Hollywood movie studio Lionsgate recently disclosed that its DVD and Blu-ray sales have been strong, as movie sales helped the company reduce the 2009 financial net loss compared to 2008 year-over-year sales.
The company also had reliable sales with its restructured VOD business, which offers a better sales margin than DVD and Blu-ray. Not surprisingly, Lionsgate has been hesitant about working in the day-and-date DVD and VOD market, but has realized it's possible to offer content on-demand without hurting sales.
"We think the idea of variable premium pricing, depending on the holdback, is a pretty smart way to create new windows," said Steve Beeks, Lionsgate President and co-COO. "It's an interesting opportunity. As to whether we will automatically join, it is hard to say. But it is definitely something we could consider."
In 2008, the movie studio faced a net loss of $178.5 million, which has been reduced to $19.5 million in the 2009 fiscal year.
Lionsgate saw the best demand for TV series 'Weeds' and 'Mad Men', which led DVD/Blu-ray sales during eight of the last 10 weeks. Moving forward, the movie studio believes pricing will help determine the day-and-date DVD and VOD market.
As DVD sales decline in the U.S. market, Blu-ray still hasn't increased its market share as quickly as some analysts expected -- and VOD is a leading factor behind this slower demand. The ability to offer VOD rentals on same-day movie release dates is an important offering for customers -- even though movie studios are hesitant to run the risk of hurting DVD and Blu-ray sales.
Analysts still believe DVD sales will drop further, but Lionsgate will remain optmistic that its home entertainment business will continue to grow.
