Do big ticket
sales at the American box-office drive subsequent video
and foreign sales?
The relationship between the American box office
and other markets has changed very significantly in
the last five years.
Traditionally, a strong correlation existed between
the U.S. box office and video and foreign markets: the
bigger the box office, the bigger the video and foreign
earnings. Indeed, studios once justified massive TV
ad campaigns, even those that cost more than they could
recover through ticket sales, on the logic that a better
box office would jack up sales in secondary markets.
Today, however, radical changes in both the video and
foreign markets have upended that logic.
Prior to the DVD revolution, video chains and wholesalers
based their advanced orders for rental copies on box-office
results. If a film had a huge box-office opening, video
chains would order 200,000 or more copies (at $60 to
$70 apiece). But this buying formula ended when consumers
began buying DVDs at mass retailers. By 2004, a single
chain, Wal-Mart, was accounting for over one-third of
the studios' video/DVD revenues. And merchandisers like
Wal-Mart regard DVD sales simply as a means to an end:
a way to lure consumers who may buy other products,
such as television sets. To get these potential customers,
stores cannot simply rely on box-office numbers, which
are heavily weighted towards teens. Instead, they now
take into account the subject matter of movies and the
appeal of particular stars. The result: a box-office
hit does not necessarily translate into a video hit.
Conversely, a film that does relatively poorly at the
box-office-- such as Eternal Sunshine of the
Spotless Mind, for example-- can sell over one
millions of DVDs in its video release.
has also changed in foreign markets. As late as 2003,
studios generally used a so-called staggered roll-out
for major films: After opening in the U.S., films went
on to open in one foreign market after another. This
practice not only allowed studios to reuse their U.S.
prints (thus saving themselves money), but--because
big box-office numbers enhanced foreign interest-- it
also gave studios leverage to secure better playdates
overseas. Now, however, with the proliferation of video
piracy, zone-free DVD players, and Internet file sharing,
studios find it risky to delay foreign releases. “Waiting
three or four months after domestic [release] to release
our bigger pictures [overseas] is not something we can
do anymore,” Paul Hanneman, vice president of
Fox International, explained to Variety in
2005. “There is too much money at stake.”
Given this new reality, major films now often open abroad
on the same date that they open in the U.S., with the
result that U.S. box-office results come too late to
help enhance foreign openings.
For both the video and foreign markets, then, box-office
success is no longer a vital part of the Big
Picture as far as the studios are concerned.