will be 2.1% of the [DVD] volume,” he said. “And even less for our product. Moms want a hard good to take on vacation. Our hard good business is core and strong.”