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Packaged media on its way out? Not at Universal Studios Home Entertainment, where the physical disc is poised to bring in big bucks in the coming year.
A strong box office typically portends a bright home entertainment future (physical and digital), said Craig Kornblau, president of Universal Studios Home Entertainment.
Universal Pictures finished No. 1 studio at the box office at the end of the first quarter (ended March 31), holding off Lionsgate juggernaut The Hunger Games thanks to three movies (The Lorax, Safe House and Contraband) in the top 10.
That’s quite a reversal for the studio, which had just one movie in the top 10 during the same period a year ago, and last ranked in the top 3 following the first 90 days in 2004.
The first-quarter run actually is a continuation of a streak that began at the end of 2011. Kornblau, who has been USHE president since 1999, said strong results late last year with Oscar-nominated adult comedy Bridesmaids — the top transactional video-on-demand release in history — and Fast Five indicated consumers were again willing to consider sellthrough.
“Clearly, we have been challenged as an industry being a discretionary good sold at retail,” Kornblau said. “In this tough economic environment, discretionary goods sold at retail got hit very hard.”
He said the key lesson learned in 2011 was focusing on titles (new and catalog) that have broad appeal for ownership (versus renting), repeat viewing and disc collections. This year started off well distributing independent films, including a new deal with Open Road Films, the indie joint venture involving theater operators AMC and Regal.
Kornblau said Open Road’s first film, Killer Elite, starring Jason Statham, Clive Owen and Robert DeNiro, and straight-to-disc release, Scorpion King 3, exceeded expectations. Even studio box office dud, The Thing, did “gangbusters” in home entertainment, according to Kornblau.
He said catalog results this year, including major Blu-ray releases, To Kill a Mockingbird, and pending Jaws and E.T., are being underwritten by Universal’s ongoing centennial celebration. Most of those re-releases will include UltraViolet.
“We have double-digit growth in catalog versus last year,” Kornblau said.
When faced with releasing animated family film, Hop, which did an impressive $108 million at the box office, in a hit-starved home entertainment window in early 2011, Kornblau hesitated — for an entire year.
“That was really bold,” he admitted. During the embargo, the USHE sales and marketing team established Easter sellthrough commitments with key retailers, including supermarkets, and securing a Friday (March 23) release date to minimize conflict with other studios.
Kornblau said Hop ended up selling better at retail two weeks after street date — bucking typical industry trends of diminishing returns which each passing day.
“The second biggest sales day we had [for Hop] was the Friday before Easter,” he said. “Even in the highly seasonal time frame, you never see that kind of curve.”
Kornblau said the key to keeping consumers away from rental kiosks is offering sellthrough titles people want to own, in addtion maintaining the current 28-day embargo. He said internal research has found that 50% of sellthrough purchases were not planned coming into the store.
“They bought it on impulse,” he said, adding that strong marketing helps plant the title in consumer minds ahead of time. “They are either looking for it or when they see it, they remember it was part of marketing offering.”
Marketing angles for Hop included point-of-purchase displays co-opted with Krispy Kreme doughnuts and prominent placement in Target’s weekly newspaper circular for three successive weeks.
Blu-ray Disc accounted for 32% of Hop disc sales, which paled in comparison to Cowboys & Aliens at over 40%, but was impressive considering its family appeal.
“That’s a really healthy percentage,” Kornblau said. Indeed, Hop was the top selling title at retail for the week ending April 8, according to Home Media Research.
The executive expects similar results for The Lorax, which he said will excel at sellthrough vs. rental, and be on par with what Despicable Me did in 2010.
“Obviously, this is the type of property kids and parents want to own,” Kornblau said. “It’s the kind of movie you want to see over and over again. So you buy it.”
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