FAIR COMPARISONS
JAN. 9 | It's unfair to compare the total money spent on home video to theatrical box office because there are so many more catalog and specialty titles released to the home video market.
But what about comparing the amount of money spent on the same movies in theaters and home video?
Consumers spent $403.4 million more renting and buying DVD and videocassette copies of 10 of the Top 20 home video titles in 2003 than they spent on those same movies in theaters.
That's $2.03 billion compared to $1.63 billion.
They spent $91.4 million more on the home video version of Finding Nemo, even though it was the top-grossing movie of the year and even though more money was spent on theater tickets for that movie than any other animated movie in history.
They spent $76.4 million more on Sweet Home Alabama.
They spent $70.5 million more on Old School even though that was DreamWorks' biggest theatrical release of the year.
Even so, industry observers--mostly defenders of the theatrical business--claim that it's an unfair comparison because consumers spend a lot more to buy a DVD than they would spend on a movie theater ticket.
That may have been true at one time, but if you consider that most people are buying at least two tickets when they go to the theater, with ticket prices rising to somewhere between $10-$14 in major markets and DVD prices falling to less than $20 most everywhere and less than $15 in many cases, that argument no longer holds water.
Now take into account that studios pocket only about 50 cents on every $1 spent on movie tickets but closer to 80 cents on every dollar spent on a video, and sometimes as much as the entire $1 when Wal-Mart and others sell DVDs at cost or even less than cost.
The studio take on the home video versions of those same 10 movies is now even more staggering--roughly $1.62 billion versus $815 million. The $81.5 million average studio portion of the box-office grosses didn't even cover the costs to produce and market most of those 10 films. (In fairness, a significant portion of those costs should be spread over the charges connected with the video version.)
What about the flipside? What about those movies that did not perform as well on home video as they did at the box office? The Matrix Reloaded generated $95.4 million less on home video; X2: X-Men United was $85.5 million lower; and Bruce Almighty was off by $64.3 million. (The Lion King was down comparatively by $155.6 million, but it was released nearly a decade ago, and the Indiana Jones trilogy was short by a whopping $466.1 million, but that is really an anomaly relative to the age of the films and the way they were packaged.)
Even so, Warner's return on the $186.1 million for the home video version of The Matrix Reloaded will likely be higher than the studio's cut of the $281.5 million for the theatrical version even before factoring in production and marketing costs and talent/producer fees.
It will be years if studios ever begin bypassing theatrical distribution in favor of marketing movies directly to home video, but you can bet there are already some studio executives crunching numbers to begin the dialog.