TheGrill 2016: Sony’s Michael Lynton Says DVD Nosedive Is ‘Significant’ Challenge

Movie industry must “make up for the hole in the boat,” Sony Entertainment CEO says

A double-digit decline in DVD sales over the past six months presents a “significant” challenge to film industry revenues, Sony Entertainment CEO Michael Lynton said.

Appearing at a keynote talk at TheGrill 2016, Lynton said that tanking returns on home entertainment has the industry warily looking at risky release models — like the Sean Parker concept the Screening Room, which created a firestorm earlier this year among the establishment.

“We do have to figure out a way to make up for the hole in the boat that the decline in the DVD business has shown,” Lynton told TheWrap’s CEO Sharon Waxman in conversation at the Montage Beverly Hills. “It is definitely down double digits of late … it is significant.”

“It’s not over, you’d be surprised. They still do drive a lot of revenue, but they certainly do not drive the revenue that they did,” Lynton continued.

Lynton admitted that emerging technology platforms have always rescued the industry’s existing business model — whether it be pay TV, DVDs themselves or the digital download market — and it’s time to take more risk in platform releasing.

“In terms of people going to movie theaters, that’s a habit that will be persistent. The fate of the theatrical business in this country is not that of the DVD business,” Lynton said.

“The problem with day-and-date right now is that it’s a pretty fragile ecosystem. You have a bunch of people who are habituated to go to the movie theater and a group of individuals who overlap and say, ‘OK, I’m also going to be able to buy this in my home in three months.'”

Parker’s Screening Room service would offer movies on the same day as their theatrical release for a steep at-home-viewing fee of $50, which Parker contends would be shared with studios and theaters.

“I haven’t spoken to them in over six months,” Lynton said of Parker. “But we do need to figure out another revenue stream long term. Typically the industry responds when either there’s a crisis, the economic model is threatened, or because suddenly somebody offers a big pile of cash on the other side. Right now, neither of those things are happening.”

Check back for more from TheGrill’s keynote with Lynton.