« Selling Comcast. Buying News Corporation. | Main | Why I Bought News Corporation »

December 28, 2007

DVD Sales Moderately Weak But No Disaster

I still got my eye on holiday DVD sales. Data is now available at the-numbers.com through December 16th. This includes the launch of the latest Harry Potter film and the second week of sales for Pirates of the Caribbean: At World's End. Please note that this data is for the US only. This could be especially important for popular international titles like Harry Potter, Pirates, or especially Ratatouille which performed exceptionally well in the overseas box office.

My impression of these sales figures is that they are moderately light pretty much across the board relative to analyst estimates. Holiday DVD sales are very important to December quarter earnings for the major entertainment conglomerates which own movie studios including Disney, General Electric, Viacom, News Corporation, Time Warner, and Sony.

It is hard to call winners and losers among this group but I do have some observations....

....First, Disney, the company most reliant on DVD sales, seems OK based on depth of titles. Pirates, Ratatouille, High School Musical 1 and 2, Meet The Robinsons, The Santa Calsue 3, and the Lost TV series are all presently in release and appear to be selling at least OK. Pirates had the biggest week one sales figure of the year and looks like it will be the top selling of the year. Some analysts have expressed concern about sales for Shrek The Third which might translate to Ratatouille since they have sold about the same number of units. However, Ratatouille did an unusually high 66% of its box office abroad vs. a more normal 60% for Shrek.

Second, the NBC Universal division of GE looks like it has a big hit, likely better than expected, in The Bourne Ultimatum, which sold over 5 million units in its first week. It is too bad that any upside gets lost at GE but NBCU has had a good year at the box office and in the event that a merger or acquisition is completed in 2008 it will be good to remember that the content pipeline has been recently strengthened.

Finally, executives at Viacom must be smiling with Transformers occupying the top spot on the sales chart so far in 2007 with a finish no worse than second in the cards. The DVD was releases was in October so look for most or all of that $126 million in very high margin revenue will be flowing through Viacom's Paramount studio this quarter.

Posted by Steve Birenberg at December 28, 2007 08:07 AM in Media