Link This | Email this | Blog This | Comments (0)

Yes, the studios won't give up DVD SALES
June 11, 2007

iDEA chair Jim Loperfido makes a well-reasoned case for the preservation and longevity of packaged media rental in his letter to Time Warner chairman Dick Parsons. Loperfido demonstrates a thorough grasp of the issue, which is that studios--well, at least Warner--are intrigued by the idea of replacing DVD rental with VOD, which returns a higher profit margin than traditional rental to the studio.

Studios have been uneasy with rental since its inception, largely due to the fact that they've never been able to consistently get the same share of DVD rental revenues as they do of theatrical box-office. It's also clear in Warner home entertainment chief Kevin Tsujihara's comments  to just what extent used disc sales rankle the studio and are seen as cannibalizing new product sales. For these reasons and more, studios--well, at least Warner--are willing to sacrifice DVD rental revenues for a bigger pay-off on VOD. No studio wants to jeopardize DVD sales revenue, which has grown in the six studio test with Comcast of simultaneous DVD/VOD release. 

Retailers who dismiss the Comcast window test with the flip "studios will never give up DVD revenue" look like they don't get what's going on, or like they're just grasping at straws.

Studios will never give up DVD sales revenue--until something more lucrative comes along. In terms of DVD rentals, what they're saying is that something more lucrative--for them may be coming along now.

Posted by Marcy Magiera on June 11, 2007 | Comments (0)