By
Jan Saxton

Packaged video 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's why a critical trick of the movie marketing trend in 2010 was to nudge consumers toward pricier SKUs without giving away the farm. And it proved true that multi-disc sets that include a DVD, a Blu-ray Disc (BD) 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 is only slowly shifting, with the top ten titles generating an average of 30% of their initial gross revenue through sales and rentals of Blu-ray discs in the fourth quarter of 2010, up from 23% in the fourth quarter of 2009.

Animated features were huge in Q4 2011, representing five of the top ten video revenue producers for the quarter. Today's sophisticated computer-animated films provide the perfect demonstration of BD's clarity and brilliance, appealing to kids and adults alike and generating more of their physical video revenue on the high-def format. Toy Story 3, the top title of the quarter with an estimated $238m in first cycle video revenue generated 31.4% of it on BD and BD3D combined. But more of what we're seeing in the most popular live-action films is computer-generated as well, and Warner's mind-bending Inception produced over 40% of its total on BD. CG effects can bring alien landscapes, fantastic creatures and impossible action shots to the screen in realistic detail that plays extremely well in high-definition. Therein lies the problem for film studios, however, as movie-goer expectations -- along with the cost of spectacular visual effects -- spiral ever upward, while video revenue continues to shrink.

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