Natixis Media & Entertainment observing slower video sales
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Natixis Bleichroeder's Media and Entertainment division reports blockbuster films are generating fewer DVDs unit sales than in previous cycles-further complicating the numbers for movie studios and production houses beyond the WGA strike. Where a big picture used to sell 20 million units, top movies now struggle to reach 10 million units. This trend is likely due to industry maturation, the economy, and new technologies. Home video, the biggest profit center for the studios, is being impacted.
Marvel's films have underperformed this holiday season with both Spiderman 3 and Fantastic Four 2 missing home video projections, generating an estimated 20% and 33% of box office revenue. They now highly question whether video revenue from the upcoming film slate will be able to generate 70% of domestic box office as Nataxis projected. If video is only 35% of box office, it implies a 19 million, or 29%, reduction in a film's average profit.
Video industry leader TWX has seen its seen its average unit price drop 15% during the first nine months of the year, resulting in a 5% DVD revenue decline on a 12% increase in units. This is after a 16% revenue drop in 2006 off of a very difficult comp the prior year. Theatrical home video revenue had dropped 5% and TV home video declined 10% during the first nine months of the year.
TV series have been the growth area of the video industry the last few years, but even that business seems to have topped out, said the report. Wal-Mart is selling earlier full seasons of HBO's Soprano's or Fox's 24 for as little as 19.96 this year; but the latest season is still selling for 49 bucks for 24 and 99 for The Sopranos.
Nataxis also notes DreamWorks Animation's Shrek the Third is pacing at a disappointing level with an early estimate of 6 million units sold, resulting in much less than the industry average DVD revenue to domestic box office revenue.
Marvel's films have underperformed this holiday season with both Spiderman 3 and Fantastic Four 2 missing home video projections, generating an estimated 20% and 33% of box office revenue. They now highly question whether video revenue from the upcoming film slate will be able to generate 70% of domestic box office as Nataxis projected. If video is only 35% of box office, it implies a 19 million, or 29%, reduction in a film's average profit.
Video industry leader TWX has seen its seen its average unit price drop 15% during the first nine months of the year, resulting in a 5% DVD revenue decline on a 12% increase in units. This is after a 16% revenue drop in 2006 off of a very difficult comp the prior year. Theatrical home video revenue had dropped 5% and TV home video declined 10% during the first nine months of the year.
TV series have been the growth area of the video industry the last few years, but even that business seems to have topped out, said the report. Wal-Mart is selling earlier full seasons of HBO's Soprano's or Fox's 24 for as little as 19.96 this year; but the latest season is still selling for 49 bucks for 24 and 99 for The Sopranos.
Nataxis also notes DreamWorks Animation's Shrek the Third is pacing at a disappointing level with an early estimate of 6 million units sold, resulting in much less than the industry average DVD revenue to domestic box office revenue.
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