Report: Studio Cash Flow From Film Plummets 40%

Report: Studio Cash Flow From Film Plummets 40%

Deadline doesn’t usually miss with their headlines, but in the case of this particular story, this headline…

Netflix Could Undermine UltraViolet As Low Cost Rentals Trash Studio Profits

…seems a little out of place with this blockbuster report:

Moguls will need a stiff drink nearby when they read Morgan Stanley analyst Benjamin Swinburne’s bracing report today about the state of the home video business — and Hollywood studios. He says that film operations at Universal, Disney, Paramount, Fox, and Warner Bros are worth about $19.3B, down from $40.2B in 2007. And a big reason for the 52% drop is that studios’ annual home video profits from each TV household fell to $100 last year from $127 in 2007 — and will continue to slide to $93 in 2015. Sales and high-priced rentals of DVDs and Blu-ray discs from retailers such as Blockbuster are simply falling too fast as consumers discover that they can do just fine paying $1.20 a night to rent a disc at a kiosk — or less to watch a movie from Netflix. …

The net result: The studios’ overall cash flow from movies fell about 40% from 2007 to 2011.

Just once I wish someone other than me would admit that the quality of the product (lousy movies) is responsible for at least some of this damage.

People sure as hell aren’t going to pay $4 to rent or $15 to buy a lousy film, and too many films just aren’t very good. 

In order to rent at a premium price or purchase, you have to be excited about reliving the experience, and who wants to relive the junk being pumped into theatres these days?