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

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Old 11-29-2011, 09:44 AM   #346  
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These are the results I have. I checked the archives of the ones where are figures differ and they do match up. I did make a mistake though by grabbing the wrong set of weeks, so actually they add up to $505.87 million, rather than $490 million. So that would drive up the aformentioned requirements to reach 25% and 40% $2-3 million more per week.

83.48 (11/28)
68.16
94.72
99
109.27
51.24

It's possible that BF and xmas sales will keep the last 6 weeks from going negative, but those types of sales are still a minority of revenue compared to what new release sales typically bring in (maybe 40% or so). So box office difference will still matter very much. After all BF and xmas are being compared to last year, which by your own account was very strong.
I have repeatedly stated that I expected Q4 2011 revenue to be strong for BD, but that the comparison would be difficult due to a strong Q4 2010.

I was stating that back in the first half when we were sub double digit growth for BD specifically because I did not think Q4 was going to be able to save the day for BD and push 40% growth like some were selling.
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Old 11-29-2011, 09:59 AM   #347  
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The remaining weeks in 2010 weeks 8-13 HMM had reported as $478.21 M or just under $80 M per week. Blu-ray would have to sustain about a 25% growth YoY in those weeks to maintain 25% growth rate for the year. Blu-ray is currently about 50% up YoY in the 4Q and ended up in the 3Q 50% in the HMM YoY statistics and 58% in the DEG statistics.

HMM was also at the end of the 3Q running 8% under the DEG statistics and if that carries through in the 4Q then a lower growth rate in the HMM statistics would equate to a higher DEG reported YoY growth number as well.

Of course the remaining 4Q weeks have a higher box office strength for 2010 over 2011 in the last 6 weeks but that does not matter as much in the higher volume Black Friday through Christmas shopping season. Increased Blu-ray hardware sales and a larger user base of Blu-ray owners will be a factor as well in the next six weeks as well as retailer support for the Blu-ray format.

Should be interesting.
I have DEG running at 6.45% over HMM this year. And remember that DEG is also running over HMM last year, at 3.92%, so you have to equally account for that when projecting what DEG may be over HMM in terms of YoY growth. So essentially you have a net difference of only about 2.5%, which may change of course if DEG or HMM (or both) revise their 2010 figures.
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Old 11-29-2011, 10:36 AM   #348  
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Here is the Q1-3 summary of DEG vs. HMM, this year and last.

2011:
DEG--$1225.86
HMM--$1156.56
difference: 6.45%

2010:
DEG--$1000
HMM--$962.33
difference: 3.91%

DEG YoY: 22.6%
HMM YoY: 19.7%
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Old 11-29-2011, 12:30 PM   #349  
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Q3 and YTD Q4 is also up $483 million in box office lead-in over 2010.

And that does not include the very significant catalog releases during that time, including all 6 Star Wars movies (which is arguably the most valuable catalog series) and Jurassic Park.

It also does not directly factor in the Blu-ray REVENUE ONLY period for POTC 4, the #4 movie of the year - the $241 million domestic grossing Disney summer tent pole, of a wildly successful franchise.


The studios basically shot their wad in support of BD in 2011, and we are looking at very mediocre growth. That is also during a time when we are likely to see OD slink its way even further down the toilet.

And the year is not over yet. I would not be surprised at this point for BD to slink back to H1 level growth for the rest of the year, and OD to get hammered in the remaining weeks.

No amount of PR spin is going to cover up the impact of that lost revenue for the studios. And I know there will be plenty of PR spin coming over the next few weeks.
Will the studios continue their support of BD in 2012? 2013?
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Old 11-29-2011, 12:36 PM   #350  
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Will the studios continue their support of BD in 2012? 2013?
My sense is that is not a serious question.

I would love to hear any statement you have to make.
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Old 11-29-2011, 12:57 PM   #351  
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My sense is that is not a serious question.

I would love to hear any statement you have to make.
This is a serious question? Will they still support the format in the years mentioned? With UV coming online and all I just ask this question?
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Old 11-29-2011, 01:10 PM   #352  
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This is a serious question? Will they still support the format in the years mentioned? With UV coming online and all I just ask this question?
I can't speak for the studios, but I don't see then abandoning Blu-ray for new releases. Their sell through revenue strategy is still based on a physical media world, and will be for at least the next two years.

Even with anemic growth, it is going to be a $2 billion plus business. Plus the damage has already been done to DVD. The studios have positioned it as an obsolete product, and it's decline cannot be stopped.


UltraViolet has had (at best) a soft launch. There are still lots of features to get ironed out and released. Hopefully that will get accelerated as OD results are looking pretty crappy right now.

Even if EST surpasses BD in sell through, I expect BD support to continue for the foreseeable future. The only way I can see studios pulling the plug on BD is if they get to the point where they decide to kill Redbox and boost rental prices (although I think they could do that now simply by pricing VOD at $2.50 or less).
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Old 11-29-2011, 02:51 PM   #353  
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I can't speak for the studios, but I don't see then abandoning Blu-ray for new releases. Their sell through revenue strategy is still based on a physical media world, and will be for at least the next two years.

Even with anemic growth, it is going to be a $2 billion plus business. Plus the damage has already been done to DVD. The studios have positioned it as an obsolete product, and it's decline cannot be stopped.


UltraViolet has had (at best) a soft launch. There are still lots of features to get ironed out and released. Hopefully that will get accelerated as OD results are looking pretty crappy right now.

Even if EST surpasses BD in sell through, I expect BD support to continue for the foreseeable future. The only way I can see studios pulling the plug on BD is if they get to the point where they decide to kill Redbox and boost rental prices (although I think they could do that now simply by pricing VOD at $2.50 or less).
I agree with you about the position the studios put themselves in, but as for each individual studio, are they going to support OD even if they lose millions each year? Didn't Warner just put out something saying that they are losing money in home entertainment?
We might be seeing the more desperate studios really push EST to offset loses due to OD. (I just realized as I was typing this, that I have no fear of being banned or called a number of names for saying this).
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Old 11-29-2011, 03:17 PM   #354  
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I can't speak for the studios, but I don't see then abandoning Blu-ray for new releases. Their sell through revenue strategy is still based on a physical media world, and will be for at least the next two years.

Even with anemic growth, it is going to be a $2 billion plus business. Plus the damage has already been done to DVD. The studios have positioned it as an obsolete product, and it's decline cannot be stopped.


UltraViolet has had (at best) a soft launch. There are still lots of features to get ironed out and released. Hopefully that will get accelerated as OD results are looking pretty crappy right now.

Even if EST surpasses BD in sell through, I expect BD support to continue for the foreseeable future. The only way I can see studios pulling the plug on BD is if they get to the point where they decide to kill Redbox and boost rental prices (although I think they could do that now simply by pricing VOD at $2.50 or less).
PS I hope my question didnt sound dumb but It just seems to me that with product like UV if the movie ends up not selling as much as you (the studio) expected they would be out less money by not having half a warehouse of un purchased discs lying around or maybe this isn't what happens and they have better stock control, I don't know just my 2 cents.

Also, The studios are going to have to get their spending under control as well. Everybody else is doing it they need to also. I was at Paramount Pictures for several days two weeks ago and walking around the studio they are not cutting back at all like I thought they would be doing. What a lavish workplace!
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Old 11-29-2011, 03:22 PM   #355  
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I agree with you about the position the studios put themselves in, but as for each individual studio, are they going to support OD even if they lose millions each year? Didn't Warner just put out something saying that they are losing money in home entertainment?
We might be seeing the more desperate studios really push EST to offset loses due to OD.
I am certain the studios are still making money on new Home Video releases. Just not anywhere near previous levels.


There are certainly concerns with how the studios approach a market that is flattening out like BD. You don't make significant material investments in an infrastructure that has no place to go (see NCR trying to dump Blockbuster Express).

But even if BD peaks at sub $3 billion sell through a year, it will be a money maker for years to come. Again, with the possible offshoot of studios cutting off OD as a way to take Redbox out of the eco-system (which has seriously damaged the perceived value of new releases).



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(I just realized as I was typing this, that I have no fear of being banned or called a number of names for saying this).
Nice, isn't it! It was pretty much impossible to state any truth about OD performance over there without being directly insulted.
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Old 11-29-2011, 03:27 PM   #356  
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PS I hope my question didnt sound dumb but It just seems to me that with product like UV if the movie ends up not selling as much as you (the studio) expected they would be out less money by not having half a warehouse of un purchased discs lying around or maybe this isn't what happens and they have better stock control, I don't know just my 2 cents.

Also, The studios are going to have to get their spending under control as well. Everybody else is doing it they need to also. I was at Paramount Pictures for several days two weeks ago and walking around the studio they are not cutting back at all like I thought they would be doing. What a lavish workplace!
No worries. Still getting used to a place where it isn't about spreading PR.

The costs to master, manufacture, store, destroy and ship all the materials that are required for the OD infrastructure are certainly not trivial. But the raw amount of revenue definitely offsets those costs.

I don't see BD going away any time soon strictly on the basic of cost vs revenue for BD sell through. A studio (or studios) could look into killing OD as a way to gain control of cheap new release rentals. Maybe have a VOD/EST window before releasing to disc, but that is also at least a couple of years off.
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Old 11-29-2011, 03:28 PM   #357  
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A question for our number and graph experts ...How much do we expect the retail side of the business to take in this year vs last year for all sell thru? Have there been any estimates yet or am I too early to be asking this?
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Old 11-29-2011, 03:32 PM   #358  
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A question for our number and graph experts ...How much do we expect the retail side of the business to take in this year vs last year for all sell thru? Have there been any estimates yet or am I too early to be asking this?
I would guess OD sell through will end up down > 15%.

OD Rental will also be down this year if they properly allocate Netflix streaming revenue.
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Old 11-29-2011, 03:37 PM   #359  
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I can't speak for the studios, but I don't see then abandoning Blu-ray for new releases. Their sell through revenue strategy is still based on a physical media world, and will be for at least the next two years.
True. But Warner has already said earlier this month that their strategy going forward is to prioritize digital over physical.

Quote:
Even if EST surpasses BD in sell through, I expect BD support to continue for the foreseeable future. The only way I can see studios pulling the plug on BD is if they get to the point where they decide to kill Redbox and boost rental prices (although I think they could do that now simply by pricing VOD at $2.50 or less).
I see studios raising wholesale (and therefore retail and rental) pricing on OD, and justifying the price increases by bundling in UV with discs.

Raising wholesale prices on discs solves 2 problems.

1) Makes room in pricing structure for lower priced pure digital (UV) purchases.

2) Raises OD rental prices at Netflix and Redbox, thus making digital purchases even more palatable.
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Old 11-29-2011, 03:44 PM   #360  
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True. But Warner has already said earlier this month that their strategy going forward is to prioritize digital over physical.
The writing is on the wall for OD/physical. It is absolutely dying so the studios need to be moving aggressively to the next thing.

Even JP Morgan had this to say regarding OD:

Quote:
"Furthermore, we believe the DVD (and broader optical disk) category has already entered a long-term decline (analogous with peak-to-trough decline of VHS and CD categories). ..."
That said, it still is a boatload of revenue.


Quote:
I see studios raising wholesale (and therefore retail and rental) pricing on OD, and justifying the price increases by bundling in UV with discs.

Raising wholesale prices on discs solves 2 problems.

1) Makes room in pricing structure for lower priced pure digital (UV) purchases.

2) Raises OD rental prices at Netflix and Redbox, thus making digital purchases even more palatable.
Good points. Raising wholesale would certainly help in both those regards, assuming they don't continue to heavily discount those wholesale prices to Redbox and Netflix in exchange for delays. Or if they do, that they more aggressively price VOD to get better margin on new release rentals.
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