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Discussion Starter · #1 ·

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Miramax, MGM, Overture face declining DVD values


Beancounters in Hollywood are busy trying to figure out just what digits should follow the dollar signs for the thousands of movies in MGM's vault, the hundreds at Miramax, and a handful owned by Overture Films, now that Liberty Media's John Malone is looking to unleash himself from the struggling venture.


With the formula for homevideo returns no longer relevant, and Hollywood waiting for the next big markets for a movie's afterlife, money men are challenged to determine just how valuable libraries of aging titles really are.


One thing is certain: They aren't worth as much as they once were.


While MGM is hoping for more than $2 billion for more than 4,000 movies, including the James Bond franchise and half of the rights of two upcoming "Hobbit" films, and 10,000 TV episodes, the nearly 10 potential bidders, including Time Warner and Lionsgate are looking to pay less than that.


Investment bankers' recommended pricetag for Miramax, made up of 700 movies like "There Will Be Blood," "Shakespeare in Love," "Chicago" and "Pulp Fiction." ranges from $300 million to $700 million. Internally, Disney wants as much as $1.5 billion. Either way, each is far more than the $80 million Disney paid the Weinstein brothers to purchase the indie label in 1993.
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DVD sales continue to decline at a rapid rate, as consumers switch over to rental. Other distribution platforms, especially digital video-on-demand, are emerging as lucrative placements, but none are making up for the loss yet.


For example, Lionsgate said it will collect close to 20% of the $39 million that its actioner "Gamer" earned at the worldwide box office from video-on-demand. And that figure is said to be $3 million more than what it would have generated from VOD three years ago.
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Either way, Lionsgate is especially upbeat on the economic prospects new distribution platforms will provide -- signaling the potential upside for other smart library owners.


"We continue to believe that when you look at packaged media on demand and digital as a whole, home entertainment remains a vibrant business," Feltheimer said. "You just can't keep operating the same way if you want to maximize the performance of your content. Streaming and downloading our movies and television through to iPods, iPads, iPhones, Xbox, PS3 and a numerable other devices will be generating new business and new customers for our content."
http://www.variety.com/article/VR111...ryid=1019&cs=1
 

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What a f***ing joke. The greedy bastards at MGM have monetized the James Bond franchise about a dozen times over by now. There were multiple rounds of movie releases, premium TV, network TV, "action type" TV (like TNT), VHS, several variations of DVD (singles and multi-packs), Blu-Ray, foreign revenue, video games, ...


Where does it end? Just how much money do they need? How many ho's and how much blow is too much?
 

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DVD sales continue to decline at a rapid rate, as consumers switch over to rental. Other distribution platforms, especially digital video-on-demand, are emerging as lucrative placements, but none are making up for the loss yet.

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For example, Lionsgate said it will collect close to 20% of the $39 million that its actioner "Gamer" earned at the worldwide box office from video-on-demand. And that figure is said to be $3 million more than what it would have generated from VOD three years ago.

Not exactly correct. One example:


DVD Stages Comeback as Disney Studio Posts Q1 Income Surge
http://www.homemediamagazine.com/dis...me-surge-18393

Hardly a rapid pace.
 

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Originally Posted by Phantom Gremlin /forum/post/18129845


What a f***ing joke. The greedy bastards at MGM have monetized the James Bond franchise about a dozen times over by now. There were multiple rounds of movie releases, premium TV, network TV, "action type" TV (like TNT), VHS, several variations of DVD (singles and multi-packs), Blu-Ray, foreign revenue, video games, ...

Where does it end? Just how much money do they need? How many ho's and how much blow is too much?

MGM is a business, not a charity.
 

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Discussion Starter · #5 ·

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Originally Posted by Chuckwl /forum/post/18135465


Not exactly correct. One example:


DVD Stages Comeback as Disney Studio Posts Q1 Income Surge
http://www.homemediamagazine.com/dis...me-surge-18393

Hardly a rapid pace.

That is one studio over one quarter. The industry as a whole is seeing declines in physical media sales. Indeed, even Bob Iger is wise enough to realize that one quarter driven by specific releases does not offset the wider trend.

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In a call with investors, CEO Bob Iger said he preferred not to compare quarterly results for DVD sales due to the varying nature of the release slate. He said ongoing recession concerns, increased competition from alternative entertainment sources and the actual time spent on entertainment continued to challenge home entertainment.
 

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Originally Posted by PSound /forum/post/18135983


That is one studio over one quarter. The industry as a whole is seeing declines in physical media sales. Indeed, even Bob Iger is wise enough to realize that one quarter driven by specific releases does not offset the wider trend.

I believe when physical and digital sales were added up together sales were down as a whole.
 

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Discussion Starter · #9 ·

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Originally Posted by Chuckwl /forum/post/18139248


I believe when physical and digital sales were added up together sales were down as a whole.

Absolutely.


Indeed, the DEG added Digital Distribution to their totals last year as a way to try and minimize the overall top line impact from DVDs rapid decline. Even with that boost, the overall Home Video number was still down.


I have often said that a combination of Blu-ray and Digital Distribution growth are going to be required to make up for the dive in DVD revenue.
 

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Originally Posted by PSound /forum/post/18139702


Absolutely.


Indeed, the DEG added Digital Distribution to their totals last year as a way to try and minimize the overall top line impact from DVDs rapid decline. Even with that boost, the overall Home Video number was still down.


I have often said that a combination of Blu-ray and Digital Distribution growth are going to be required to make up for the dive in DVD revenue.

Spot on PS!
 

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Discussion Starter · #11 ·

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Originally Posted by Chuckwl /forum/post/18141743


Spot on PS!

I think the last projections I saw was that 2013 would be the year when combined Blu-ray and Digital Distribution growth would grow the Home Video market again. Every model I have seen shows physical media in a slow, steady decline in the mid-term due to DVD erosion.
 

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Originally Posted by Chuckwl /forum/post/18135498


MGM is a business, not a charity.

I agree. I don't begrudge them a profit (except for the fact that copyright is no longer "for a limited time"). But I won't shed any tears (real or crocodile) for their current predicament.


So what's the "actionable" takeaway here? How can an investor make money on what I agree is the "inevitable" decline of DVDs and perhaps of all physical media? My gut says boxes like Roku won't be a good long term play, streaming will eventually be ubiquitous and not require a separate box.
 

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Discussion Starter · #13 ·

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Originally Posted by Phantom Gremlin /forum/post/18162575


I agree. I don't begrudge them a profit (except for the fact that copyright is no longer "for a limited time"). But I won't shed any tears (real or crocodile) for their current predicament.


So what's the "actionable" takeaway here? How can an investor make money on what I agree is the "inevitable" decline of DVDs and perhaps of all physical media? My gut says boxes like Roku won't be a good long term play, streaming will eventually be ubiquitous and not require a separate box.

It is all about who offers the best service for the consumer while driving revenue. That is why investors are high on Netflix.


Vudu may be able to take off now that they are getting out of the hardware side and turning themselves into a service. A lot has to do with the consumers true interest in HD. Right now they have the largest HD library available from any format. Let's see if they can leverage that into revenue growth as their service ships on more devices.
 
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