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Interesting article on DVD sales vs. box office gross...

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Interesting article on DVD sales vs. box office gross...

Old 06-01-04, 02:55 PM
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Interesting article on DVD sales vs. box office gross...

But as DVD revenues become more important to studios -- in 2003, DVD sales totaled $11.9 billion, according to Variety sibling Video Business, nearly 30% bigger than the $9.2 billion in U.S. box office that year -- studios began to look for talent who could move units at Wal-Mart the same way Cruise fills seats at the multiplex.

So, who are these stars of DVD?

Will Ferrell. Frat-house laffer "Old School," for instance, grossed $75 million at theaters in the U.S., but it then went on to sell an impressive $83 million worth of DVDs.

Vin Diesel. Has been in two pics that outperformed on DVD. "The Fast and the Furious" grossed $144 million at the box office but then sold $132 million on DVD. His follow-up, "XXX," sold $97 million on DVD after grossing $142 million at the wickets.

Ben Affleck. Has two DVD successes under his belt with "Pearl Harbor," which did $144 million on DVD (vs. $198 million gross) and "Daredevil" which made $51 million on DVD after grossing $102 million on the bigscreen.

Reese Witherspoon. It's not only boys who can be DVD stars. Her "Sweet Home Alabama" sold $98 million on DVD against $127 million at theaters.

Tobey Maguire. "Spider-Man" was huge on DVD, with sales of more than $215 million. But so were tights-less titles like "Seabiscuit," which has sold $99 million in discs after a $120 million box office run.

Denzel Washington. Nearly equaled the "Training Day" box office of $77 million with $74 million on DVD.

Matt Damon. Part of the reason Universal made a sequel to "Bourne Identity" is that it sold $89 million worth of DVDs after grossing $122 million in theaters.

Kevin Smith. Directors can have big DVD followings, too. "Jay & Silent Bob" sold $36 million on DVD after a moderate $30 million in theaters, which may explain why Smith has become a pitchman for Panasonic's recordable DVD player.



As these stars emerge, they and their agents are likely to demand a bigger cut of the action.


"The studios may take someone's homevideo prowess into consideration," says Ken Kamins, partner at Key Creatives, "but in private, not in public, because no one wants to compensate anyone for it."


DVD dollars are worth more to the studios than box office dollars, because they keep the lion's share of homevideo revenues.


Usually, studios only put 20% of their DVD receipts into the pot that is divvied up among gross players, a deal point that is known as a video-to-gross ratio. Even those with the richest deals in Hollywood, like Steven Spielberg or Cruise, are getting video-to-gross ratios of no more than 50%.


In their ongoing talks with the Writers Guild, studios have cited spiraling talent and marketing costs as justifications for closely guarding their DVD windfall.


But scribes won't likely be the last to demand a higher share of the DVD lucre.


Ultimately, it is likely that DVD sales will reach a point where the figures will help determine the price of an actor or director, just as foreign box office did.


Foreign B.O. used to be an afterthought in the movie biz, gravy that could pad studio balance sheets. But as it grew, stars emerged, like Sylvester Stallone or Charles Bronson, whose pics -- hits or flops -- seemed to magically double their U.S. grosses when sent abroad.


More recently, Leonardo DiCaprio has emerged as one of Hollywood's most bankable actors overseas. "Titanic," grossed $601 million in the U.S. and $1.2 billion in foreign box office; "The Beach" took in an unimpressive $39 million domestic and then $104 million foreign.


The prevailing opinion is that the best predictor of a DVD title's success is its box office tally. 2003's DVD bestsellers were "Finding Nemo," "The Lord of the Rings: The Two Towers" and "Pirates of the Caribbean" -- a list that looks awfully similar to the top U.S. box office one.


But after box office, the next best predictor is genre. Kidpics do extremely well. A new edition of "The Lion King" sold $136 million worth of DVDs. "The Santa Clause 2" sold $84 million.


After that come the genres that are most likely to appeal to young men: gross-out comedies, horror pics and action films. "XXX" sold $97 million last year. "Jackass the Movie" did $64 million in DVD.
Old 06-01-04, 03:49 PM
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Some of those titles perform exceptionally well on DVD because they are exceptional movies.

But I have to believe that some titles that do great on DVD achieve those numbers because there are people who were too embarassed to actually be seen walking into a theater where they were playing.
Old 06-01-04, 03:57 PM
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This is why the studios will continue to pump out big budget movies as they continue to factor in the home entertainment market. I think it's a lousy business model, but what do I know?

Domestic box office should (at the very least) pay for the cost of a film's budget and marketing. International is a bonus, and home entertainment should be the pot of gold.

Just because the film does well in DVD sales, in my mind, doesn't account for overspending on a production. I'm still in shock over the $225M budget for Spider-Man 2.
Old 06-01-04, 04:52 PM
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There are a few reasons for this i think:

1) It costs $9.25 a person for a night at the movies (don't forget concessions). It costs around $17.99 to own the average movie. No need to buy multiple copies if you want to watch it with your girlfriend or kids. No need to waste $5 on a tub of popcorn.

2) Movies like Old School and Super Troopers are good yet go unnoticed at the theatres. Those people that did get a chance to see it at the theatres probably bought the DVD because of its rewatch value. Then some of their friends saw it and liked it and bought their own copy and so on.

3) Movies like Pearl Harbor which probably don't have too much of a rewatch value came in super packages with super effects and super sound and picture. People bought it to show off their system and see what DVD is all about.
Old 06-01-04, 06:13 PM
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I dont subscribe to the theory that actors and even directors have specific followings on dvd.

I believe the only link between movies at the theatre and on dvd is the box office. The bigger movies will get the bigger name actors and the bigger hype. Thus generating more box office and dvd sales.
Old 06-01-04, 06:22 PM
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Originally posted by devilshalo
This is why the studios will continue to pump out big budget movies as they continue to factor in the home entertainment market. I think it's a lousy business model, but what do I know?

Domestic box office should (at the very least) pay for the cost of a film's budget and marketing. International is a bonus, and home entertainment should be the pot of gold.

Just because the film does well in DVD sales, in my mind, doesn't account for overspending on a production. I'm still in shock over the $225M budget for Spider-Man 2.
Why exactly would anyone follow this logic? If ancillary markets have proven to be a consistent revenue stream, why wouldn't you make it part of you business model? So what if Sony spent 225 million on Spiderman...obviously they think it's worth the money, and more than likely they are right.
Old 06-01-04, 06:40 PM
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Originally posted by jaeufraser
Why exactly would anyone follow this logic? If ancillary markets have proven to be a consistent revenue stream, why wouldn't you make it part of you business model? So what if Sony spent 225 million on Spiderman...obviously they think it's worth the money, and more than likely they are right.
Because in the past, they weren't. And in looking at the financials of Sony each year at a where it's all about showing numbers to Japan and being in the black, there is still cost cutting going on at the studio to offset these high priced pictures. Amy Pascal said it herself that she spent way too much money last year and that to offset the costs, 1500 people lost their job, assets (Culver Studios, GSN) were sold. I don't know, maybe I have a different mindset.

It's like going to eat at a buffet. I make sure my first plate covers the cost of the buffet. Everything I can eat after that is bonus. Why would I want to pig out on soup or dessert, when there's BBQ ribs right there?
Old 06-01-04, 08:40 PM
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devilshalo, I'm just saying the market has changed. To consider DVD and international just as a "bonus" would be, in my opinion, a terrible decision (at least from the business perspective). It is part of the equation, and doesn't look to be changing. To base current business decisions on what the market used to be is...yeah that doesn't make sense to me. Studios are companies interested in making money. Not American money, just money.
Now...whether 225 for Spiderman 2 is too much money even with those markets in consideration is another question. Certainly they could've made a good movie with less money, but in this case...I don't think a mistake was made. Spiderman 2 will make at minimum 500 million worldwide, and that's a very conservative estimate. So it's not like it's even in danger of losing money. But when you KNOW that you'll make at least as much money from international, if not more, why not cater to that market?
Old 06-01-04, 09:08 PM
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It's also worth pointing out that, while the average movie is in theaters for four-six weeks, they're on shelves for as long as the distributor can press copies. Jay & Silent Bob Strike Back made $30 million after three or four weeks in theaters. It's taken two years for it to make $40 million on DVD.

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