Hollywood continues to struggle during a down economy, but Lionsgate CEO Jon Feltheimer is turning the company around while still showing faith in home entertainment.
Part of Feltheimer's optimism could be fueled by the movie studio's recent 3Q financial results, as its profits reportedly increased by 15 percent. Lionsgate also reportedly is interested in purchasing the Walt Disney Miramax film business, which has several different suitors.
Hollywood has slow to adapt to the digital age, but is now realizing that it has no other choice but to move forward. If consumers want to stream content, rent DVD's and Blu-ray movies from rental kiosks, then that is what the movie studios must do.
For example, Lionsgate recently discussed its five-year deal with Redbox, and released specific video rental figures. Its first Redbox offerings were Gamer and Crank 2, with both movies racking up 145% more than box office sales, without limiting media sales. Gamer, which earned $20.5 million in the box office, is expected to have $4.1 million in VOD rentals.
Just a couple years ago, Lionsgate saw only 4% turn over, which increased up to 8% to 10% in 2009. The 20% expected turnover for Gamer is a significant boost as consumers continue to embrace digital media at a higher rate. Movie viewers also are more likely to head to the movie theater instead of purchasing movies in stores, which Lionsgate and other studios must deal with.
As consumers switch to Blu-ray and streaming media, Hollywood still must learn to adapt, as there has been quite a bit of friction between Redbox and several movie studios. Several studios have forced rental kiosks to wait 28 days to stock new releases, and that has affected 40% of rental kiosks inventory.
