NYC Film .net / New York Film Blog

Wall Street Woos Film Producers, Skirting Studios

Since the birth of Hollywood, movie studio chiefs have been makers and breakers of careers, arbiters of taste and gatekeepers who decide which movies are made.

But as Hollywood power shifts more to Wall Street investors, financiers are starting to bypass studio bosses by dealing directly with successful producers.

Now, instead of deals being cut over lunch at Spago or the Grill, movies are increasingly being greenlighted in conference calls to New York.

The reason is a simple desire for more control. Wall Street financiers want a greater say over what movies they finance and who makes them; producers want more artistic independence and a larger share of the profits.

The studios themselves are nudging the trend along, too, since they are making fewer movies.
Via: New York Times

Google Video Strikes Music Video Distribution Deals

Google's purchase of YouTube isn't the only thing making the news for the Internet giant this week, as they also have entered into an agreement with two major music labels to release music videos through the Google Video service. In fact, the blog Toby's Space mentions the irony of these deals being struck for Google Video just as YouTube was purchased by Google, pointing out that Google Video is "a destination that has been utterly dwarfed by now-sister site YouTube."

 

The plan is to provide dual platforms for audience members, one offering the content on-demand in a pay-per-view format, with each video costing $1.99, set by the iTunes price (which seems like a rip-off when compared to getting an hour television show for the same price), while the other is available for free but accompanied by advertisements that the viewer must watch to view the video.

 

The partnership is with Sony BMG and Warner Music Group, with the videos debuting later this month. Both Google and the record labels will share in the profits, and the long-term plan is to make this content available through other Web sites as well, sites that features Google AdSense advertisements. The Sony videos had been available for download since January through the Google Video Store.

 

In addition, according to their recent statement, the company wants to create copyright-safe places for user-generated content, such as a space that would allow them to create videos using footage from the Google music video repository that can be repurposed and then posted to Google Video. In other words, the company is looking to create ways to do what YouTube does without facing the barrage of lawsuits that have been threatened in the past few months.
Via: http://www.convergenceculture.org/weblog/2006/10/google_video_strikes_music_vid.html

Not Many Hoorays in Hollywood: DVD Sales Slump, Digital Distribution Looks Like a Bust

Eric Savitz (Barron's) submits: Here’s a good reason for the movie studios to worry: 2007 could be the first year in which consumer spending on DVDs actually declines. Richard Greenfield, an analyst with Pali Research, addressed that issue and a few others in a research note on Friday.

The basic issue on DVD sales, Greenfield reports, is that there has been a decline in catalog sales, as the “halo effect” from an expanding DVD consumer base is over. In short, almost everyone now has a DVD player, and they’ve replaced their VHS catalog titles - so now the market will be driven largely by the ability of the studios to produce hits.

Greenfield notes that household penetration of DVD players is now over 80%. He says “wholesale pricing is going to come down on DVDs,” the only questions being “how fast and how much.” Meanwhile, he notes that digital film distribution will enable “the ultimate price competition,” pressuring “bricks-and-mortar” DVD retailers. He also notes that digital movie distribution will have to compete against free, pirated versions, as has beeen the case in the music industry.

As for the next generation DVD players - the Blu-Ray and HD-DVD formats - Greenfield says they will not have a material impact on studio revenues and profits in 2007. “It remains highly unclear which format will win (as both sides continue to make serious errors), not to mention that consumers without 50-inch or large HDTV [sets] are unlikely to appreciate the improvement in picture quality.”

Greenfield says studios with a higher percentage of back catalog DVD sales are more vulnerable to the shifting landscape - he says Warner Brothers (TWX) is “particularly exposed.” He says he would also worry about smaller pure-play movie studios, including DreamWorks Animation (DWA), Lion’s Gate (LGF) and Marvel (MVL). He thinks Disney (DIS) and Fox (NWS) are better positoned, thanks to recent theatrical successes.

On the issue of how the movie business might benefit from digital distribution, he concludes that, basically, it might not.

While the music and television industries are likely to benefit from an increased array of opportunities in digital distribution, it is not clear to us how the movie industry benefits... We believe the inherent value of what a movie is implies that most consumers will want to view most movies in a high-quality experience…the more we think about the movie industry, we keep thinking, what is the benefit from digital? Cheaper distribution and no physical inventory? That sounds great at first, but if the product has to be sold at a discount (comparable to the lower cost to create/disitribute) because it is inferior to physical DVDs (in picture quality and usage restrictions/DRM), how does it help the studio business?

Here’s the bottom line, according to Greenfield:

Keep an eye on 2007 film industry profits, we suspect the risk to expectations is increasingly to the downside, with downside risk growing into 2008 unless there is a notable acceleration in Next-Gen DVD sales and/or a more attractive business model emerges for digital movie distribution.

Via: http://media.seekingalpha.com/article/18035