Balancing Disc and Digital

28 Aug, 2012 By: Thomas K. Arnold

With the fourth quarter fast approaching, it will be interesting to see how the two facets of our sellthrough business — packaged media and electronic sellthrough — play into each other.

The fourth quarter, of course, is prime gift-giving season, a time period in which studios traditionally generate about 40% of their annual home entertainment revenue. And a prime driver behind pre-holiday DVD and Blu-ray Disc sales is the impulse market. That’s why you see such a hullaballoo around dating. Some studios want to be out early, hoping repeat impressions will get customers to pick up their title or titles. Others, fearful of being pulled from prime shelf-space spots after three or four weeks, choose to wait until December, hoping to snag choice positioning just as the harried last-minute gift shopper enters the store and frantically begins filling his shopping cart.

Digital downloads have never really been a factor. There’s less perceived “gift value,” if you will, of a $25 or even $50 iTunes gift card slipped into a stocking in comparison to a neatly wrapped DVD or Blu-ray Disc of The Amazing Spider-Man or The Dark Knight Rises.

But with both VOD and video streaming finally gaining traction and electronic sellthrough, buoyed by UltraViolet, promising to become a real business rather than an afterthought, studios are looking more and more toward digital distribution for future growth of the overall home entertainment business.

And in their enthusiastic push of fancy new DVD and Blu-ray Disc configurations of the big summer tentpoles, as well as elaborate gift sets, catalog collections, TV series and other programming aimed at holiday gift buyers, they’re going to have to be careful not to give digital the proverbial short shrift.

My hunch is that studio marketers are going to look for common ground, a way to continue to promote digital without taking focus away from the hot packaged-media commodities that will generate the lion’s share of their fourth-quarter revenue (and profit).

And finding that balance won’t be easy, particularly with so many bundled gift sets either already out there or waiting in the wings. After all, it makes more sense for Warner Bros., to cite just one example, to promote Batman Begins and The Dark Knight on disc when The Dark Knight Rises arrives in stores. Similarly, Sony Pictures would be smart to promote the previous “Spider-Man” trilogy on disc when The Amazing Spider-Man makes its DVD and Blu-ray Disc debut this fall instead of steering customers to the digital versions.

It may take a whole new way of looking at things. Just as in the old days, just before and right after DVD, when we pegged certain movies as a “rental title” or a “sellthrough title,” we may have to categorize movies as bringing optimal value back to the studio in either physical or digital form.

That won’t be easy — but in this business, it seems, nothing ever is.

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About the Author: Thomas K. Arnold