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March 04, 2011
Packaged video in the US still represents a $9.7bn net revenue stream for studios, and feature films generate the lion's share of it - roughly 70% of the total, with new-release features generating nearly half of all studio revenue. That is why a critical trick of the movie marketing trend in 2010 was to nudge consumers toward pricier SKUs without giving away the farm. It proved true that multi-disc sets that include a DVD, a Blu-ray Disc and a digital copy can command a higher price and still outsell the plain BD version, although DVD remains the dominant format even for new releases. The latter trend, though, is only slowly shifting, with the top 10 titles generating an average of 30% of their initial gross revenue through sales and rentals of BD in the fourth quarter of 2010, up from 23% in the fourth quarter of 2009.
Animated features were huge in the US in Q4 2011, taking five of the top 10 slots. Today's sophisticated computer-animated films provide the perfect demonstration of BD's clarity and brilliance, appealing to kids and adults alike. More of what we're seeing in the most popular live-action films is computer-generated as well, bringing alien landscapes, fanciful creatures and impossible action shots to the screen in realistic detail. Therein lies the problem for films studios, however, as movie-goers' expectations - along with the cost of spectacular visual effects - spiral ever upward, while video revenue continues to shrink.
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