June 24, 2004

Is the Theatrical Release Just a $100 Million Dollar Commercial for the DVD?

Here's a must read piece from the New York Times on the explosive success of DVD sales. I've excerpted a few choice tidbits for your delight.

Here's an important one:

"In the last five years maybe 6 pictures out of 1,000 recouped their cost in the theatrical marketplace," said Nick Counter, president of the studio alliance. "Today the hits have to make up for all the losses."

Not too sure about those numbers. Here's a good place to look and check.

Here's another good one -- remember, that's more than likely a gross margin (still quite good though):

The profit margin for studios is significantly higher on the disk format. A study by Jessica Reif-Cohen, an analyst at Merrill Lynch, found that studios make an average of 66 percent profit margin on the DVD, compared with just 45 percent profit on the videocassette. She concluded, "We believe the perception of low returns on feature film production is no longer valid."

Finally, my personal favorite, and one that affirms that sickening feeling you got when you bought the '20th Anniversary Special Limited Box Edition of 'Porky's'":

But that does not mean the studios do not wring every cent from each movie. Miramax is planning to release a half-dozen different DVD editions related to "Kill Bill." "This is the beauty of having two volumes," said Rick Sands, chief operating officer at Miramax. " 'Vol. 1' goes out, 'Vol. 2' goes out, then 'Vol. 1 Special Edition,' 'Vol. 2 Special Edition,' the two-pack, then the Tarantino collection as a boxed set out for Christmas. It's called multiple bites at the apple. And you multiply this internationally."

...reminds me of the stunts that DC and Marvel comics used to pull in the late 80s to early 90s. Basically, they would release four different versions of the same comic book, each with a different colored cover, and all of them hermetically sealed in a plastic bag. This forced the astute comic book collector to buy five copies at a minimum (the extra copy was for reading...) This DVD phenom is the same concept, (and sometimes the same product with all the superheores on screen these days) with just a much larger consumer base.

Duluth News Tribune | 06/24/2004 | Studios rush to cash in on DVD boom