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

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Old 04-11-2012, 10:03 AM   #2431  
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Originally Posted by PSound View Post
Agreed.

If it was 1:1 we would be able to use a strict formula to figure out gains. I also agree it is not linear as genres and number of films that make up TBO all make a difference.

But without a doubt you can see the relative impact on box office on YoY trends. And it is once again crystal clear that Q1 2012 BD sell through had worse performance that Q1 2011 BD sell through when factoring in box office lead-in.

Can you imagine how low BD Q1 sell through would have been with the same box office lead-in strength as 2011? Ouch!
In addition to it not being linear because of genre and individual title variation and how many titles and the distribution of the performance numbers there is a bit of diminishing returns for some large titles as well. The TBO is only a gross influence with a lot of specific details that go into that number that have an influence on home video sales.

You also have seasonal effects, titles that are released on DVD but not Blu-ray, DTV titles and cable TV box sets and new to Blu-ray and major re releases that do not show up in that metric at all.

From an industry perspective the bottom line of performance of sales will be the most important observation of the period and just like last year at the time the strength of release TBO variation will be an explanation and contributing variable for the observed result and not the most significant number.

Last year the relatively poor strength of releases in 2011 gave a reason to observe that things were not as bad as they seemed for sales just as this year the TBO advantage gives a reason to be more cautious and tempered in the celebration of the better sales numbers.
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Old 04-11-2012, 10:10 AM   #2432  
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Originally Posted by bruceames View Post
Okee, I guess +12.2 IS much closer to -25.9%, than +22.2%. Only a difference of 38.1% instead of 48.1%. Wow, that is close.
I meant that the TBO advantage now of +12% is much closer to 0% and being flat than it was a week ago when it was at +24%.

+12% is getting closer to a random variation while +24% is much more of an clear advantage.
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Old 04-11-2012, 10:16 AM   #2433  
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Originally Posted by bruceames View Post
There's no question that BD YoY performance is worse this year, but it's not unexpected as it's just following the growth decline curve it established about 2 year ago.

It seems that growth is being cut by about 1/2 every year. If last year's growth were normalized for box office, then it would probably have grown about 30%, which is roughly 1/2 that of 2010 (and 1/2 of 2009, which grew over 100% I believe). So this year it should be around 15% like you say, under normalized conditions. If it's up 5-10% for the year (or more), then it could by up by as much as last year or perhaps even a tad more.

Perhaps a rough BD correlation (linear) with BO would be:

BO-->BD
-10%-->-10%
-5%-->0%
0%-->+10%
5%-->+20%
10%-->+30%
I would tend to agree with you that would fit the observations that we have seen for last year in 2011 and so far year to date in 2012.

It will be interesting to see if that relationship holds later in the year when more favorable action orientated genre titles hit the street.

Mission Impossible Ghost Protocol coming up in a few weeks will be the first test this year of how a more favorable Blu-ray genre tent pole release will perform on the Blu-ray format.

The conversion ratio of that title's box office performance to Blu-ray sales should be more favorable to Blu-ray than that of the Twilight Saga title we already have seen this year.
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Old 04-11-2012, 10:30 AM   #2434  
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Yoy growth is going to be at or around 15% when the BO is even. That is about 3x better than Malanthius expected.
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Old 04-11-2012, 10:33 AM   #2435  
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Originally Posted by PSound View Post
True. As previously stated, Blu-rays declining growth trend really has not changed from 2011 performance.



BO is currently up over 10% and BD is only up ~ 20%. Again, probably due to the non linear impact of BO.

This might be more of a good general representation based on measured performance YTD:

BO-->BD
-10%-->-10%
-5%-->0%
0%-->+8%
5%-->+15%
10%-->+20%
20%-->+25%

As box office increases away from the 0% normalization, it requires a doubling of box office growth to translate into a 5% BD sell through increase.

I could certainly see a 40% box office increase resulting in +30% BD growth.
40% box office variation would be a lot for any extended period.

Right now we also have a situation where a lot of the box office variation is concentrated at this time of the year in a single title.

The specifics of that title in genre and fan status has a lot to do with its sales performance on DVD and Blu-ray.

At other times of the year such as the much higher volume 4Q holiday sales period we have a lot more titles and magnitude of the TBO and sales being a factor.

Right now in the 1Q we have a +12.85% variation in the TBO being a total magnitude of a +276.29 M difference between 1Q 2011 and 1Q 2012. That's really the difference in the single Twilight Saga title not being or being released in the period.

Last year in the 1Q the -25.92% -$740.7 M variation involved three or more different major releases so there was more variation in the genre and specific effects.


In the 4Q we have $5 to $6 Billion in box office performance being the range of the strength of releases. A 10% or 20% variation YoY in that high volume 4Q period would mean more than in the 1Q 2Q 3Q periods where the magnitude of the TBO is $2 to $3 B range.

A large variation in the 4Q would also be comprised of many more titles including more favorable genres to Blu-ray being involved so its likely to have more affect on the Blu-ray sales rate as well.
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Old 04-11-2012, 10:41 AM   #2436  
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Quote:
Originally Posted by bruceames View Post
There's no question that BD YoY performance is worse this year, but it's not unexpected as it's just following the growth decline curve it established about 2 year ago.

It seems that growth is being cut by about 1/2 every year. If last year's growth were normalized for box office, then it would probably have grown about 30%, which is roughly 1/2 that of 2010 (and 1/2 of 2009, which grew over 100% I believe). So this year it should be around 15% like you say, under normalized conditions. If it's up 5-10% for the year (or more), then it could by up by as much as last year or perhaps even a tad more.

Perhaps a rough BD correlation (linear) with BO would be:

BO-->BD
-10%-->-10%
-5%-->0%
0%-->+10%
5%-->+20%
10%-->+30%
Personally I would adjust so that flat BO results in +5% more than you expect. At the beginning of the year I predicted +17% growth.
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Old 04-11-2012, 10:57 AM   #2437  
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Personally I would adjust so that flat BO results in +5% more than you expect. At the beginning of the year I predicted +17% growth.
That seems very reasonable, but at the same time maybe have the adjustment ratio be 8/5 instead of 10/5 (BD/BO)

BO-->BD
-10%-->-5%
-5%-->+7%
0%-->+15%
5%-->+23%
10%-->+31%
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Old 04-11-2012, 11:00 AM   #2438  
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Quote:
Originally Posted by bruceames View Post
That seems very reasonable, but at the same time maybe have the adjustment ratio be 8/5 instead of 10/5 (BD/BO)
I think the start point change makes sense.

The TBO variation probably has less of a impact but the set point probably is a bit higher based on the observed results we have seen.

Some of the performance variation is also going to come from stuff not in the TBO calculation.

I'd actually propose that the slope or adjustment ratio should be modified in the other direction as I think not all of the TBO change impacts the sales rate.

So I would go with 12/10 instead of 10/5 in your formula there or at least stay the same.

I think its possible that we may have a +20 variation in the overall box office strength by the end of the year if the summer blockbusters perform well. The pipeline right now of titles now that have already had their theatrical release but not hit home video yet at a glance looks to me that its even more favorable than the TBO is right now and the summer releases show a lot of potential.

So maybe we should extend the model range to include +15 +20 +25 scenarios?

Last edited by Kosty; 04-11-2012 at 11:08 AM..
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Old 04-11-2012, 11:08 AM   #2439  
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OK, here it is with a 6/5 ratio (or 12/10).

BO-->BD
-10%-->+3%
-5%-->+9%
0%-->+15%
5%-->+21%
10%-->+27%
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Old 04-11-2012, 11:13 AM   #2440  
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How about a formula where the base rate of Blu-ray sales YoY is something like +10% and then the TBO variation is applied?

Something like BD YoY gain = +10% + x * (TBO variation)
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Old 04-11-2012, 11:17 AM   #2441  
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Quote:
Originally Posted by bruceames View Post
OK, here it is with a 6/5 ratio (or 12/10).

BO-->BD
-10%-->+3%
-5%-->+9%
0%-->+15%
5%-->+21%
10%-->+27%
That seems closer to the observable results we have seen this year.

We probably will have a better idea of what the model or formula should be after we see the results of Mission Impossible Ghost Protocol in a few weeks which is a better Blu-ray genre match than what we have seen so far this year.
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Old 04-11-2012, 11:20 AM   #2442  
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It would be nice if we could create some sort of formula that could give some sort of estimate based on the TBO and other variables on a weekly basis that could predict what the revenues would be for the week. We could even add in some variables of genre and the impact of the Friday releases.

I like the way we are going with this model though for the cumulative TBO vs the BD revenue performance.
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Old 04-11-2012, 11:25 AM   #2443  
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The one consideration that a TBO to revenue model is not going to capture is any changes in the market related to increased retailer support or increased household penetration or network effects like a shifting of product inventory on the shelves from DVD to BD skus. To account for that the numbers in the formula just would have to be adjusted to fit the observations over time.

But what we get for a workable formula now in the 1Q 2Q 3Q seasonal period may not be as valid in the higher volume 4Q period is there is an increase in retailer support for Blu-ray or if Blu-ray hardware sales accelerate and shift the household penetration numbers in a way that's non linear to previous years increases.
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Old 04-11-2012, 11:26 AM   #2444  
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Quote:
Originally Posted by bruceames View Post
OK, here it is with a 6/5 ratio (or 12/10).

BO-->BD
-10%-->+3%
-5%-->+9%
0%-->+15%
5%-->+21%
10%-->+27%
That deviates from the end of quarter results.

With that being the latest data, the ~10% BO gain should end up with a ~20% BD gain.

Otherwise it is ignoring the best recent data.

This is more plausible based on where we are and what has been observed, although it is being kind as we know it took more like 20% BO lead-in strength to get to ~26% BD growth.

BO-->BD
-10%-->-3%
-5%-->+3%
0%-->+9%
5%-->+15%
10%-->+21%
15%-->+26%
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Old 04-11-2012, 11:42 AM   #2445  
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Here's how the cumulative data currently graphs out.








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