Home Media Magazine - November 18-24, 2007 - (Page 9) www.homemediamagazine.com NEWS By Erik Gruenwedel hen the best thing Image Entertainment CEO Martin Greenwald could say in print about secondquarter results was the imminent close of the company’s acquisition by BTP, you know better times haven’t arrived yet. Chatsworth, Calif.based Image said a drop in sales of audio programming (CD/ DVD) during the period ended Sept. 30 was the primary reason for a 5.3% decline in net revenue, to $21.6 million, from $22.8 million during the same period last year. The net loss narrowed to $3.6 million for the quarter, from $3.7 million in the same quarter last year. Top-selling DVDs included Shark Week: 20th Anniversary Collection, Dirty Jobs Collection 1 (both from Discovery Channel) and Jeff Dunham: Spark of Insanity. Last week, Image said it extended to Nov. 15 the closing date of its $132 million acquisition by BTP Acquisition Co. LLC, an investor Genius Q4 Marketing Image Q2 Plays Sour Note Sinks Q3 Results W By Erik Gruenwedel enius Products is paying upfront. In an effort to be profitable at year’s end, Genius Products Inc. accounted for $6 million in marketing costs in the third quarter (ended Sept. 30) for seven DVDs from The Weinstein Co. slated for release this quarter. As a result, the Santa Monica, Calif.-based distributor, which is 70% owned by The Weinstein Co., posted a net loss of $5.4 million, compared to a first-ever profit of $2.1 million last quarter. New-release DVDs, including the John Cusack thriller 1408, Rob Zombie’s Halloween, the Michael Moore documentary Sicko, Who’s Your Caddy?, The Nanny Diaries, Last Legion and Planet Terror (half of the double feature Grindhouse) collectively generated more than $172 million at the box office. The distributor, which said it deferred a record $57 million in DVD revenue on the titles, is expecting net G income of $20 million for the fourth quarter (ending Dec. 31). The company said 1408 is the main source of the deferred revenue. «ALTHOUGH THE ADDITIONAL $6 MILLION EXPENSE NEGATIVELY AFFECTED OUR THIRDQUARTER MARGIN, IT WILL HAVE A POSITIVE EFFECT ON FOURTH QUARTER MARGIN.» CEO TREVOR DRINKWATER “Although the additional $6 million expense negatively affected our thirdquarter margin, it will have a positive effect on fourth-quarter margin,” CEO Trevor Drinkwater said in a call with investors. “If not for the timing of the additional expenses … we would have delivered another profitable quarter.” The company cited DVD sales of the Weinstein title Death Proof and non- Weinstein fare (about $60 million) from World Wrestling Entertainment, ESPN, Sesame Street and Discovery Kids in generating net revenue of $93.4 million, compared to net sales of $112 million last quarter. “It should be noted that our [nonWeinstein] branded content grew over five times, versus the same time last year,” said Stephen Bannon, chairman of Genius. Gross revenue of $135.5 million included $42.1 million in DVD returns, discounts and allowances. Drinkwater said the returns (which included higher-than-expected allowances on some Weinstein titles) were higher than expected but would be repurposed as third-party sellthrough. “So, it’s not necessarily bad news on the returns front,” he said. The CEO said the writers’ strike could help Genius title rentals as people look for re-run alternatives. Genius, which said it will co-produce at least 14 titles in 2008, projects preliminary revenue of $1 billion next year. group led by film financier and producer David Bergstein. A notable bright spot included $598,000 in digital revenue (downloads and streams), up 193% from $205,000 during the same period last year. Image said interest expense from loans and other sources increased to $808,000 from $479,000 last year. Other expenses included $307,000 related to the merger with BTP and $108,000 in accelerated depreciation and amortization from the closure of a Las Vegas distribution facility. The expenses are on par with $416,000 reported during the same period last year due to the bankruptcy of Tower Records and Video. “The past few quarters have been a time of transition for us, and we are excited about combining our companies and moving ahead with great resolve and even greater resources,” Greenwald said in a statement. The company expects to host an analyst call to discuss the results some time after Thanksgiving. Vivendi Visual to Distribute Young Adult Fare on DVD By Erik Gruenwedel ivendi Visual Entertainment, the DVD delivery arm of Universal Music Group Distribution, has inked a distribution deal with upstart media company Blowtorch Entertainment. San Francisco-based Blowtorch recently secured $50 million in funding for the production and acquisition of content catering to young adults, who range from 18 to 25 years old. Under terms of the deal, Los Angeles-based Vivendi Visual will distribute three to six Blowtorch titles annually on DVD beginning in 2008. In addition, Vivendi Visual will market, promote and distribute movies and related content via the Internet, TV and mobile phones. Yolanda Macias, VP of acquisitions for Vivendi Visual, said the company is selling Blowtorch content to TV in addition to DVD. “We will be selling to all the digital retailers, including electronic sellthrough and streaming,” Macias said. She defines the young adult market as the “sweet spot” for distributors. Sony Making a New Push for Its Ailing UMD Movie Business By John Gaudiosi ony Computer Entertainment and Sony Pictures are taking advantage of the increased installed base of PlayStation Portables, as well as the holiday spending season, with a revival of UMD movies. While UMDs retailed for at least $20 when Sony launched its portable entertainment device, an influx of new UMD movies are selling for just $5 each at retailers such as GameStop. “Because each studio manages their own business, there will still be a variety of price points and content offerings for the UMD business,” said John Koller, senior marketing manager, PSP, Sony Computer Entertainment America (SCEA). “However, for the most part, the market has spoken — and has wanted better content at realistic prices.” Koller said that the movies featured at these prices and how they’re displayed and promoted will differ among retailers and studios. Best Buy, Circuit City, and GameStop are the first retailers to step up the promotion of the new UMD V S You Are Here The first movie, You Are Here, is slated for theatrical release next spring. The 2006 film festival entry about a group of twentysomething, nightclub-hopping friends who wake up after a wild night on the town and find their lives in chaos, stars Bijou Phillips (Hostel: Part II), Danny Masterson (“That ’70s Show”) and Patrick Fleuger (“The 4400”). A DVD release date has not been set. Macias said the title was acquired, unlike future content that will primarily be produced in-house and with third parties. She said Blowtorch interested executives at Vivendi Visual after they worked with several of its key players, including producer and Blowtorch board member Paul Schiff. movie pricing, as well as the recently lowered $170 hardware and $200 bundles. The new bundles include a limited edition “Star Wars” PSP packaged with Star Wars Battlefront: Renegade Squadron, and a Daxter PSP that comes with that platform game and a “Family Guy” UMD. SCEA also will up marketing of the PSP’s movie functionality. Koller said SCEA’s approach to the UMD business always has been that with the right content at the right price, consumers will come. He said the PSP’s screen size lends itself perfectly to viewing videos and movies on the go, but the company needed to serve up the correct content at an affordable price. “With the core PSP owner being a 16-year-old male, they wanted more Wedding Crashers, “Family Guy” and Napoleon Dynamite and fewer romantic dramas,” Koller said. DIVX TECHNOLOGY TO JOIN PLAYSTATION 3 By Erik Gruenwedel DivX Inc., the San Diego manufacturer of an alternative video technology based on smaller MPEG-4 compression, said its technology will be included in future PlayStation 3 consoles from Sony Computer Entertainment. The move will greatly expand the DivX universe, which claims about 100 million devices capable of playing its digital playback technology. Other CE manufacturers incorporating DivX technology into DVD players and related media devices include JVC, LG, PhilGAMES ips, Plextor, RCA, Yamaha and Samsung. PS3 owners soon will be able to add DivX functionality as part of a software update, according to DivX. Separately, Sony Nov. 2 released a PS3 software development kit that allows game manufacturers to incorporate DivX’s decoder technology. “Our technology will expand the multimedia functionality of PS3 by enabling users to enjoy access to the broad library of content in the DivX digital media format,” Kevin Hell, CEO of DivX, said in a statement. Home Media Magazine November 18–24, 2007 http://www.homemediamagazine.com
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