Home Media Magazine - February 17-23, 2008 - (Page 6)

NEWS www.homemediamagazine.com Lionsgate Projects Record 2008 DVD Sales Mini-major says consumer DVD spending is up By Erik Gruenwedel SUPPLIER Lionsgate is bucking industry trends by projecting record DVD revenue of $560 million in full-year 2008, up about 6% from 2007. Steve Beeks, president and co-COO of the mini-major, said DVD outperformed pessimistic analyst projections. Speaking Feb. 12 during an investor call, the executive blamed the 2.5% industry DVD sales decline in 2007 on the product mix — not economic downturns or industry trends. He said sequels represented 25% of the DVDs released in 2007, compared to 18% in 2006. The COO said sequels generally convert box-office revenue to DVD sales at a lower rate than nonsequel original titles. “This accounted for most of the difference in consumer [DVD] spending between 2006 and 2007,” Beeks said. He said consumer spending on DVD in 2008 is up more than 2%, compared to the first five weeks of 2007. The studio said it shipped more than 14 million DVDs in January — a record 3:10 to Yuma for Lionsgate. Beeks said the titles released last month, which included DVD and Blu-ray releases of 3:10 to Yuma, Good Luck Chuck and Saw IV, outperformed their theatrical results. He said the studio exceeded the nearest rival by 20% in converting theatrical revenue to DVD. The studio will generate $250 million in revenue on its DVD library, including $50 million in free cash, Beeks said. Lionsgate’s Blu-ray revenue in January was about seven times higher than last year, according to Beeks. The studio has already shipped as many BD releases this year as in entire 2007. “We expect the industry to unite behind Blu-ray by the summer, which should drive the current HD market to Gallery Posts Monthly Profit By Erik Gruenwedel RETAIL The light at the end of the tunnel may be getting brighter for bankrupt Movie Gallery Inc., which reported net income of $12.6 million for the period from Dec. 3, 2007, to Jan. 6, 2008. The Dothan, Ala.-based No. 2 video rental chain reported consolidated revenue of $253.5 million, including $160.7 million in rental and $92.7 million in DVD sales, according to a filing with U.S. Bankruptcy Court in Richmond, Va. Subsidiary Hollywood Video generated $182 million in revenue, compared to Gallery stores with $71.5 million, but recorded a net triple in size from $300 million in 2007 to more than $1 billion this year,” he said. “It is exciting again to have a true growth opportunity in home entertainment as we expect Blu-ray revenue to be largely incremental in the near term.” Lionsgate said it expects to realize from 10% to 15% of annual company revenue in digital distribution by 2010, compared to less than 1% in 2007. “This is the year we will see meaningful revenue in digital delivery,” he said, adding the revenue would be accretive and not detrimental to DVD sales. Beeks said it was premature to discuss ongoing same-day VOD and DVD trials with cable operators. He said Warner has expanded its sameday VOD and DVD offerings, a move Beeks said Lionsgate won’t emulate. Beeks said VOD, pay-per-view revenue added 10% and 15% of the theatrical revenue to a film in 2007, depending on the title. “We expect that to grow even further, especially this year since you will really begin to have true broadband delivered in the calendar year,” he said. Despite strong theatrical revenue from Saw IV and Tyler Perry’s Why Did I Get Married?, Lionsgate posted a 90% drop in third-quarter (which ended Dec. 31) net income to $1.95 million, compared to $20.4 million during the same period last year. The minimajor posted Q3 revenue of nearly $291 million, compared to $254.5 million last year. DVD sales fell 7.5%, to $105.1 million, from $113.6 million last year. Top selling titles included Bratz: The Movie, Skinwalkers, Captivity, Delta Farce, Saw III and The Condemned. Lionsgate’s filmed-entertainment backlog, which includes future revenue not yet recorded from licensing of films and television product for foreign and domestic markets, grew to a record $416 million in the quarter. loss of $36.2 million, versus $48.9 in net income for Gallery. Store operating expenses topped $55.5 million for Hollywood Video — almost twice Gallery’s expenses at $28.9 million. Since declaring bankruptcy Oct. 16, 2007, Gallery (including Hollywood Video) has posted a net loss of $69.3 million on revenue of $548.8 million. The company had $54.4 million in available cash at the end of the period. Gallery recently said it would shutter an additional 400 stores, on top of 520 store closing announced late last year. BRIEFS I TOLKIEN ESTATE SUES NEW LINE The British estate of J.R.R. Tolkien has taken New Line Cinema Corp. to court, alleging the company hasn’t paid the estate money it’s owed from box ofﬁce receipts and DVD sales from the “Lord of the Rings” ﬁlms. The Associated Press is reporting The Tolkien Trust and others were promised 7.5% of gross proﬁts from the ﬁlms, and the suit seeks at least $150 million. The suit also asks that the Trust be allowed to terminate any rights the studio has to other Tolkien works, including “The Hobbit.” Production on the two-ﬁlm prequel to the “Rings” movies is slated to begin in 2009. – Chris Tribbey version and two discs of bonus materials. – John Latchem I MVD, ALTITUDE PARTNER MVD Entertainment Group and Altitude Digital have formed a DVD distribution partnership. A majority will present live concerts of drummers. MVD’s release of Allan Holdsworth & Alan Pasqua — Live at Yoshi’s will be the first title from the deal. MVD Visual, MVD’s exclusive music DVD division, was the second largest producer of music DVD in 2007, according to the company. – Ruby Cardenas HOLLYWOOD STUDIOS* NEW-TO-DVD SKU OUTPUT: 2002 - 2007 2,400 2,297 2,100 2,172 1,940 1,770 1,556 Juno There are rules and laws of physics, and there are rules for the DVD universe. Break a law of physics, and you just might open a black hole and be swept to your doom. In the DVD universe, like it or not, the Hollywood studios set the market, and everyone else who wants to play must follow. There’s no changing that. Period. Judging from the 2007 SKU output totals for the studios (collectively speaking), it appears they’ve grown weary of the DVD format. You have to go all the way back to 2002 to find a lower title count from these market-makers. Have they begun a death spiral into a black hole of their own making? — Ralph Tribbey 2,200 2,000 1,800 1,600 1,400 1,200 2002 I BLOCKBUSTER ‘OSCAR’ NODS Lord of the Rings: Return of the King I LANDMARK OFFERS EARLY ‘LAST EMPEROR’ 2003 2004 2005 2006 2007 * Hollywood studio defined as having at least 15 new theatrical releases with a box office gross of $25 million or more. These include: DreamWorks, Lionsgate, MGM, New Line, Paramount, Sony Pictures, 20th Century Fox, Universal and Warner Bros. I THIS WEEK’S RELEASE ACTIVITY FOR DVD Titles in Release Through Week Ended Feb. 8, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Net DVD Titles Announced and/or In Release Through June 30, 2008 . . . . . . . . . . . . . . . . . . . . . . . 82,681+220 83,240+271 I THIS WEEK’S RELEASE ACTIVITY FOR BLU-RAY As of Week Ended Feb. 9 . . . . . .Released I THIS WEEK’S RELEASE ACTIVITY FOR HD DVD Scheduled As of Week Ended Feb. 8 . . . . . .Released 390 Scheduled 40 Landmark Theatres will sell Criterion’s new four-DVD The Last Emperor collector’s edition beginning Feb. 19, one week before the set streets anywhere else. The theater chain, known for selling hard-to-ﬁnd DVDs, books and CDs, offers the set at $49.99, $10 less than SRP. The ﬁlm, directed by Bernardo Bertolucci, tells the story of the last emperor of China. It was released in 1987 and won nine Oscars. The DVD set, due Feb. 26, includes the theatrical cut, an extended TV The Academy Awards don’t happen until Feb. 24, but Blockbuster Inc. already has the winners based on an online survey of online movie renters conducted by e-Rewards. Respondents voted Johnny Depp best actor for Sweeney Todd: The Demon Barber of Fleet Street and Ellen Page best actress for Juno. Best supporting actor went to Philip Seymour Hoffman in Charlie Wilson’s War and Ruby Dee won best supporting actress for her role in American Gangster. Joel and Ethan Coen’s No Country for Old Men was voted best picture. – Erik Gruenwedel Home Media Magazine February 17–23, 2008 http://www.homemediamagazine.com

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Contents News Health/Fitness Reviews Pipeline Research Top 20 DVD Sellers Top 20 Rentals and Top 10 Charts Just Announced

Home Media Magazine - February 17-23, 2008

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