The domestic theatrical
exhibition market is taking a hit this year.
A big one … as of right now it is not a pretty picture. It comes as no surprise to us as the numbers
have been soft long before the summer results were in.
Each week the DVD & Blu-ray Release Report plots
year-over-year new theatrical release performance and posts the results. To some that may seem odd when the nature of
this publication is the monitoring of the home entertainment packaged media
trends … namely, what’s happening with DVD and Blu-ray product releases.
The reason for keeping an
eye on trends in the new theatrical release arena is that activity in that
quarter invariably translates to subsequent action — good or bad — in the home
entertainment market place.
Consumers — mass market
consumers — tend to rent and buy (consume) film entertainment that they
know. “What’s new?” is the question
most asked; rarely, “what’s good?” When
they overlap, that’s terrific.
With the arrival of the
Labor Day period a certain clarity to what the entire year will look like for
new theatrical releases comes into very sharp focus. What remains of the year is all about time
and seats available.
The DVD & Blu-ray Release Report tracks, religiously, a specific class of new theatrical releases. Namely, those films grossing in excess of
$25 million. Speed to market (Asset
Rollover Rate, or simply ARR) is measured in days from a film’s theatrical
debut to its subsequent debut on either DVD or Blu-ray represents the
“window.” It is slowly being crushed.
Why these films? Films released theatrically that gross in
excess of $25 million get there by having the combination of promotional
dollars supplied by the studios and theatrical screens (seats to generate sales
from exhibitors), plus enough consumer interest to keep the respective candidates
in theatrical play long enough to reach this “golden” plateau. These films are “hits” regardless of whether
they make money in terms of their production costs. Their costs of production are simply not
relevant to home entertainment … consumers don’t care if studios lose money on
a film. And, with studio accounting,
you can never really be sure if it is a winner or a loser anyway.
This group of films —
roughly 100 each year — tend to drive the “what’s new?” sector of the home
entertainment market place (rental and retail). They are important … they are the engine
that drives the business (like it or not).
All other theatrical
releases fall into certain subgroups.
These are:
• Abject Failures and Lost Films — consumers either said NO!!! to a wide,
studio-backed release (no matter how much money was spent in launching the
turkey), or the film got great reviews, but no one saw it; a failure to
“ignite” (read that as a terrible marketing campaign). There will be interest when these films are
released to DVD and Blu-ray … and often a disaster can be salvaged.
• Limited Releases — arthouse, religious
audiences, etc., but with a national presence (consumers are usually aware of
these films). They usually exhaust
their target audience before reaching “hit” status.
• Promotional Releases — select markets to raise
awareness (and to say that the film had a theatrical push).
• Foreign Language imports — targeted for
specific audiences … you may not even know that these theatrical releases exist
because you simply do not speak the language (think: social event).
• “Other” — a
category that has been expanded in recent years as a result of trends in
digital exhibition. You need to think in
terms of a combination of limited and promotional releases without print costs
… digital exhibition can easily elevate a micro-budget film to theatrical
status. Often these are films
that are being stepped from the festival circuit to home entertainment … they
only show up in a few venues (and largely go unnoticed).
Roughly, and this may
come as a surprise to some, 65 percent of all new theatrical releases gross
less than $1,000,000. Only one in
twenty new theatrical releases each year have ticket sales in excess of $100
million and yet they dominated the discussion.
Which brings us to the
current status of this particular product category. Anyone following the entertainment industry
has likely heard that 2014 is turning into a stinker … box office is down (15 percent
and more). It’s a long list of excuses
… a rough winter, the loss of “tent pole” releases, high ticket prices, too
many of the same films, etc., etc.
Excuses, yes, but they
don’t change the fact that “hits” are down this year … and that will have an
impact on the home entertainment arena, especially as the summer crop is
translated into DVD and Blu-ray product offerings on the run-up to the
Christmas-selling season.
As we bump up against the
Labor Day weekend (the traditional end to the summer theatrical release
season), the industry has generated 58 “hits” on a year-to-date basis. Last year, at this time, the number was 64 …
in 2012, 68.
At the other end of the
spectrum, we’ve seen 250 films released during the same period that have
grossed under $1 million … last year the count was 254. The promotional and limited use of
theatrical venues is pretty much unchanged, but the “hits” are MIA.
In any case, by the time
the Labor Day weekend rolls around the final outcome for the year (in terms of total
theatrical releases) works out to about plus or minus three percent of the existing
trend at the 34th week of the year.
This year the numbers point to 594 films (based on year-to-date
comparisons), versus a final count in 2013 of 632 theatrical releases (only
films with a reported box office gross are included).
As you run out of weeks
remaining, the swing gets narrower and narrower. We could finish the year with as few as 575
new theatrical releases (unlikely) or as many as 613 (a possibility with a rush
of digitally-released theatrical entries).
But the “hits” will be hard to come by in terms of making up the lost
ground … it comes down to a factor of weekends remaining and seats
available.
Two “hits” per week is
about all the market place can generate … 18 weeks remaining yields 36
possible. Add that number to the
current crop of 58 and it is a bleak year-end total of just 94. The final count last year (2013) was 104 …
two years ago (2012) there were 106.
Like we said, it is not a
pretty picture!
To download this week's
complete edition of the DVD and Blu-ray Release Report: DVD & Blu-ray Release Report
