Disney wins 2001 sell-through battle by a nose

By Scott Hettrick -- Video Business, 1/16/2002

In a year in which DreamWorks Home Entertainment encouraged consumers to spend a staggering $436 million on the video version of Shrek and Universal Studios Home Video had three titles that surpassed $200 million, including The Grinch at $331 million, Disney beat Warner Home Video by a nose shorter than Pinocchio's to maintain its long-held lead in the sell-through market.

However, despite not having a title ranked among the Top 10, Warner was the winner in almost every other category. It had a 20% share ($3.4 billion) of the overall market, a commanding 19.6% share ($1.7 billion) of the $8.4 billion rental market and a dominating 22.8% share ($1.4 billion) of the fast-growing DVD market.

The margin of difference on the $8.5 billion sales side of the overall $16.9 billion video market was only $1 million for Disney's Buena Vista Home Entertainment, according to research by Video Business that included an analysis of widely varying reports from every supplier and key market analysts.

Pearl Harbor generated $301 million on video, while two other Buena Vista titles, Dinosaur and Remember the Titans, each drew more than $200 million. Buena Vista had three other titles at $150 million-plus: The Emperor's New Groove ($185 million), Spy Kids ($151 million) and video premiere Lady and the Tramp II: Scamp's Adventure ($154 million).

The gap between Buena Vista, Warner and No. 3 Universal was less than two percentage points, compared to 2000 when the spread was 10 points.

This was the year of maximizing catalog sales on the new DVD format, and Warner led the way with a low-priced, high-volume strategy. Although the studio was a smidge behind Buena Vista in dollars spent, Warner sold 127.8 million videos compared to 104.3 million for BVHE. Each of those units sold for about $4 less on average than Buena Vista's.

Although Warner distributed two of the year's Top 25 new releases in Miss Congeniality ($150 million) and Rush Hour 2 ($124 million) from sister New Line Home Entertainment, Warner president Warren Lieberfarb said that last year's sales disproved the notion that Disney is the most effective studio at maximizing revenue from its library.

Nearly 35% of consumer spending on the purchase of videos in 2001, or about $6 billion, was on older movies, Lieberfarb said. Among Warner's classic titles released on DVD last year were Citizen Kane, Willy Wonka & the Chocolate Factory, Superman, Ben-Hur and collections of films from Stanley Kubrick, Oliver Stone and Clint Eastwood.

Buena Vista president Robert Chapek said the studio's strength in the sell-through market was driven by a rapid succession of hit titles beginning with Dinosaur ($222 million) in January and continuing each month through Pearl Harbor in December.

Meanwhile, Universal Studios Home Video president Craig Kornblau said he was pleased at how well his studio competed with Disney and Warner without the luxury of leveraging a comparable catalog. In addition to the top two titles of the year, Universal distributed five of the Top 10 titles (Grinch, Shrek, Meet the Parents, The Mummy Returns and Jurassic Park III) and had eight that generated at least $100 million.

Even without a conventional major hit, overall consumer spending on Columbia TriStar Home Entertainment titles was fourth-highest among suppliers. The studio enjoyed the success of one of the best-selling foreign-language films ever in Crouching Tiger, Hidden Dragon, which generated $113 million. However, president Ben Feingold was just as proud of his studio's increasing success with third-party acquisitions such as Memento and urban and martial arts films. Columbia's third-party business is as big as all its competitors' combined, he said.

In addition to a 20% increase in its business this year, 20th Century Fox Home Entertainment executive VP Mike Dunn said that studio enjoyed one of its most balanced attacks with a mix of successful new releases that rented well, including Cast Away (the No. 8 video overall with $191 million), big sell-through titles such as Planet of the Apes ($140 million) and some of the most successful collections of TV series on video with The X-Files, The Simpsons and Buffy the Vampire Slayer. He said the studio's $475 million in catalog sales represents a disproportionately high share at about 20%.

DreamWorks Home Entertainment may have had only one major hit this year, but the studio made the most of it by pushing VHS and DVD sales on Shrek to numbers that haven't been seen in more than six years. The studio also hit the $1 billion mark in overall revenue for the first time.

DreamWorks head of worldwide video Kelley Avery noted that the studio got as much mileage as possible out of Gladiator, its leftover hit from 2000. After setting DVD records upon its release in November 2000, the film raked in another $128 million last year.

MGM president and COO David Bishop noted that while the industry saw an overall decline in VHS sales, MGM's videocassette sales were up 21% thanks in large part to Hannibal, which generated spending of $125 million. MGM's library sales are second to Warner's, with much of its 26% market share coming at the expense of Warner, he said. MGM also exceeded the industry's phenomenal DVD growth with a 214% surge in sales.

Artisan also successfully exploited DVD with a barrage of older titles including Basic Instinct, Young Guns, Total Recall and a new special DVD edition of Terminator 2. Artisan president Steve Beeks said the company not only enjoyed a disproportionate share of DVD sales but also had a breakout hit in the Video Premiere Award-winning computed animated movie Barbie in the Nutcracker, which sold about 4 million copies.