Studios pull back from PSP

Movie releases slow as sales fall below expectations

By Jennifer Netherby and Susanne Ault -- Video Business, 2/15/2006

FEB. 15 | With sales falling below expectations, Sony Pictures Home Entertainment, Paramount Home Entertainment and Warner Home Video are cutting back on movie releases for Sony’s PlayStation Portable handheld videogame player.

SPHE president Ben Feingold said the studio is temporarily scaling back the number of new release PSP movies it puts out due to weak performance. Sony last year was the first studio to release movies for the PSP and has been the biggest cheerleader of the format since its launch by the studio's parent company.

SPHE and sister unit Sony Computer plan to visit other studios in the next month to garner support for PSP by making an adapter that would allow the movies to be watched on a TV, making them more versatile for consumers.

“It would be a huge boost to [PSP movies] if we can arrange for the disc to play on TV players,” Feingold said.

In the meantime, Sony is adding to its comedy slate of releases on PSP with Monty Python titles and Not Another Teen Movie. Feingold said comedy has turned out to be the sweet spot on the format—the top-selling PSP release is 20th Century Fox Home Entertainment’s Napoleon Dynamite.

Paramount also has had some of the hottest releases on the format, with TV comedies Chappelle’s Show: Vol. 1 and Beavis & Butt-head—The Mike Judge Collection: Vol. 1.

However, the studio has no new PSP releases planned for the coming months, though a spokeswoman for the studio said they would continue to look at releasing select films on PSP.

Top PSP movie performers generally sell more than 100,000 units, though average release sales are closer to 40,000 to 50,000 units, according to industry sources.

Some have reasoned that sales might have slowed recently because of a shortage of new titles in the last month and because users might be copying films, albeit illegally, from DVDs onto a memory chip that PSPs can read.

Sony is hoping to combat online piracy starting in March when it begins selling movies online through its Connect digital media store. Users will be able to download movies from Connect and watch them on a PSP without a disc.

Warner, which only began releasing movies in the format in November, pulled six planned PSP titles including Goodfellas from its slate of releases previously set for an April to June rollout.

"We are re-evaluating our position on any future releases at this time," said Jeff Baker, Warner senior VP and general manager of theatrical catalog. "We'll look at this on a case by case basis. We're disappointed with consumer demand at this time."

The studio moves come as retailers are said to be cutting out shelf space for PSP movies with hit-and-miss sales. Best Buy is primarily stocking new releases on PSP, one studio source said.

“The performance of [PSP movies] has been unstable since their inception,” said Virgin buyer Chris Anstey. “We continue to carry most new titles, and there is a modest demand for them, but there simply hasn't been a consistent growth of this new format to justify making more space for it. We have been encouraged by the results of a couple successful campaigns that we've featured to help promote them, but the overall impact of the format has still been nominal.”

Sources say retailers are being flooded with new disc SKUs and view underperforming PSP movies as an area for cutbacks with upcoming high-definition releases set to reach market in the coming months.

"With standard-definition, HD DVD, Blu-ray and PSP, all these formats take up space," said one source. "Consumers aren't going to buy three or four configurations of the same movie. Something has to give."

However, Sony’s Feingold said multiple SKUs aren’t likely to go away soon, with consumers preferring to watch movies on a variety of screen sizes.

“It’s the beginning of a time when multiple formats will become a mainstay in the video business,” Feingold said. “For retailers, having one product could be easier, but the reality is there’s going to be a proliferation whether the studios or retailers like it or not.”

Feingold said he doesn’t expect any retailers to cut out PSP movie sales altogether, with 6 million new hardware units expected to be sold.