Blu-ray Expected to be a Major Factor in Revenue Growth for Studios

[Blu Titan]

A very nice read from Home Video Magazine:

Report: Studios’ digital revenue will grow 15% a year
By Susanne Ault -- Video Business, 5/20/2008
MAY 20 | Major studios’ worldwide revenue should rise about 20% over the next few years, due in some part to growing contributions from Blu-ray, according to a new Adams Media Research and Screen Digest study.

Between 2007 and the end of 2011, studios’ worldwide feature film revenue will jump from $34.9 billion to $46.1 billion. Digital content sales and rentals will expand during that time, averaging a 14.6% annual growth rate. However, physical media such as standard DVD and Blu-ray will remain significant, as they will represent over half of studios’ total film revenue, according to the report.

Although Blu-ray and digital delivery will help fuel studios for the next several years, rising film production costs should still be a concern to studios’ bottom lines. Adams Media/Screen Digest report that the average film budget, encompassing private equity investments, grew from $46.9 million to $63.2 million between 2004 and 2007. Overall during that frame, expenses for Motion Picture Assn. of America members rose from $9.7 billion to $13.2 billion. At the same time, worldwide revenue from these films actually shrank from $36.6 billion in 2004 to $34.9 billion in 2007.

Between 2007 and 2011, worldwide studio revenue will enjoy a modest 6% annual growth rate between 2007 and 2011.

“When DVD hit the scene, it changed the way studios made their money,” said Adams Media president Tom Adams. “Blu-ray won’t have the same impact, but this time around, studios and those invested in them have a greatly expanded universe from which to draw revenue. Although we expect continued revenue expansion, the market won’t be returning to DVD-era growth anytime soon, so it’s crucial that studios pare down expanding costs and wisely manage upcoming film slates to maximize their profitability.”

For more information on the study, dubbed “Film Entertainment Worldwide: The Private Equity Era, visit the Adams Media Web site, www.adamsmediaresearch.com.