Director is working on English-language version of Reliance Big Pictures' "Kites."
A Crack in the Blu-ray Pot of Gold
Three years since its launch, the format still only generates about 6 percent of total home entertainment revenue.
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Disney released a triptych of posters for this spring's "Alice in Wonderland" on Thursday. The posters give audiences a look at Johnny Depp's Mad Hatter, Helena Bonham Carter's Red Queen, Anne Hathaway's White Queen, and Mia Wasikowska's Alice. Take a look at the avant-garde art for Tim Burton's upcoming 3D fantasy flick.
Dreamed up back in the halcyon days of DVD, Blu-ray was supposed to be the format that saved studio home entertainment.
It hasn't gone exactly as planned.
More than three years since its U.S. launch, the savior format still only generates about 6 percent of total home entertainment revenue.
As a comparison, DVD at age 3 commanded fully 20 percent of home entertainment revenue back in 2000, when the standard format had been VHS -- according to industry tracking service the Digital Entertainment Group.
“The market is not being driven by Blu-ray right now,” conceded Brad Hackley, vice president of Rentrak, another tracking service. “The bulk of the transactions are still coming from standard-definition DVD.”
Last week, Rentrak released data that seemed to supply some long-awaited hope to a home entertainment business that has precipitously declined about 10 percent since peaking in 2004.
According to Rentrak, revenue from rentals of traditional DVD and Blu-ray movies and TV shows had increased 8.2 percent to $5 billion through the first three quarters of this year.
Rentals of Blu-ray high-definition disc titles, meanwhile, increased 52 percent to $313 million.
However, while the uptick seems like good news, it actually illustrates continuing problems for the major studios, which have convulsed amid the lack of DVD revenue growth in recent years.
For one, the increase in revenue from disc rentals doesn’t make up for a huge decrease in the higher-margin sales. Indeed, despite the fact that the DVD rental market spiked 6 percent in the first half of this year, the overall home-entertainment market declined 3.9 percent to $9.7 million, according to Digital Entertainment Group.
The reason? DVD sales, which command the lion’s share of growth, declined 16 percent to $5 billion.
For their part, studio officials have blamed low-priced rental services -- notably kiosk operator Redbox -- for undermining the once buoyant DVD sell-through business. Studios including Fox and Universal have argued that not only are their rental prices too low – $1 a unit in the case of Redbox – but they're flooding the market with used discs, exerting significant downward price pressure on DVD sales.
Just as key to these overall declines, however, has been the failure of Blu-ray to become a significant home entertainment business driver.
Even if Blu-ray were to double the $750 million in sales and rental revenue it generated for the studios in 2008, it’s still unlikely that the overall business would remain flat with last year’s total revenue figure of $22.4 million.
For their part, studio home-entertainment executives say trying to convince consumers to re-invent their library in the middle of a recession hasn’t been easy.
“We anticipated a higher growth curve, but the economy has had a lot to do with that being a lot slower than we thought it would,” said Lionsgate president Steve Beeks to industry trade Video Business last month.
As a result, both titles and players have been steadily discounted at a rate far exceeding the rate experienced by DVD in its youth.
Blu-ray players are expected to be available for under $100 this holiday shopping season, while a number of titles will sell for less than $10.
“Blu-ray hardware and software prices are coming down faster than anyone wanted them to,” said consumer electronics analyst Richard Doherty of the Envisioneering Group.
Comments
Blu-Ray user Says
I have a Blu-Ray player, but obviously the economy has cut down on the number of discs I'm buying for now.
But I think what's also killing DVD and Blu-Ray sales is Netflix. The technophobes are just renting discs and watching them; the techno-geeks and young people are ripping both the DVDs and Blu-Rays with no compunction whatsoever.
I think the studios are going to have to start significantly delaying releases to Netflix, if they don't already (I don't use Netflix, I don't know). That way they'll get the up-front sales, and at least the pirates will have to wait.
Screenking Says
Blu-Ray profit margins would be in the 30% range at that heavy a discount (before returns) - however, returns from the big boxes are now running 30-40% of gross even on the deep discount titles.
VOD - A $4.99 VOD transaction (new release Hi-Def rental) is a 50% margin with no returns, no manufacturing, no inventory.
Digital download = guaranteed wholesale price from Apple, Xbox, etc. with no returns - for catalog titles, you're looking at $7.00 profit per Download-to-own transaction.
Blue Ray - $3.00 profit before returns at $9.99 deep discount price point, around $2.50 after returns. And let's hope the studio didn't make some obscene backend deal with talent on physical goods...
Sure, Blue Ray at $9.99 is more profitable on a gross basis, but not on a per-unit basis.
Paul Sanford Says
It seems as if there are things preventing the Blu Ray disc growth from continuing. These figures do sound promising but yet with the movie titles that are available from the cable box it may not be long lived. casino online
Carly Says
I'm not switching to Blu-ray because I'm waiting for all digital movies. Plus I hate all the DVDs, VHS tapes, CDs, and books that clutter up my house and made an effort to drastically cut down the amount of that stuff I buy when it is available to rent, watch on-demand, or download.
NYCrex Says
Man, Redbox has really become the scapegoat for the industry.
Feo Amante said all the things in his post that I would say about Blu-Ray.
The majority of consumers don't care about the pristine quality of the image or audio. If they did they would never go to their local multiplex to watch a movie on the soda-soaked screens with over-modulated sound and dirty projectors that make a brand-new print look awful.
RODAN IN PHOENIX Says
Are you kidding me? Are they really scratching their heads asking themselves why Blu-Ray's haven't taken off?
We (consumers) in a relatively short time (DVD'S haven't been around that long really) just spent a fortune building up our home collection. I know I'm rather proud of my own collection.
But now are expected to jump for joy when they come along with something better so they claim. Blu-Rays are twice as expensive not to mention the machines that play them. And we're suppose to just toss our cherished collection aside toss out the " not that old" DVD player onto the heap pile of our old VHS machines. I resented having to toss out all my old VHS tapes to make room for the newer DVD's. On top of all this junk pile of a mess now we're suppose to feel saddened that sales of Blu-Ray's are down? I for one do not. If they want to move product then they'd better get the prices down. Unless they're oblivious to the hard times most of us in the real world are now going through, if that is the case then they can just kiss their precious idea of Blu-Ray good by. I for one will not be making that switch until I win the Powerball because frankly my dear, I cannot afford it or do I give a damn.
Feo Amante Says
- “Blu-ray hardware and software prices are coming down faster than anyone wanted them to,” said consumer electronics analyst Richard Doherty of the Envisioneering Group." -
Gee! The prices are coming down faster than anyone wanted them to? How about the only factor that matters in sales? How about what the consumer wants? Where does that play into your deep consumer electronics analysis?
Seriously, I've no doubt that many others in the home movie industry share his view. It may be a crippled mantra of the industry: Obviously not a thoughtful one. And can the scattered few Redboxes out there really be having such a significant effect? Granted there may be 17,000 nationwide, but there's only 10 in a 20 mile radius of my home, and I live in densely populated Los Angeles! And most of those RBs are clustered in Glendale and Alhambra.
DVDs killed VHS because we no longer had to rewind and fast forward. With a DVD you could "skip" to where you wanted to be in the movie. You could adjust the sound to suit your system. There were all of these wonderful DVD "Extras". it didn't have parts that would break or tape that could get chewed up. And it just took up far less space on your shelf.
What does BLU-RAY bring to the table? DVD plus better picture and sound. Of course to enjoy that quality, you have to replace, not just one part of your home entertainment center, but the whole center. Blu-Ray is a far bigger investment than DVD was. You need a brand new TV to handle Blu-Ray and you have to understand the difference between low quality HD (720) and high quality HD (1080). Plus, an HD digital TV takes more time to set up than programming your VCR clock.
And of course with that better sound you need a better sound system. And with all of this OBVIOUS expense, in an OBVIOUSLY bad economy, the movie industry wants to charge up to $10 MORE for a Blu-Ray over a DVD and just can't figure out why Blu-Rays are moving so slow? Sheesh! Bunch of Dunder Mifflins.
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