The Universal Studios ninth-floor conference room offers a spectacular view of the San Fernando Valley. Yet the more remarkable sight is what takes up one entire wall: a 2005 calendar jammed with more than 100 cards, each representing a new DVD release, all vying for a slice of Hollywood's newfound $21.2-billion windfall.
For years, movie studios expended most of their marketing muscle on a movie's vital opening weekend at the local multiplex. Now that DVDs account for as much as 60% of show business profits, the more momentous battle is being waged during a film's first few days on the DVD shelf, a make-or-break week that usually spells the difference between a movie's profit or loss.
Thanks to such economic and competitive pressure, the timing and promotion of new DVD releases has turned into a sophisticated marketing matchup -- and calendars are but a fraction of the game plan. Thanks to retailers' high-tech tracking devices, distributors now have almost instantaneous feedback on how well a single title is doing, say, at the Wal-Mart Supercenter in Pascagoula, Miss. What's more, complex algorithms project an entire week's retail volume mere minutes after a new title goes on sale.
To spark consumer interest and rise above the clutter, DVD makers have borrowed nearly every page from the theatrical debut playbook, launching new titles with star-packed premiere parties, multimillion-dollar advertising campaigns, extensive consumer research and even press junkets.
"It's just like theatrical, but there is just much more competition," Craig Kornblau, president of Universal Studios Home Entertainment, said as he surveyed his sweeping calendar, where nearly every week holds several major releases. "Our job is to take something big, and make it huge."
Yet Kornblau and his home video peers have precious little time to turn a box office blockbuster into an even larger DVD sensation. While theater owners might give a movie several weeks to generate audience interest, video retailers tend to grant DVDs mere days to prove themselves.
The reason has more to do with toasters and diapers than the movies themselves.
"The number of titles coming into the market is growing faster than the market," said Stephen Einhorn, president of New Line Home Entertainment. "If you miss the first week, you've got a problem."
Just as movie theater owners can make nearly half their income on popcorn and other concessions, mass merchants exploit popular DVDs to drive traffic to other (and more profitable) parts of their stores. Kornblau says that although shoppers in mass-merchant stores tend to spend about $80 at the checkout when they buy a DVD, the shopping basket for non-DVD buyers totals half of that.
"That's why DVDs are often sold below [wholesale] cost," says Tom Lesinski, president of worldwide home entertainment at Paramount. "The whole thing is about getting people through the turnstiles."
Consequently, a DVD that isn't flying off the shelf will lose its prominent store display, ending up in a dark corner with so many exercise tapes. "Instead of trying to hold theaters, we are trying to hold shelf space," explained David Bishop, president of MGM's Home Entertainment Group.The opening week stress springs largely from a lopsided retail environment.
Home video executives estimate that just three giant mass merchants -- Wal-Mart, Target and Best Buy -- account for more than half of all DVDs sold. As much as 60% of a new title's total sales come in the first six days (up from about 30% three years ago), with some 20% of the overall volume often arriving on Tuesday, the first day new releases typically are available. A hit movie, on the other hand, collects about a third of its overall gross in its first weekend in theaters.
Moviegoers, though, are deciding only which movie they want to see and generally are picking among only two or three new national releases on a given weekend. When they steer their shopping carts down the DVD aisle, however, home video shoppers are choosing in an average week from among as many as half a dozen new movie titles, scores of repackaged TV series, and countless reissues of older films.
"You know when there's a new big release on a Tuesday, because you can't get a parking spot" at the store, said Peter Staddon, executive vice president of marketing for Fox Home Entertainment.
On a recent Tuesday at the Target in Pasadena, the store's strategic end-of-the-aisle "new releases" section included the movies "Sideways," "Spanglish," "After the Sunset" and "Elektra"; television series "The West Wing," "The Greatest American Hero," "Queer as Folk," "Murder, She Wrote," "The Pretender," "Doogie Howser, M.D.," "Pimp My Ride," "Kojak," "The Hardy Boys/Nancy Drew Mysteries," "Batman and Robin" and "The Flintstones"; and direct-to-video titles "The New Scooby-Doo Movie" and "Hot Wheels: Acceleracers Ignition."
