August 11, 2004

Today's Must Read: Studios Spent $887 Million Marketing DVDs Last Year

The Hollywood Reporter has a must-read article on the ever-increasing marketing costs associated with DVD releases. Here's a little taste:

Industry analyst Tom Adams of Adams Media Research is not surprised by the overall spending numbers. According to his company's figures, studios are earning about 60% more upon initial release from video sales of theatrical feature films than they did during the VHS-only era. Among movies that earned more than $100 million at the domestic boxoffice, the average home video yield last year was $152 million, a 71% increase on the comparable $89 million average in 1997, the year DVD launched.

Here's a nice breakdown of spending by sector:

There is one thing on which most studios agree: Allocating marketing dollars to the small screen makes sense. Nearly 80% of video marketing expenditures last year were for television commercials, with broadcast and cable in the lead at $385 million and $222.8 million, respectively. DreamWorks Home Entertainment spent the highest percentage of its marketing budget on network TV (58.3%), followed closely by BVHE (53.2%). Fox led percentagewise spending on cable television (37.8%), followed by New Line (31.4%).

Even though this article is about the "big fish," Indie DVD marketers should read it to see where the big money's not being spent -- in particular, niche, small circulation magazines/fanzines with favorable CPM costs, online contextual advertising and Blogs. The online sector is especially important for those unable to spend more than a few grand in advertising and need an effective way to manage ROI.

Home entertainment marketing