Three years ago, everyone’s focus was on packaged media. Predictions were high as purchases for standard DVD and Blu-ray tipped the charts, skyrocketing to a 35% sales increase. But technology moves at warp drive speed and there is entire new group of options that have brought the packaged media margins to a slower pace. However, hope is not abated. Enter Disney’s CEO, Bob Iger, and president Alan Bergman, and you will hear a bit of a different story.
Today’s home entertainment media choices have brought about a complete swing for the general public. Streaming sources, video-on-demand (VOD) and companies like Netflix bring the enjoyment to the masses, whenever and wherever they want it. The proof of preference is the fact that packaged media, including DVD and Blu-ray have experienced an 8% decrease in sales in the last year.
However, as one would expect from Disney, there is an optimistic twist to the topic of packaged media. Their decision to create the animated movie, Frozen, was a touch of brilliance. With a story line that empowers young women, instead of being presented as damsels in distress or totally reliant on the lead male character, brought a sales leap at the box office to over $1 billion. Reaching out to every little girl in the country with a can-do attitude allowed Frozen to become the top grossing animated movie that was ever produced and became the biggest Blu-ray title sold, ever.
At an investor meeting for a DVD/Blu-ray, president of The Walt Disney Studios, Alan Bergman, stated that there is an anticipated $8 billion sales mark for 2014 Blu-ray, DVD movies and television shows. Continuing the story of vitality in the market, Bergman made an additional presentation in Los Angeles at the Bank of America Merrill Lynch 2014 Media, Communications and Entertainment Conference, indicating the Disney commitment to a broad based offering across all imaginable product categories, which will include continuing to supply the consumer for their demand for packaged media. Bergman has admitted that there have been challenges over the last couple of years, but he added that disc sales has remained as a ‘significant business’ and people should not lose that insight.
So what does this say about the future of packaged media? The translation can be that it is ‘quality’ and not ‘quantity’ that may allow packaged media formats to continue as part of the in-demand product selections. This is demonstrated with the intention of Disney’s perception that they ‘got it right’ with Frozen and that they will continue to implement this philosophy. Development of a retail marketing campaign in a cross-channel method, across a plethora of branded titles is anticipated to bring $400 million at the box office. This, of course, will include the 2015 release of Star Wars: Episode VII.
It appears that some hope remains for packaged media, but it will continue as part of the overall picture for Disney. They are clearly paying attention to the fact that there has been a 37% increase in digital sales. Disney is pursuing digital ownership via their cloud-based Disney Movies Anywhere (soon to launch). Their partnership with iTunes has already brought about 4.5 million app downloads, and Disney is expanding their discussions with other partnership opportunities. It should be noted that part of the Disney packaged media strategy will encompass the envious position of early release window (three to four weeks prior to retail) for some of their premier titles.
On the topic of VOD, Bergman stated “We want people to see [our] movies in the theatre and other sell-through markets. That doesn’t mean premium VOD – the dormant industry initiative aimed at generating incremental revenue by offering select movies early in the home at a higher price”…”As it relates to premium VOD for [Disney], I don’t really see any substantial changes [i.e. embracing the concept] in the next few years.” Bergman continued to say “We have titles that people want to buy on physical. [It] is still a very strong business.”
Since every company looks at the bottom line, profit margin and ROI, it appears that the plans to move forward beyond packaged media is a Disney main goal, but packaged media can continue to bring in the dollars, when they get the ‘formula’ right. Could this be the crystal ball for packaged media as a profit area for ‘Premium only’ releases in the future?