With DVD sales flattening, Variety re-examines the big studios. Most of the executives interviewed requested to remain anonymous, a clear sign it’s time to face some unpleasant realities.
DVD sales have been the engine for studio growth in the last 5 years but in the last 12 months the DVD market is flattening. There’s some new distribution channels on the horizon: like Sony’s Blu-Ray DVD (or Toshiba’s alternative HD-DVD) and even the new video iPod (limited to tv series or ipod torrents). These new markets are not mature enough however to compensate the overall decrease in revenues.
Although the major studios are facing different problems, the majority of studio executives agreed on several points:
- Limit movies in the $35 million to $70 million range
- Financial partners are no longer an option — they’re required
- Trim marketing budgets
- Make fewer movies
In terms of the mid-budget movies, Variety quotes a COO at a major studio:
If you look at the $40 million to $70 million budget film, they are so difficult. They rarely have top box office stars, and they’re such risky territory because you have to spend $25 million on P&A, so it’s a huge investment. It’s really hard to get that back.
It’s still debatable if this spells GOOD news for indie producers. If the market continues to contract in the next year, studios might need to find ways to market smaller and cheaper movies. They could plagiarize the NASA motto: faster, better, cheaper.
A few examples that Hollywood could take to heart: Russian-made The Return (Возвращение) was produced for under $500,000 and made over ten times that. Sofia Coppola’s Lost in Translation also resulted in 1:10 ratio: a budget of just $4M resulted in revenues in excess of $40M internationally. Of course, a profit of a few million can’t plug in the holes made by a disaster like Zathura…
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