2006 stable on strong Q4

Warner tops market share, Buena Vista has Top 3 sellers

By Jennifer Netherby -- Video Business, 1/19/2007

JAN. 19 | Strong-selling fourth-quarter releases played a key role in shaping studio market shares during 2006, which was a stabilizing year for the packaged home entertainment business as a whole.

Buena Vista Worldwide Home Entertainment and 20th Century Fox Home Entertainment both boosted their market shares at year-end on strong fourth-quarter releases.

The mid-year distribution moves of DreamWorks Home Entertainment to parent Paramount Home Entertainment, from Universal Studios Home Entertainment, and MGM Home Entertainment to Fox, from Sony Pictures Home Entertainment, also shifted some share away from the old distributors and to the new.

With its humongous catalog and distribution of DVDs from sister companies New Line Home Entertainment and HBO Video, Warner Home Video again held its No. 1 position of the home video market, with an 18.1% share, accounting for $4.26 billion in home video spending last year, according to Video Business research. It was the studio’s catalog that allowed it to outdistance nearest competitor BVWHE, which had a 15.3% share, or $3.63 billion in consumer sales.

BVWHE was fueled by one of its strongest movie slates ever, including the Top 3 DVD sellers of the year: Pirates of the Caribbean: Dead Man’s Chest, Cars and The Chronicles of Narnia: The Lion, the Witch and the Wardrobe.

Fox’s strong No. 3 finish in overall consumer spending performance was driven by first-quarter’s Walk the Line and a broad fourth-quarter slate that included Ice Age 2: The Meltdown, X-Men 3: X-Men United, The Devil Wears Prada and Little Miss Sunshine.

Although the booming growth of years past is gone, 2006 was a healthy year for the business. Consumers spent $23.6 billion renting and buying movies, a 0.5% increase from 2005, according to VB research.

While studios inherited a strong summer slate of movies that debuted in the fourth quarter, helping to steady the business, it was catalog sales that turned out to be one of the year’s biggest highlights, with every studio reporting gains in the competitive segment.

“Consumers have an insatiable desire to continue to build their library,” said Craig Kornblau, USHE president. “The frank reality is, with what has happened with price points [dropping], you’ve got consumers buying a lot more product this year than last year.”

Market leader WHV was aggressive in all areas of catalog, from TV to multi-disc sets such as a 14-disc Superman collection.

“What remained remarkably healthy is the theatrical catalog business,” WHV president Ron Sanders said. “It’s still showing strength, not just in low-priced or budget price points. There’s remarkable resiliency in high-end price points. We did remarkably well with high-end ultimate collectors editions.”

New Line’s Wedding Crashers, meanwhile, hit the top of the sales and rental charts at the start of the year and kept selling throughout the year even as it moved into the catalog category. “It has had terrific legs,” said Stephen Einhorn, NLHE president and chief operating officer.

Even competing against the Star Wars Trilogy release last year, Fox catalog sales were up 15% with a new Napoleon Dynamite, The Sound of Music and Office Space releases, studio execs said. In addition, “we had a steady stream of really successful new releases and TV shows,” Fox executive VP and general manager Simon Swart said. “Everything was working.”

For MGM, now distributed by Fox, new DVD editions of older James Bond films released around the theatrical debut of Casino Royale did “fantastically well,” Swart said.

Sony saw double-digit growth in all segments of the business and walked away with The Da Vinci Code and Talladega Nights: The Ballad of Ricky Bobby among the top sellers for the year, SPHE worldwide president David Bishop said.

“We have a consumer who’s still very interested in the category,” Bishop said. “We have the promise of significant revenues in the future coming from things like Blu-ray and potentially digital downloads. If you look at the total home entertainment pie, I feel quite encouraged.”

Paramount likewise saw growth in all segments of DVD this year. “We’ve had significant growth in every major category—kids, hits, TV, catalog,” said Kelley Avery, Paramount Pictures president of worldwide home entertainment.

USHE was aggressive in growing its DVD Originals business in 2006, with successful releases of Bring It On Again and American Pie Presents: Band Camp, which each pulled in more than $25 million, the studio said.

Lionsgate has continued to build its home video market share as the company expands its theatrical slate. This year’s growth was led by strong sales on sequels Saw II and Tyler Perry’s Madea’s Family Reunion, as well as children’s franchises including Doodlebops, Clifford and Care Bears. The children’s/family video market remains competitive as nearly every studio entered the business over the last few years.

“It continued to be extremely competitive,” Lionsgate president Steve Beeks said of the kidvid market. “The properties that are not franchise based or do not have the built-in awareness to have them immediately poke through the fray still have a difficult time.”

In addition to having the Top 3 titles, Buena Vista had every type of release in the Top 20 DVD sellers: platinum edition catalog release The Little Mermaid was No. 10, TV movie High School Musical was 16 and direct-to-video animated feature Bambi II ranked 18.

“Having the Top 3 DVDs of the year, which has never been done before, was a huge accomplishment, ” said Lori MacPherson, BVWHE general manager of North America.