Optical (Blu-ray/DVD) and Digital (EST/UV) Sales Thread

[PSound]

Originally Posted by mikemorel

TK's Take, from last month:

Possible New Warner Window Could Change the Sellthrough Game



Apparently new release sell-through revenues have NOT been very stable over the last few years, contrary to what somebody has been attempting to make a case for, armed with dubious, inflated, top 100 the-numbers data.

The statement of new release revenue being "sustained" or "maintained" is the biggest lie being perpetuated by the OD PR machine.

One need look no further than the studios to see that. Executives are very clear about the decline in conversion rates. Studios almost universally are cutting back directly in Home Video (including RIFs) and budgets of future productions are shifting due to the decline.

Fortunately for the studios, international IS doing well and is easing the pain slightly. But the very real decline in OD sell through is happening, and is having an impact.

[chipvideo]

Originally Posted by PSound

The statement of new release revenue being "sustained" or "maintained" is the biggest lie being perpetuated by the OD PR machine.

One need look no further than the studios to see that. Executives are very clear about the decline in conversion rates. Studios almost universally are cutting back directly in Home Video (including RIFs) and budgets of future productions are shifting due to the decline.

Fortunately for the studios, international IS doing well and is easing the pain slightly. But the very real decline in OD sell through is happening, and is having an impact.

Just wait for the European market to start falling. Things are not so rosey across the pond.

[bruceames]

when 25% of consumer dollars flow into a business that only gives you 5% back, you’ve got to do something

So Netflix is spending only 20% of what they're charging for content? That's not going to be sustained, no wonder the studios are pissed.

[bruceames]

Originally Posted by PSound

The statement of new release revenue being "sustained" or "maintained" is the biggest lie being perpetuated by the OD PR machine.

One need look no further than the studios to see that. Executives are very clear about the decline in conversion rates. Studios almost universally are cutting back directly in Home Video (including RIFs) and budgets of future productions are shifting due to the decline.

Fortunately for the studios, international IS doing well and is easing the pain slightly. But the very real decline in OD sell through is happening, and is having an impact.

Clearly new release revenue is down along with everything else in OD sell through. The only debate is if it's down proportionally as much or not. I wouldn't know the answer to that, but if I had to guess, I'd say that it's down less than catalog or TV on DVD is.

[PSound]

Originally Posted by bruceames

So Netflix is spending only 20% of what they're charging for content? That's not going to be sustained, no wonder the studios are pissed.

I guarantee you that statement as a standalone is not accurate. The Netflix financial data simply does not support that.

If that was true, Netflix would be reporting much more than 15% margin for the overall business.


Now the disc-by-mail business might be right around 20% of revenues going to the studios, down from a traditional ~33%. That is because 33% of revenues goes to the post office, and the studios discounted their material for Netflix in exchange for rental delays.

Plus Netflix needs less new discs and can ship tons of discs that have already been fully depreciated.


Studios and networks are probably seeing right around 70-80% of revenue from streaming, and higher percentage for international as those markets ramp up.

[PSound]

Originally Posted by bruceames

Clearly new release revenue is down along with everything else in OD sell through. The only debate is if it's down proportionally as much or not. I wouldn't know the answer to that, but if I had to guess, I'd say that it's down less than catalog or TV on DVD is.

I would not argue that new release is likely performing better than catalog or TV. BDs revenue seems new release heavy, so that is actually very likely.

But that is not the lie that has been perpetuated. What has been attempted to be sold is that new release revenue has been "sustained" and "maintained" by Blu-ray. That is outright false.

[bruceames]

Originally Posted by PSound

I guarantee you that statement as a standalone is not accurate. The Netflix financial data simply does not support that.

If that was true, Netflix would be reporting much more than 15% margin for the overall business.


Now the disc-by-mail business might be right around 20% of revenues going to the studios, down from a traditional ~33%. That is because 33% of revenues goes to the post office, and the studios discounted their material for Netflix in exchange for rental delays.

Plus Netflix needs less new discs and can ship tons of discs that have already been fully depreciated.


Studios and networks are probably seeing right around 70-80% of revenue from streaming, and higher percentage for international as those markets ramp up.

That doesn't leave them much wiggle room for renegotiating, which they would need to land the much more expensive contracts that would more accurately reflect the larger sub base. If you're right though, a hefty rate hike will follow.

[PSound]

Originally Posted by bruceames

So Netflix is spending only 20% of what they're charging for content? That's not going to be sustained, no wonder the studios are pissed.

Keep in mind who made that quote.

The editor of a publication who takes money from Cinram to promote the Cinram business (disc replicating). The same publication that has published false quotes from studio executives. The same publication that puts unattributed bracketed words in executive quotes to change the meaning of quotes.

An editorial with the end note of the need to "put the brakes on Netflix" is not surprising as the bulk of Netflix revenue now comes from a model that does not require a single disc to be pressed. The nightmare scenario for Cinram.

[PSound]

Originally Posted by bruceames

That doesn't leave them much wiggle room for renegotiating, which they would need to land the much more expensive contracts that would more accurately reflect the larger sub base. If you're right though, a hefty rate hike will follow.

The contracts are fixed rate.

Which means that the margin improve with new subs. Until the new contracts are made, when the content owners can get paid more based on the subscriber base.



Assuming just $2 billion in streaming revenue in 2012 and that 70-80% COG, Netflix would still be looking at $400 - $600 million annual income.

On the old disc model, Netflix was looking at 66% COG for the studios and post office, NOT including the actual fulfillment process (envelopes, warehouses, staff, machinery, etc).

[bruceames]

Originally Posted by PSound

Keep in mind who made that quote.

The editor of a publication who takes money from Cinram to promote the Cinram business (disc replicating). The same publication that has published false quotes from studio executives. The same publication that puts unattributed bracketed words in executive quotes to change the meaning of quotes.

An editorial with the end note of the need to "put the brakes on Netflix" is not surprising as the bulk of Netflix revenue now comes from a model that does not require a single disc to be pressed. The nightmare scenario for Cinram.

I always do now when reading their editorials. I enjoy the comedy of their spin and sometimes they'll say something that actually makes sense or is true.

I'm sure you have a keen eye for anything negative they spin about Netflix.

[PSound]

Originally Posted by bruceames

I always do now when reading their editorials. I enjoy the comedy of their spin and sometimes they'll say something that actually makes sense or is true.

I'm sure you have a keen eye for anything negative they spin about Netflix.

With the influence of Cinram purchasing HMM PR (and that Home Media Magazine advertises their editors as part of the PR package they sell), I have a keen eye for anything absurdly pro-OD (disc manufacturing) and anti-digital (less disc manufacturing).

[bruceames]

Originally Posted by PSound

I would not argue that new release is likely performing better than catalog or TV. BDs revenue seems new release heavy, so that is actually very likely.

But that is not the lie that has been perpetuated. What has been attempted to be sold is that new release revenue has been "sustained" and "maintained" by Blu-ray. That is outright false.

Perhaps, but to call it a "lie" is a little harsh. When you look at the top 100 sellers for each year since 2007, The-Numbers site doesn't really show any YoY decline in new release sales. So even though we now know their numbers are high, perhaps they may be proportionally high (although I suspect their numbers are creeping up over time). So one can read from their "data" to conclude the new release sales are indeed being sustained, and that is not a "lie".

[PSound]

Originally Posted by bruceames

Perhaps, but to call it a "lie" is a little harsh. When you look at the top 100 sellers for each year since 2007, The-Numbers site doesn't really show any YoY decline in new release sales. So even though we now know their numbers are high, perhaps they may be proportionally high (although I suspect their numbers are creeping up over time). So one can read from their "data" to conclude the new release sales are indeed being sustained, and that is not a "lie".

ROFL!

You lost me at "The Numbers".

But even if you assume new release revenue is flat, it is still a lie to state that revenue is being "maintained" or "sustained" as revenue performance has always been a factor of box office lead-in, AKA conversion.

Again, the PR push around selling the false story of new release revenue being "sustained" or "maintained" is ridiculous.

[bruceames]

Originally Posted by PSound

ROFL!

You lost me at "The Numbers".

But even if you assume new release revenue is flat, it is still a lie to state that new release revenue is being "maintained" or "sustained" as revenue performance has always been a factor of box office lead-in, AKA conversion.

Again, the PR push around selling the false story of new release revenue being "sustained" or "maintained" is ridiculous.

I fixed your reply (in italics). Reread it now and see how ridiculous that sounds. If it's flat, then it's being maintained.

[PSound]

Looks like HP7pt2 did 49% of sales on Blu-ray, and Cars 2 did 20.55% of HP sales (at 33% share).

HP7pt2 won the BD race, with Cars 2 in second at 13.88%.

Going to prob be a sub $100 million week. Maybe as low as $75.