If box office is booming, why are so many top studio executives brooding about the future of the movie business? Let's just say that in today's increasingly complex film world, the cinema gods giveth at almost exactly the same time as they taketh away.
The studio bosses who should be celebrating the unprecedented upswing in moviegoing at theaters -- with theater box office up roughly 15% this year -- have been getting a big dose of bad news from the other end of the food chain. DVD revenues have cratered in the past six or so months, dropping off (depending upon whose figures you trust) as much as 15% to 18% overall.
What's really scary for studio executives is that DVD sales, which have traditionally represented the biggest chunk of pure profits in the business, were the real safety net when it came to greenlighting movies. In the past, if you had an action film that made $150 million in domestic theatrical box office, you could relatively accurately predict what that movie would make in DVD sales. But in recent months, studios have been alarmed to discover that there is often a dramatic fluctuation between box-office revenues and DVD performance, with the highest erosion often coming from the highest-grossing films.
Even more alarming, especially for studios that have thrived on seducing moviegoers into seeing mediocre product, is the realization that audiences are becoming more quality conscious. In the past, if a forgettable action film hit pay dirt at the box office, it would perform correspondingly well in DVD, allowing studios in greenlight meetings to provide a conversion rate -- i.e. that if a movie of a certain genre made $100 million in the theaters, that would equal X millions of units in DVD. But judging from recent DVD sales figures, films that had poor word-of-mouth were underperforming in DVD, even if they had enjoyed lofty box-office numbers.
The example that made the biggest impact in studio circles involved "Iron Man" and "Indiana Jones and the Kingdom of the Crystal Skull." The films, released within weeks of each other last summer, did almost the same amount of business in their U.S. theatrical runs, roughly $318 million. But when they arrived on DVD, "Iron Man," the film that performed far better in exit polls (not to mention with critics), easily outperformed "Indiana Jones," whose DVD numbers were far lower than expected. Among the big-grossing summer films, "Hancock" was also a poor performer (in terms of box office versus DVD numbers), while the DVD numbers for such well-liked family films as "Wall-E" and "Madagascar: Escape 2 Africa" held up far better.
