In Hollywood, direct-to-video movies, and the folks who make them, have always been second-class citizens. But it’s clear from recent media earnings reports that recent changes in the DVD market are now driving the type of movies the upper crust is making as well. Call it, direct-from-video. In Viacom’s Q4 earnings call earlier today, for instance, CEO Philippe Dauman said slumping DVD sales are weighing heavily on green-light decisions at Paramount Pictures.
The big issue in terms of profitability [in the filmed-entertainment business] was the decline in home entertainment sales, which hit the entire industry,” he said. “As we look at the green-lighting process we will take into account the shift in the landscape. We have to take into account the possibility that the decline in home entertainment revenues will continue at least for a while and when we green-light films we will take that into account.”
What that means in practical terms, Dauman made clear, is more “franchise,” or “tent pole,” movies, like Iron Man, Star Trek and Transformers, which increasingly are the only things that sell on DVD, and less of everything else.