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By Jennifer Netherby -- Video Business, 5/31/2007
MAY 31 | Digital downloads, Blu-ray and video-on-demand are showing strong growth while DVD sales held steady, indie studio Lions Gate said during its fourth quarter earnings call Thursday.
The studio reported earnings of $25 million, down 36%, in the fourth quarter due to a weaker theatrical slate. Revenues for the quarter ending March 31 were up 6% to $331.6 million.
For the full year, earnings more than tripled to $27.5 million. Revenues were up 3% to $976.7 million.
Film revenues were up 6% for the year to $858.2 million, with home entertainment offsetting a 26% decline in theatrical revenue.
Home video revenues edged up to $528.3 million compared to $527.2 million the previous year. Leading performers for the year included Saw III, Crank, Employee of the Month and Tyler Perry’s Madea’s Family Reunion.
Library revenues were up 21% to $256 million for the year.
During a Thursday conference call, president Steve Beeks said that wholesale pricing on catalog had held steady over the last year.
Revenues from VOD, digital downloads and Blu-ray, still small, showed strong growth. Revenues from traditional video-on-demand through cable companies grew 50% in the quarter and now equal 10% of a film’s box office revenues, the studio reported.
For Employee of the Month, the studio said VOD revenues totaled $3 million. The studio said it hasn’t seen any cannibalization on DVD in its day and date VOD test with Comcast.
Lionsgate CEO Jon Feltheimer said digital download business grew sevenfold. The studio sold 1.4 million digital downloads through partners that include Apple iTunes and CinemaNow over the last few months. The studio has sold 150,000 downloads of 15 films through Microsoft’s Xbox Live Marketplace. On iTunes, Van Wilder became the top-selling film on the site when it was added recently.
Feltheimer listed Blockbuster among the companies the studio has recently signed digital distribution deals with. Blockbuster hasn’t yet launched a download site, but has said it plans to do so this year.
Lionsgate will expand its film slate in the coming year to 20 releases as part of a finance deal with a film fund that is investing $400 million for film production over the next three years. The company said it expects a loss of $50 million for fiscal year 2008 due to increased marketing costs. The studio expects revenues of $1 billion.