Studio honchos tell investors sector is strong
Movie business 'recession resistant,' says Katzenberg
By Jennifer Netherby -- Video Business, 9/18/2008
SEPT. 18 | Top execs at the major media companies put on a happy face for Wall Street about the future of DVD business at the Goldman Sachs Communicopia XVII Conference Sept. 17 in New York.
While acknowledging the tough economy, DreamWorks CEO Jeffrey Katzenberg called the movie business “recession resistant” at worst, while noting that DVD remains strong, with sales down just 3% this year.
“Our product, both our first-run releases and our library, have continued to do well,” he said. “We have not seen either price or margins erosion for us. It’s again, all businesses are challenged and the home video market is challenged, but it has held up surprisingly strong. I think even the 3% that you see is more reflective of product and things that have occurred in terms of lesser titles year to year, as opposed to the market itself eroding.”
He predicted a strong fourth quarter and then boldly boasted that the upcoming Kung Fu Panda release, which will include a new DVD premiere short, “may be one of the best values ever offered on home video.”
At the same time, Time Warner president and CEO Jeff Bewkes said piracy is flattening, with file-sharing less of a problem worldwide than bootlegs in some Asian markets.
Warner also expects to benefit in coming years from better margins in the home entertainment market due to digital sales and rentals.
Bewkes said the studio makes $13 to $14 on each electronic sell-through transaction versus $10 on a DVD sale. He said electronic rental, or video-on-demand, is “at least three times as profitable as a physical rental.” Bewkes said TW earns $2 to $3 for a VOD transaction versus 75¢ to 80¢ for a DVD rental.
CBS president and CEO Leslie Moonves said TV DVD sales remain strong.
“The bulk of money is from new TV releases,” Moonves said, then added, “believe it or not, there’s still a lot of money in Charmed. It delivers tens of millions of dollars every year to this day in DVD sales. There are certain shows that just continue to do that.”
