Read an interesting post on Brand Autopsy on how DVDs have totally disruptive the old "standard" business model for Hollywood. From the post:
- For consumers buying DVDs, 30% saw the movie in the theater, 30% saw it on cable, and 40% have never seen the film.
- Despite being a critical purchase factor for consumers, the DVD extras (actor commentary, behind-the-scenes footage, deleted scenes, alternative endings, etc.) are only viewed by 20% of DVD buyers.
- âEventizeâ is the marketing idiom du jour being used in Hollywood. Eventize â¦ as in, âWe need to eventize the hell out of this release.â
- Studios generate around $9.00 cash flow per DVD sold. [COST BREAKDOWN: Studios incur about $6.00 in costs (from production to marketing to royalty fees) to produce one DVD and they charge retailers a wholesale price of approx. $14.95 â¦ leaving slightly more/less than $9.00 as positive cash flow per DVD sold.]
- Given the profitability of DVDs, an unnamed Hollywood executive referred to DVDs as being, ââ¦ the corporate A.T.M. machine.â
- Mega retailers dominate the consumer sales of DVDs with Wal-Mart capturing 22% of all DVD sales in the US. Best Buy, Target, Costco, Samâs Club, Circuit City, and Blockbuster combined are responsible for 42% of DVD sales.
- With greater frequency, more films are receiving only a two-week theatrical run and then disappear only to reappear on the DVD market to exploit the âhome-cinemaâ market.
- The emergence of the âhome-cinemaâ market is having a profound effect on how consumers experience motion pictures. Mark Rance, a DVD producer, explained this effect by saying, âWhat weâre used to is the 19th century theatrical experience: you go to a theater with a large group of people, you see a movie and enjoy it with a crowd. Thatâs being replaced now by, like, 20 people in your living room, like a book club watching a film they might not have heard of.â
Also from the post, and perhaps the most telling: ". . . DVDs now claim 63% of a filmâs revenue (as generated through wholesale DVD sales to retailers) while box office receipts only account for 21% of a feature filmâs revenue."
I rarely watch any of the DVD extras; if I do watch them, I only watch them once and I find many of them to be very disappointing. It is interesting that everyone subconsciously feels the quick release cycle of DVDs -- I hear a lot more people saying, "I thought that was just in the the theater" than I have in the past. However, I really wonder how sustainable DVDs are as a media. Personally, I think that within the next 24-36 months (probably sooner for those of us on the left side of the chasm, but I'm talking about the general public), most people are going to be downloading their movies or simply viewing them on demand. Steve Jobs seems to have been right in saying that people want to own their music (at least for now), but I don't think that people necessarily want to own their movies (with the possible exception of Disney DVDs that only are "released from the vault" every once and a great while).