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…
It’s all over the HD sites now. Let me quote a headline from PCPro that sums it best: “Last century codecs for next-gen Blu-ray.”
That’s right, Sony’s Blu-Ray DVDs will pack 50GB of data, all encoded with MPEG2. A side note for the tech un-savvy - MPEG2 is the codec that current DVDs are using. I did a recent comparison between Sony Blu-Ray and HD-DVD. I’m not sure what HD-DVD will be using but I think Sony’s making the wrong move here.
There are better codecs available. On paper, Blu-Ray supports MPEG-4 AVC (a.k.a. H.264) which allows much higher bitrates. Apple recently joined the Blu-Ray camp and has built-in support for H.264.
A race between MPEG2 and MPEG4 is like racing … [writer's block]… a red snail and a Ferrari. Between the two of them, the only common thing is that they’re both red … I mean codecs. MPEG4 is able to pack A LOT more info into a file size that’s equal to an MPEG2 file.
The discussion on why Sony did it still rages on. The only grain of truth that I see is that Sony has invested a ton of dough in coding machines that only do MPEG2. Also, their technicians (for lack of a better word ) are experienced with MPEG2 settings. After all their task is to makes the movies appear their best on an HD screen. Whether the file is 30GB or 45GB is not something that they to worry too much about. At least for the moment.
I fear come Peter Jackson’s King Kong (btw, King Kong trailer is out ) they’ll start feeling the pressure. I bet Peter has extras that will put the Lord of the Rings DVDs to shame. His production diary will take half a blu-ray easy!
As far as I’m concerned, I’d like to put a system together that will make it possible to take the 100MB rate from the Panasonic HVX200 and burn it to a DVD!
The next generation of HD formats has been split in two for years. There has been some famous switching of sides (Microsoft leaving Blu-ray and joining HD-DVD).
A bit of background: HD-DVD was developed by Toshiba and NEC; Blu-ray is SONY response to a common format. SONY has a proven track record in creating their own versions of just about everything: from Betamax (vs. VHS) to memory sticks (vs. Compact Flash).
The conflict will be resolved by consumers and right now the HD-DVD seems to be in a better position to win popular support. HD-DVD has the backing of Time Warner (that’s Warner Bros. and New Line), Paramount, and Universal. The studios have committed to releasing almost 100 titles on HD-DVD by the year’s end.
Blu-ray is backed by SONY and its two studios, Columbia Tri-Star and MGM. Microsoft pulled out of the Blu-ray camp when they said the XBOX 2 will NOT use Blu-ray. This was turned around when Disney said they’ll release titles on Blu-ray. Apple has also joined the Blu-ray camp recently and one major player, 20th Century Fox, still haven’t made up their minds.
Although tech specs have little to do with who wins the race, here they are: HD-DVD holds 30 GB, Blu-ray holds 50 GB. Another difference could be in the region encoding. There are rumors that the HD-DVD will not support region codes.
SONY seems a bit behind right now. At the same time, they’ve recently announced their TOTAL commitment to Blu-ray as their default high-definition format. MGM’s film library of over 6,000 titles will be made available in the new HD format. The question remains when. The HD-DVD camp will start releasing their titles for the Christmas season when you can already record your HD video to a Blu-Ray DVD!
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