Divining DVD

A little over three years ago, around the time everybody was wondering if Y2K would bring the end of the world as we know it (or at least screw up the VCR), home video distributors started to sell docs on a new platform called DVD.
February 1, 2003

A little over three years ago, around the time everybody was wondering if Y2K would bring the end of the world as we know it (or at least screw up the VCR), home video distributors started to sell docs on a new platform called DVD. The advantages afforded by the thin, shiny discs were many – they could play in computers, they supported 5.1 surround sound, and they could hold up to 17.5 gigabytes of information, which meant that outtakes, commentary and interactive elements could be added to the feature presentation. Still, DVD players were in few homes, and the extra costs involved in producing a DVD versus a video cassette forced many distributors, especially smaller outfits, to take a wait-and-see approach to the new technology.

Today, most distributors – both large and small – have embraced DVD. The platform occupies prime retail real-estate, and filmmakers consciously capture extra material for the eventual release of a DVD.

Behind-the-scenes docs are popular on theatrical titles, but the non-fiction film genre has also found independent success in the DVD market. Classic titles are experiencing a revival and new releases are being buoyed by the popularity of the platform itself – a trend producers are cashing in on. Not that DVD doesn’t bring its own set of problems – the platform tends to be hit-driven and a disc is still expensive to produce, which means smaller titles struggle for sales. Overall, however, distributors view DVD as a positive force in the documentary home video market, with many already bidding adieu to VHS.

Like hot cakes

Last year appears to have marked a turning point for DVD, with distributors reporting a reversal in their video cassette-versus-DVD revenue intake. ‘In 2001, our revenue was 60% home video and 40% DVD,’ says Kenton Selvey, vp of strategic partnerships for Discovery Consumer Products. ‘We’ve seen that shift [in 2002], so that 60% is DVD and 40% is home video. In 2003, I expect 80% of our business to be either DVD or VCD driven.’ (VCD, says Selvey, is a cheaper step-cousin to DVD that is popular in Eastern Europe and Asia, though not Japan.)

Selvey’s figures reflect DVD activity for territories outside North America, but a quick survey of U.S.-based home video distribs reveals similar statistics. ‘About 80% of our revenue is now from DVD and it’s going to keep going,’ says Steve Savage, president and cofounder of New Video, a home video company in New York that has distributed docs under its Docurama label since 1999.

Sales statistics for DVD players lend insight into the rising popularity of the platform. According to figures released in January by the U.S.-based Consumer Electronics Association (CEA), stand- alone DVD players are now in 35% of American homes, with unit sales in 2002 totaling just over 17 million – an increase of 39% from 2001. The figures are similar for the U.K., where hardware sales increased by 87% in 2002 and 30% of British households now have DVD players, reports the U.K. DVD Committee, an industry organization hosted by the British Video Association.

Stuart Snaith, director of video, sponsorship and events for BBC Worldwide, adds, ‘We do extremely well in Japan and Australia. Those are the key growth areas. Also, when you scratch a bit under the surface, you’ll see that Europe is having a DVD explosion. Growth rates for hardware in Germany [for example] are very fast.’

All of this has happened in five years, says CEA’s Tara Dunion, making DVD players the fastest- growing technology of all time. To compare apples to apples, DVD players have entered homes twice as fast as VCRs. And, for anyone already wondering how long DVD will survive encroaching technologies such as video-on-demand (VOD), the experts have an answer: ‘In five years, we are still looking at DVD as the primary delivery medium for prerecorded media,’ says Sean Wargo, CEA’s senior industry analyst. ‘Wireless delivery through vod or other broadband- enabled service is at least 10 years away for mainstream America.’

So, DVD is here to stay. But, in the short term, so too is VHS. As a result, retail shelf space for DVD docs is as hard to come by as a table at New York’s Balthazar. Says Savage, ‘We’re fighting for shelf space with Spider-Man, which has sold 12 million units. Blockbuster is very discriminating about when and how many documentaries they take in, as are other video stores.’

Selvey agrees and adds that while Discovery used to attract buyers to its factual fare by offering a lower price point – US$16 per DVD versus $22 for a theatrical title – not so anymore. Now, consumers can find Hollywood titles for as little as $10. ‘This is especially true in southern Europe, northern Asia and Latin America,’ explains Selvey. ‘Theatrical DVD prices are being driven very low by movie studios trying to gain market share with first-adapters and keep the momentum of DVD player growth. The challenges that presents right now is that we have lesser efficiencies of scale and obviously less shelf space, and we have price-point issues that we need to contend with.’

But, this is likely a short hiccup in the transition away from VHS, as distributors are already beginning to release solely on DVD. ‘If something is geared for a young audience, we won’t put it on VHS,’ explains Savage. ‘But, schools and libraries that have been buying VHS for many years have not yet switched over to DVD in a big way.’

They will, however. Snaith says academic institutions and museums are showing increasing interest in abridged versions of BBC series. ‘We’ve been cutting five-minute edits [on DVD] and exploring immersive environments – for example, creating Blue Planet pods that people can sit in,’ he explains. ‘DVD is a cinematic experience. You’re translating that to a worthy documentary and maximizing the visual and sound quality opportunity.’

Dollars for docs

The cost of producing a DVD varies, depending on how complex it is. Savage says it rings in anywhere from $2,500 to $25,000 per title, and Snaith says costs average £35,000 ($57,000) per DVD, but climb as high as £100,000 ($163,000). Selvey notes that money for DVD production comes from Discovery’s program budget, though the company tries to defray costs by partnering with local distribs.

In any case, a title must generate enough revenue to cover these costs and still produce a profit. In the short history of docs on DVD, titles that sell well tend to be high-profile projects. ‘You have to accept that the nature of our business is big-hit driven,’ says Snaith. ‘When you look at our recent factual output, you see properties like Walking with Dinosaurs and Walking with Beasts. This year we have Walking with Cavemen and next year Walking with Spacemen. These are huge properties that far outsell even an average-to-good drama.’

Evergreen genres, such as ancient civilizations, natural history and weather, also do well, according to Jo Edwards, director of global business development, international licensing, Discovery Consumer Products. Discovery’s top three selling titles in 2002 were The Real Eve, When Dinosaurs Roamed and Engineering the Impossible.

Savage, whose Docurama label represents The History Channel and A&E catalog, IFC-branded theatrical docs and high-profile titles such as D.A. Pennebaker’s Bob Dylan: Don’t Look Back, says most docs sell between 10,000 and 20,000 units. ‘That’s a good space to be in,’ he claims.

His reasoning is based on simple math. ‘Filmmakers make between a 10% and 20% royalty,’ he explains. If a DVD is priced at $20 retail, says Savage, the wholesale price is $10, which means the filmmaker is taking in $1 to $2 per unit sold. At 10,000 units sold, that’s $100,000 of wholesale revenue and a maximum of $20,000 royalties for the film- maker. ‘We just broke the $1 million mark of wholesale revenue with one of our titles, but it’s a rare day,’ he says.

Last year, Docurama released 18 titles. This year, it will issue 24. Ideally, Savage wants the DVD of those films in stores at the same time they’re playing on TV or in theaters or capturing the interest of the press. ‘People need to know what’s inside the box,’ he says. ‘We’re doing Southern Comfort [Kate Davis] and we’re also doing Murder on a Sunday Morning [Jean-Xavier de Lestrade]. One played at many festivals and built a reputation, and one is an Academy Award winner. Both are going to do well.’

TV is also a good platform for launching a DVD. ‘As a public broadcaster, there’s some opportunity to announce that things are available on DVD,’ says Snaith, who reveals that The Blue Planet is the Beeb’s best- selling DVD. It retails for £34.99 ($57.26) and has sold 76,000 units in the U.K. In 2002, it sold 125,000 units in the U.S.

The BBC is also putting more emphasis on direct sales, as is Discovery, which is tapping into alternate sales channels to promote its titles. ‘One is the door-to-door market, an established sales channel in Spain, southern Europe and Latin America,’ says Selvey. ‘Salespeople give away the DVD player, then people sign up to buy 20 or 30 Discovery DVDs, which they pay for in installments.’

It could happen to you

For those still unconvinced that the home video market will support documentaries on DVD, consider the recent trajectory of independent dramas. ‘What indie films were to the ’90s, that’s what docs are to the low zeros,’ says Savage. ‘At Sundance and other festivals, we saw that the action and the good filmmaking was happening with the documentaries, and the audiences were selling out screenings. We thought we spotted a trend and we got in there early. If there is an emerging audience, it’s going to go from when documentaries used to be ‘the D-word’ in the home video biz to where docs are a recognized genre.’

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