Lionsgate plans to take more DVD market share
2008 theatrical releases to feed 2009 DVD sales
By Danny King -- Video Business, 6/23/2008
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JUNE 23 | LAS VEGAS—Lionsgate said it will continue to defy the trend of declining DVD sales in the U.S. by widening its selection in the children’s, horror and direct-to-DVD genres, while feeding early 2009 growth with about a dozen theatrical releases scheduled for the remainder of the year. The studio also expects to benefit as home entertainment spending reverses its decline with more Blu-ray Disc sales and digital-media demand.
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2008 Home Media Expo
The studio expects to boost home-entertainment revenue this year by about 12% on theatrical DVD releases such as the Jackie Chan-Jet Li vehicle The Forbidden Kingdom, holiday films such as Thomas Kinkade’s Christmas Cottage and a slate of direct-to-DVD horror titles from Sam Raimi and Rob Tappert’s Ghost House Underground production company, Lionsgate said at its annual retail summit here yesterday. Such growth will continue into next year as its own 2008 theatrical movies such as the Tim Robbins-starring The Lucky Ones and My Best Friend’s Girl, starring Kate Hudson, are released on DVD.
Lionsgate, which is also known for its fitness and Latino genres and says it converts theatrical revenue to DVD sales at a higher rate than any of the larger studios, reported earlier this month that DVD sales for the year ended March 31 jumped 18% to $623.5 million on titles such as 3:10 to Yuma and Good Luck, Chuck, helping the company boost its fiscal-year U.S. market share to almost 7% and its most recent quarter’s share to 9.1%.
“Lionsgate had a great year, especially in home entertainment,” Lionsgate president Steve Beeks said at the conference. “Our goal this year is to crest $700 million.”
The company had increased its DVD market share to 9% as U.S. home entertainment revenue was little changed at about $5.6 billion for the first quarter, according to Video Business research and Rentrak.
Since March, Lionsgate has inked distribution agreements for MGA Entertainment’s new Animated Little Tikes Entertainment label and U.K. publisher Hit Entertainment, whose series include Barney, Bob the Builder and Thomas & Friends. With such agreements in place, Lionsgate has the third-largest U.S. non-theatrical family market share, with about 15%, and is the No. 2 DVD distributor in the preschool segment, with about 20% of the market.
The company will build further upon its children’s DVD sales with titles such as Speed Racer: The Next Generation, which has sold more than 200,000 units since its release last month, while looking to expand its selection of Hulk-related titles from Marvel Entertainment as well as its titles from the Bratz franchise, said Anne Parducci, Lionsgate’s executive VP of family and home entertainment marketing, at the conference.
Lionsgate also will benefit as U.S. consumers reverse the home-entertainment spending decline by purchasing more Blu-ray Disc players, renting more movies through video-on-demand and downloading more digital content, said Michael Youn, Lionsgate’s VP of strategic planning and business development.
Although home entertainment spending is expected to fall slightly this year to about $25.1 billion, Blu-ray sales will jump about 20% to $1 billion and could hit the $10 billion mark by 2013 as teenagers and adults over 35 drive growth and retailers such as Wal-Mart push the price of Blu-ray players down toward the $200 mark. U.S. consumers own about 4 million stand-alone Blu-ray players and an additional 11 million Sony PlayStation 3 consoles, which include a Blu-ray player, said Youn, adding that consumers owned about 5 million standard DVD players in 1999, which represented the same timeframe in that product’s development.
“Packaged media has a long life ahead,” said Ron Schwartz, Lionsgate’s executive VP and general manager of home entertainment, at the conference.
Additionally, digital delivery of content, estimated at $1.53 billion, will more than double to $3.55 billion within five years, while video-on-demand spending will increase more than 15% a year, driving home entertainment spending to almost $27 billion, according to Youn.
With the dozen theatrical titles scheduled for release between now and Christmas, Lionsgate could have as much as 7% of the U.S. theatrical market by the end of the year, Beeks said, with that momentum extending to DVD in first-quarter 2009. The studio next year will best its first-quarter 2008 market share of 9%, Beeks predicted, and possibly will move up from the No. 7 studio to No. 5.
