Battle intensifies over holiday DVD sales

`Christmas is king' to Hollywood studios

December 23, 2004|By Lorenza Munoz | Lorenza Munoz,LOS ANGELES TIMES

HOLLYWOOD - When it comes to the battle to sell the most DVDs during the holidays, forget the Christmas spirit.

Since the DVD format was launched seven years ago, the slugfest has grown more intense each year - to shoppers' delight - as Hollywood studios jockey for position near the checkout scanners of Best Buy Co., Wal-Mart Stores Inc., Target Corp. and Costco Wholesale Corp. stores.

Some 40 percent of the $16 billion in annual DVD sales occur from October through December, because of the DVD's popularity as an inexpensive present, the high number of DVD players given as gifts and price cutting by retailers. And because of people like Maurice Shaw.

"I've bought 30 this month alone," he said, flipping through titles last week at a Culver City Best Buy. In his hand was a candidate for No. 31: the 1991 Wesley Snipes film New Jack City, marked down from $19.99 to $9.99.

While movie executives battle to lure teens to theaters during summer vacation and TV programmers fight it out for viewers for their fall schedules, for Hollywood's home entertainment executives, the holidays make or break a year.

"It's like the summer for blockbuster movies and the November sweeps for TV all combined," said Peter Staddon, marketing chief at 20th Century Fox Home Entertainment Inc. "Christmas is king."

Since October, at least two blockbusters, half a dozen smaller releases and a couple of television shows have debuted weekly at retail stores. Warner Bros. released 50 holiday-themed DVDs in three months. When DreamWorks Animation SKG's Shrek 2 came out Nov. 5, supermarket employees wore the green ears of the computer-animated film's ogre.

With DVD sales their most lucrative source of profit, studios are already plotting 2005 holiday strategies. Executives made pilgrimages this month to Wal-Mart headquarters in Bentonville, Ark., to plan ahead with the industry's biggest buyer.

DVD holiday sales are even driving studios to shift theatrical release dates to better piggyback on summer box office receipts. Last month, Walt Disney Co. and Pixar Animation Studios moved the expected hit Cars from next Thanksgiving to the following June.

That means the Cars DVD release a few months later will coincide perfectly with holiday shopping. Likewise, DreamWorks moved Shrek 3 to May 2007.

Time Warner Inc.'s New Line Cinema waited more than a year after Elf hit theaters in 2003 to release the blockbuster on DVD in November. Discs sat for months in half a dozen warehouses scattered around the United States.

November was so loaded with big titles - Elf, Shrek 2, Harry Potter and the Prisoner of Azkaban and Spider-Man 2 - that two studios, 20th Century Fox and Metro-Goldwyn-Mayer, opted to sit out the month in releasing major DVDs.

Fearing its film De-Lovely would get crushed, MGM instead released it yesterday. "We positioned it for the last-minute gift shopper and the post-holiday season," said Blake Thomas, MGM executive vice president of marketing.

When the bulkier, more expensive videocassette was Hollywood's home entertainment format, children's movies sold well. But only a few live-action films, usually the big hits, would be purchased in large numbers. With DVDs, virtually any genre - movies, TV shows and music concerts - sells, in part because studios can load the discs with extras and price them affordably.

Last year, consumers on average bought 15 DVDs, compared with five in 1997, according to Adams Media Research, a Carmel, Calif., consulting firm.

"People have turned into voracious buyers," President Tom Adams said.

The pressure is highest in the first week after a DVD's debut, when about 50 percent of the discs are usually sold, often to the likes of Vince Toyama and his buddies.

Like Shaw, Toyama was on the prowl for new titles at the Culver City Best Buy. He usually buys 25 movies a year. Five of his friends have a weekly "Best Buy Tuesday" ritual in which they go out on their lunch break to buy new DVDs.

"They are single and that is what they spend their money on," Toyama said.

Helping fuel the holiday buying binge are retailers, which view bargain-priced DVDs as a way to get customers into stores. Top titles often sell for less than $20, some at less than $15. Cheap DVDs lure people to stores more often than bigger-ticket items.

"A person only needs a certain number of televisions a year," said Derek Horeis, head of home entertainment sales for Best Buy. "What home entertainment provides is a lot of visits to our stores."

With only so much space in the stores, studios elbow one another to get, and keep, prime real estate near the checkout area and at the ends of aisles. The bigger and more lavish the display, the better. "You want it to be as subtle as a flying brick," Fox's Staddon said.

The selling doesn't stop Jan. 1. Gift cards and a flurry of buying by consumers stocking movies to play on new DVD machines keep the momentum going.

The Los Angeles Times is a Tribune Publishing newspaper.

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