Q4 boom busted '07 DVD sales

Buyer frenzy pre-empted this year's major releases

Video industry executives concede that any slowdown in DVD sales this year is of their own making: Release schedules have been notoriously weak, with a lot of the high-profile theatrical product that traditionally gets saved for January or February pushed out the door in December to capitalize on the fourth-quarter buying frenzy.

The boxoffice value of theatrical DVDs released in January was just $533.5 million, down 28.1% from the January 2006 total of $741.6 million. The February count was $542.8 million, 8% less than the $588 million theatrical value of February 2006 DVD releases.

"Conversion rates are so strong that whatever could be released in November and December was," one observer said. "So if you squeeze the windows to get it into December, that sort of makes for an empty January and February."

Yet there were success stories early in the year. Lionsgate had its biggest January ever and dominated sales charts in the first two months of this year with hits like "Saw III" and "Crank."

"Excess product in the holiday period created an opportunity for us in the first quarter," Lionsgate president Steve Beeks said.

Paramount Home Entertainment, too, has had a good first quarter, thanks to such titles as "Flags of Our Fathers," "Babel" and "Flushed Away." "We've managed to build off the excitement surrounding the awards season and a less-crowded marketplace to generate strong numbers," division president Kelley Avery said.

Starz Home Entertainment's numbers are up from 2006, said exec vp and GM Bill Clark, largely because of a strategic expansion of distribution outlets.

But if theatrical tentpoles drive the business, much of the first quarter has chugged along in first gear. Only now is the industry beginning to see a turnaround, with 17 films coming to DVD after grossing $1.03 billion in theaters, essentially flat with the March 2006 theatrical tally. Four of them grossed more than $100 million theatrically: "Borat" ($128.5 million), which came out on DVD March 6; "Casino Royale" ($167 million), re-leased Tuesday; "The Pursuit of Happyness" ($162.6 million), due March 27; and "Happy Feet" ($194.8 million), also March 27.

"We had a terrific fourth quarter for both home video and theatrical, and the theatrical product released at year-end is now starting to come out on DVD," said Steve Feldstein, senior vp marketing communications at 20th Century Fox Home Entertainment.

The outlook for April and May also is good, with the boxoffice value of April DVD releases clocking in at $603.3 million, compared with $671.3 million for April 2006. And big titles are slotted for May, including "Dreamgirls" (May 1) and "Apocalypto" (May 22).