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Time Warner's home-video revenue plunges

PSound
11-04-2011, 12:58 PM
I actually emailed him and received a response.

He is talking directly to folks at the studios.

It is not a fun time right now. The revenue drops are real and having an impact.

That is why the PR spin that Blu-ray is maintaining sell through revenue is an outright lie. It is false and in no way represents the reality at the studios.

Of course, we already know that from studio exec comments and the significant reduction in force at the studios (particularly around Home Video).

The alleged increases in Blu-ray sales that Hollywood is supposedly seeing weren't obvious in Time Warner's earnings report.

The conglomerate that operates such media properties as Warner Bros. Pictures, Time magazine, HBO, and Turner Broadcasting, reported today large drops in home-video revenue for the quarter ending September 30.

The New York-based company said quarterly revenue in home video and electronic delivery for television shows came in at $161 million, down from $215 million a year ago--a 25 percent decrease.

In home video and electronic delivery for films, revenue shrank 21 percent, from $534 million for the same quarter last year to $421 million.

news.cnet.com/8301-31001_3-20128929-261/time-warners-home-video-revenue-plunges/

bruceames
11-04-2011, 03:24 PM
Home video revenue is down, no doubt about that. Perhaps the larger studios are harder hit because they were more reliant on catalog and TV on DVD revenue. That revenue stream is drying up much faster than that of new releases, although that's down as well, of course.

Lean years are in store for Hollywood. The best place to trim the fat would be in actors salaries. As less movies get made and under low budgets, there will be more competition for star roles and the stars will have to lower their rates or lose roles to other stars who will work for less.

PSound
11-04-2011, 03:47 PM
Home video revenue is down, no doubt about that. Perhaps the larger studios are harder hit because they were more reliant on catalog and TV on DVD revenue. That revenue stream is drying up much faster than that of new releases, although that's down as well, of course.

Lean years are in store for Hollywood. The best place to trim the fat would be in actors salaries. As less movies get made and under low budgets, there will be more competition for star roles and the stars will have to lower their rates or lose roles to other stars who will work for less.

It's already happening.

The drama around "The Lone Ranger" was all about cutting talent costs due to the major decline in new release Home Video revenue.

Bob Iger discussed cutting budgets in Disney's earnings cycle, and then we saw it play out exactly as expected... With the project only moving forward after significant cuts in budget (mostly around actor and director).

PSound
11-04-2011, 07:03 PM
I was just reading the comments on the story.

I think it is always good to see the perspective of people who are not as into the hobby as us:

I haven't bought more than a couple of pieces of actual physical media in years, since I have no room to store the damned things, and online digital stores such as iTunes, Netflix, etc. are adequate for me, and far more convenient. I actually was stupid enough to buy a Blu-Ray player, but after looking at the prices for the disks I would have any interest in, it's gathering dust. Good thing it doesn't take up much room!

Put me in the same boat as you two. I've got a giant pile of about 50 DVDs that I haven't watched in years, and a smaller set of 10-15 DVDs that I've watched maybe once in the past two years. There are a handful of blu-rays in my collection, but I haven't watched any of them more than once.

Meanwhile, I've also got content that I've bought/rented through Amazon Video on Demand, plus Video on Demand content from Xfinity and HBO (I have Comcast/Xfinity). I've watched a lot of that stuff (mostly television programming with some occasional movies) multiple times in the past couple weeks.

It's just so much easier to stream stuff these days, than to go to the hassle of digging up the disc and changing it. I wish Hollywood would get around to setting up some way for me to simply store and stream my old DVD content legally (I'm aware of the illegal ways to do it).

So then TW -- stop whining and make the deal with Internet streamers like Netflix, etc. The public has spoken. They don't want your stinkin' plastic disks anymore -- except for the very best of the best -- Lord of The Rings, Dark Knight, etc. I mean, what sane person buys an Adam Sandler DVD or what? -- BluRay? Are you kidding me??

Agreed, I saw an ad for the Pirates of The Caribbean box set that included a dvd, blu ray and Digital copy selling for an exorbitant price.

What the heck would I want three versions of the same damn movie, just one is enough.

bruceames
11-04-2011, 07:10 PM
I agree that the PQ advantages of Blu-ray are not fully appreciated by most consumers. The hassle of hunting the movie down, changing discs, and waiting 2-3 minutes for it to load and get through the trailers far outweigh the marginal PQ advantages.

As for physical taking up room, sure it does. So do books. I guess these people live in small apartments or something. In any case, physical media will be increasingly a collectors and videophile format, while digital and streaming will be for the masses (and for the enthusiasts too).

bruceames
11-04-2011, 09:02 PM
I think going forward, whenever I buy a BD title that has an alternate 3D SKU available, I will buy that SKU as long as it's only $5 more or so, so that I have a running start to my 3D collection when I get a 3DTV. I think it's nice to have multiple versions of the same movie, even DVD and digital copy. You get more options.

And speaking of DC, you can get the best of all worlds when buying a movie with a DC since you can download it as part of your "convenience" library. So I certainly don't agree with the last comment above.

PSound
11-04-2011, 10:16 PM
I think going forward, whenever I buy a BD title that has an alternate 3D SKU available, I will buy that SKU as long as it's only $5 more or so, so that I have a running start to my 3D collection when I get a 3DTV. I think it's nice to have multiple versions of the same movie, even DVD and digital copy. You get more options.

And speaking of DC, you can get the best of all worlds when buying a movie with a DC since you can download it as part of your "convenience" library. So I certainly don't agree with the last comment above.

At this point, UltraViolet is a "must" for me (as I want a large streaming library).

I am just pointing out what those outside of the hobby are stating.

bruceames
11-04-2011, 10:44 PM
At this point, UltraViolet is a "must" for me (as I want a large streaming library).

I am just pointing out what those outside of the hobby are stating.


Thanks for doing so, as I find the "average Joe" comments interesting and enlightening.

PSound
11-04-2011, 11:11 PM
Thanks for doing so, as I find the "average Joe" comments interesting and enlightening.

Unrelated... But do you know a way to contact "Mal"?

mikemorel
11-10-2011, 02:28 PM
Since this is a "studio" thread...

Barron's:

DreamWorks Investors May Lose Some Sleep (http://online.barrons.com/article/SB50001424052748704506004577028091307645000.html?m od=BOL_twm_da)

By Janney Capital Markets

We are increasingly concerned about the decay in franchise film performance, the possible cannibalization from the Netflix (NFLX) deal, the weak open on Puss in Boots, and our diminished outlook on new IP films. These concerns are exacerbated by the steep decline in DreamWorks Animation's DVD sales, but is partly tempered by better international performance, the near-term boost from Netflix's catalog sales, strong nonfilm performance, and the potential for self-distribution savings in 2013. On balance, we believe estimates will need to move lower and see the risk/reward on the stock in favor of a Sell rating.

KEY POINTS:

* Downgrade on Spike and Optimism -- We are downgrading DreamWorks to Sell from Neutral, as we believe Wall Street is too optimistic about the rebound prospects on Puss in Boots, which we believe is now trending toward a $135 million U.S. box office ultimate (below our reduced expectations). The underperformance leads us to question the prospects on DreamWorks' future slate of new IP films. We are reducing our fair value to $12 based on the reduction in our estimates.

* Lower Generic Expectations -- We believe the generic $200 million U.S. box-office film will trend down to $175 million. While foreign performance has helped worldwide numbers, the high rental rates offset much of the benefit. Our reduction of Puss in Boots numbers and the reduction in new IP film estimates (Guardians, Croods, Turbo, Shadow) lead us to reduce our 2012 and 2013 earnings per share to $1.07 and $0.95 from $1.41 and $1.50, respectively.

.
* Franchise Fatigue -- The core of DreamWorks' business has been under pressure as established franchises are decaying faster than expected while new IP films have yet to create new franchises. The company is still producing some of the highest grossing animated films but the relative weakness and the string of disappointments will likely cast more doubt over future releases. Mounting competition also stands to commoditize the value of DreamWorks' IP.

* DVD Doubts -- The entire industry has seen weakness in disc sales. However, DreamWorks' compression in DVD to box-office ratios have been higher than its peers, which we ascribe to its support of cheap rental services. While the new NetFlix deal will provide incremental catalog revenue near term, this deal has the potential to cannibalize new-release and catalog disc sales as the output deal launches in 2013.

* Foreign Exchange -- The recent strength in the U.S. dollar could be another headwind for DreamWorks, as it produces its films in U.S. dollars but sees more than half its revenue from international markets. The high U.S. dollar would essentially deprive DreamWorks of high-margin revenue. While promotions and advertising spending is a hedge, each DreamWorks film is expected to be profitable so the hit to revenue will be greater than the expense offset. We would note there has been recent weakness in key Latin American currencies that are now trending between a 4% to 8% year-over-year headwind.

* One Last Hurrah -- Puss will likely rule the U.S. box office for one final weekend and may gross between $25 million to $35 million, which could fuel more bullish optimism. However, Puss' run is coming to a close as Happy Feet 2 launches next week.

bruceames
11-10-2011, 05:01 PM
It seems that children's animation titles haven't been doing as well as they once were, as compared to CGI and action films aimed toward the gaming demographic.

PSound
11-10-2011, 05:19 PM
It seems that children's animation titles haven't been doing as well as they once were, as compared to CGI and action films aimed toward the gaming demographic.

The real problem for the studio is that this is uncharted territory.

The transition away from OD is happening, and there is no clear path to exactly how to play that transition.


That is why you are seeing the studios with such a wide range of strategies (zero rental delay, 28 day delay, 60 day delay, BD only releases, varying combo disc packaging, streaming deals during Pay TV windows, no streaming deals, etc).

The only consistent is that studios are trying desperately to minimize the harm from OD's decline, while simultaneously fostering some sort of new revenue stream.