LA Times story on DVD sales
The Los Angeles Times recently ran a good piece about the studios’ reluctance to disclose exactly how much money they really make on DVDs. They’re happy to tell you that home video is absolutely crucial to profitability, particularly when it comes to the threat of piracy. But ask how much money they made from DVDs on, say, Shrek, and they whistle a tune while rocking back and forth on their heels.
Of course, knowing a precise figure is not idle curiosity. Peter Jackson, for instance, is suing over Lord of the Rings, suspecting he was shortchanged somewhere in the tens of millions of dollars for DVD payments.
You can read the whole story here. (Free registration required.)
See also:
Glossary: Residuals
Big Fish sells 2 million DVDs in first week
April 24th, 2005 at 8:47 pm
John,
Would it make more sense for all back-end deals to be based on public information, so that artists and their representatives don’t have to worry about studio accounting?
For DVD sales, why not pick two of the leading DVD trade papers that report sales figures and establish bonus structures based on ‘wholesale DVD unit sales, as reported in DVD News Daily’, just like how box-office bonus deals are based on figures ‘as reported in Daily Variety and The Hollywood Reporter’?
Love the site.
Ben Los Angeles
April 24th, 2005 at 9:05 pm
I’m not WGA yet, but I’m SAG. We just passed a contract with the studios that postponed DVD residual negotiations in exchange for a time-release scale increase and larger health plan contributions. A strike would have been imminent if we pursued the DVD. The studios weren’t going to budge. They used the fact that the WGA and DGA did not overly pursue it issue as their argument as to why we shouldn’t, and were ramping up pre-strike production to give them something to run if we walked out of negotiations. We took what we could get. We still did well, considering.
One thing I didn’t see mentioned in the article was that, as I understand it, current video residuals are determined by a formula agreed upon when VHS was king—a format that cost more to produce because the raw media itself was more expensive. Now that DVD is the standard, dupes are cheaper to produce, which means profit margins are greater; and the studios are pocketing the difference.
Regarding, “Some studios say accurate industrywide DVD sales numbers cannot be generated because Wal-Mart, which typically accounts for more than a third of all DVDs sold, does not make public its sales data.”
What? Wal-Mart is doing something that turns out to be anti-union? Who’da thunk. Seems awfully convenient for the studios. I wouldn’t be surprised to find a backroom deal there. It’s an easy enough solve though. Instead of the studios paying residuals on how many DVDs Wal-Mart sells, they should pay us based on how many they sell to Wal-Mart. Surely they can quantify the DVDs leaving their warehouses.
As far as Wal-Mart goes? Screw ‘em. I quit shopping there when they wouldn’t sell me apples in the cigarette line, and wouldn’t let me buy cigarettes in the apple line. Two lines for one trip? My hairy ass.
BTW, John; now you know I’m SAG and have the initials and last name from my email address, you can look me up on IMDB if you ever want to know what a surly miss-speller looks like. Pretty small potatoes, but you may have seen a thing or two.
April 24th, 2005 at 9:14 pm
Oh, and, um, if i would have read all of your linked articles in the first go round, I could have struck pragraph 2.
Hair-trigger keyboard.
April 25th, 2005 at 12:28 am
I don’t remember it being mentioned here so here’s a previous article in the NYT.
While the LAT only objectively transcripts the studio generated gospel (”any DVD concessions would bring financial ruin”) in what I call ground zero of journalism (well-informed sources reported that he said so but she said no). On the other hand:
Actually I’ve read no article, even with a slight investigative approach, asking: - so if DVD is that important how overhauled has been the industry’s business model since 2000? - what’s next with the DVD sales bound to go downhill before the end of the decade? Well, who cares? That’s all about easy money and its big mysterious digits. I care because all this is changing the way we make pictures and, most of all, the way we will watch them.
April 25th, 2005 at 8:25 am
Whenever I see “(free registration required)” I read it as “(you’ll need to go past http://wwww.bugmenot.com)”, but I fear that others aren’t familiar with Bug Me Not, and actually faff around registering.
I reckon a good blogging rule of conduct is to always try and include a login for sites like the L.A. Times when linking them.
April 25th, 2005 at 9:47 am
On a related note, I keep wondering when (or if) DVD sales are going to shift the type of movies studios make. While we know that teens are the prinary moviegoer, adult males are the primary DVD buyer. Considering the huge DVD sales and profits, is it reasonable to think that the studios might consider making more films for grown ups, knowing that what they won’t make at the box office, they will more than make up come DVD sales time. And if the studios don’t want to make changes, the question is why?
Just wondering.
April 25th, 2005 at 4:16 pm
Alan, Thanks for the tip. I’ll use http://bugmenot.com from now on!
April 26th, 2005 at 11:51 am
As a member of the Board of the WGA and the Negotiating Committee, I just want to point out that the WGA and DGA did strongly pursue DVD residuals. There are many in the WGA who think we didn’t pursue it strongly enough…meaning…we didn’t strike over it.
If there’s a level of pursuit that’s short of a strike but still qualifies as “strong,” well, that’s what we did, IMO. We allowed SAG to have two observers in our negotiations room at all times, so I hope they brought back a sense of the debate to their negotiating committee.
What we’re dealing with, unfortunately, is a formula that is now nearly a quarter of a century old. In negotiations-speak, that’s like trying to change the Ten Commandments or something. The Companies have made it their “strike issue” as it were, and in fact, they’ve threatened to come back to us with an even worse formula.
Nonetheless, it will be an issue again in 2007. There’s another front in the battle, though, and that’s residuals for internet video sales. The battle should be fun. And by “fun”, I mean “excruciating”.
April 26th, 2005 at 7:43 pm
Craig: Good points all.
I hope what I wrote didn’t come off as dismissive. It certainly wasn’t my intention. I should have more clearly stated that the studios made it plain — if SAG pushed harder. e would be on strike. They drew a line in the sand and said, “The WGA and DGA didn’t cross this; do you really want to be first?” They used it as a precident. But, when all was said and done, it had little bearing on the choice I personally made. And I voted to keep working too.
Thanks for making clear what I did not. And thank you and your fellow Guild members for mapping the minefield for us. Keep working.
Doug