October home vid takes 'Stand'

5:00 AM PST 10/27/2006 by Thomas K. Arnold, AP

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After more than a year of bad tidings, the home entertainment business appears headed for a rebound that even the most optimistic studio executive wouldn't have predicted as recently as the summer.

October is poised to set a new record for consumer spending, studio sources report, thanks in no small part to one of the most powerful slates of theatrical titles coming to video in any October.

Sixteen theatrical films with total boxoffice earnings of $1.1 billion have already arrived in stores or are coming out before month's end, including such blockbusters as 20th Century Fox Home Entertainment's "X-Men: The Last Stand," which grossed $234.4 million in theaters and sold 5 million units its first week in stores.

And that's not counting a handful of marquee catalog titles like Buena Vista's "The Little Mermaid Platinum Edition," which sold more than 4 million units its first week out.

Studio estimates say consumer spending on video during the first three weeks of October was up a healthy 6% from the same period a year ago, while DVD spending rose 9.4%. Unit volume is up 3.3% overall, while DVD units are up 10%.

And while at the end of the third quarter, total consumer spending for the year on home video -- rental as well as sell-through, DVD and the last straggling VHS tapes still in stores -- was running slightly behind 2005, the "October boom," as studio executives are calling it, is expected to lift spending for the year firmly into positive territory.

"The summer boxoffice was up 7% this year, which is translating into a strong fourth quarter for home entertainment," 20th Century Fox Home Entertainment president Mike Dunn said. "The release of 'X-Men' set an industry record for a single day and first week in October and was clearly a happy foretelling of what's followed."

Dunn said he expects to see "the year ending up at least 3%."

Universal Studios Home Entertainment president Craig Kornblau shares Dunn's optimism. The October rally "has finally turned the year-on-year comparisons up," he said. "And with the tremendous slate of product coming between now and the end of the year, it's safe to say we will finish the year up and on a decidedly positive note."

Studio and retail sources see three factors behind the apparent rebound. Gas prices are falling rather than rising, as they were last year. More big titles have been pushed into October. And, perhaps most significantly, the summer boxoffice slate packed a lot more punch than last year.

"The industry's strong summer boxoffice slate is beginning to hit on DVD," said Kelley Avery, president of worldwide home entertainment at Paramount Pictures. "We know the fourth quarter typically represents about 40% of consumer sales for the year. Based on October results, including strong Week 1 sales for 'Over the Hedge,' the industry is off to a great start."

October began with the residual effect of two late-September releases from Universal Studios, "Curious George" and "The Fast and the Furious: Tokyo Drift," which together generated $60 million in consumer spending.

Then came the one-two punch of Fox's "X3" and Buena Vista's "Little Mermaid," which in a single day generated $80 million in consumer spending.

Both titles wound up No. 1 and No. 2, respectively, in sales for the week and remained strong sellers their second week out, when they were joined in stores by another DVD heavyweight, Sony Pictures' "Click."

Week 3 found DreamWorks Animation's "Over the Hedge," distributed by Paramount, sell nearly 4 million units in six days, generating about $65 million in consumer spending.

October ends with the Monday release of "Mission: Impossible III," also from Paramount, which grossed $133.4 million in theaters.
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