Whistling Past The Graveyard, Still

Can Blu-ray Heat Up Hollywood Again?pdf

All over the movie business, people are hoping that the new high-definition DVDs — either in its Blu-ray form or its rival HD-DVD — will take off and mitigate the reality that hangs over the home entertainment business. The DVD go-go years are over.

For many in Hollywood, it’s as if they just discovered Santa isn’t real. No matter how bad the movies, the box office, the marketing costs, the bloated star salaries, there was always salvation in the shiny little disc. The studios could make and market one for $5 and then sell it to consumers for more than $17, a tidy profit of at least $12 bucks per disc. The disc generated rivers of cash. “Finding Nemo” is the all-time bestseller on DVD; it made $340 million at the U.S. box office and $537 million in home video.

[…] American homes are now officially crammed with DVD players and copies of everything, including Season 3 of “The Golden Girls,” “Fitzcarraldo” and various special editions of “The Terminator.” According to the Digital Entertainment Network, 80% of all households own DVD players. The most enthusiastic DVD buyers have generally been new DVD owners looking to build their collections. Many people have rafts of the shiny jewel cases they’ve never even opened.

“I don’t know when you’re supposed to watch them all,” sighs one marketing honcho surveying her DVD closet. “I could only hope for a long incapacitation.”

[…] DVD sales constitute 50% to 60% of the revenue on any given picture. Plus, the studios had deemed for themselves the right to be piggy with the booty. Generally, the writers, stars and directors earn royalties that are based on just 20% of a DVD’s net income, with the other 80% pouring right into the studio’s bottom line.

“I think there was a feeling in town that because the DVD was growing, it would cover for sins,” notes Ben Feingold, head of home entertainment for Sony.

[…] “DVD sales will go down this year because consumers know about high definition but they don’t know which format to buy,” says Reed Hastings, chairman of Netflix, the online DVD rental powerhouse that has been growing at the expense of traditional video stores. “The problem with picking sides is that creates consumer anxiety, and so they’ll just stop buying, period, or slow down their buying. The solution to getting the business growing is to have the studios support both formats. In video games, the two main formats are Xbox and PlayStation, and the market does well with two formats.”

At $1,000, the Blu-ray players cost about $500 more than the HD-DVD players, which in turn cost about $450 more than a regular DVD player. Although the new technology provides richer, more detailed imagery, some critics wonder whether consumers will really be able to see the difference if they don’t possess gigantic 65-inch plasma TV screens.

Yet hope springs eternal in Hollywood.

Good luck with that…

Later: High-definition DVD market facing staticpdf