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The DVD and Blu-ray of the final Harry Potter film, Harry Potter and the Deathly Hallows (part 2) , is due for release next month, and will probably be the highest selling title of the year. The film was a colossal hit in cinemas, and it's out in numerous different forms (DVD, Blu-ray, 3D, box set) just in time for Christmas. But Warner Bros have also made a fairly surprising announcement about the future of the Potter films. On the 29 December, they will stop shipping all titles. The DVDs and Blu-rays will be withdrawn from sale. It will probably take some time for stock to run out, but it will, and Potter will soon vanish from shop shelves and online retailers. On the surface, this seems like a ridiculous move. Why would a company whose profits have been so dependent on Potter for so long withdraw their most popular product from sale, at the time of its greatest demand?
The answer lies in the changing fortunes of the DVD market. During the 1990s, all of the major Hollywood distributors saw profits from DVD sales rise stratospherically. For some reason, consumers were far more likely to buy DVDs than they had been with video cassettes. What's more, a DVD was much easier to make and distribute than a complicated mechanical cassette, so the profit mark-up was significantly higher. All of this meant that the Hollywood studios experienced an unprecedented period of financial growth during the early 2000s, funded almost entirely by DVD sales.
In Warner Bros case, DVD profits helped to stabilise the company as the consequences of its disastrous merger with AOL played out. The AOL deal wiped many millions from the company's balance sheet, but DVD sales ensured that it still turned a profit. Reliable DVD profits also dramatically enlarged the amount of money a single film could hope to generate, which resulted in increased budgets across Hollywood. Many of the super-expensive blockbusters of the last decade were considered viable because it was thought that they would turn a profit on DVD if they didn't at theatres (and few films today do more than break even at the theatrical box office).
But in recent years, the DVD bonanza seems to have slowed. Profits have been declining for some time, and new formats such as Blu-Ray have not had the same impact. The industry is also struggling to find new business models in the age of digital downloads and the expansion of film piracy via torrenting websites.
So, DVD is not as big a deal it used to be, which is bad news for studios. The old business model no longer seems viable. Previously, film distributors waited until shortly after a film's theatrical release had ended, and then released DVD retailing at around £15. After the most devoted consumers had bought the product at a high mark up, retailers would generally discount the price sharply to encourage casual sales. Consequently, many films could be picked up for as little as £3. Blu-rays retain their value more successfully, but their market still follows this basic framework.
One company, however, treated the market differently. The Disney corporation released its animated films using a more carefully managed strategy, which Warner Bros is now seeking to adopt. Each Disney 'classic' was released for a short window of time, before being withdrawn from sale. At any one time, it is possible to buy several key Disney movies, but they will not be around for long, and some will be entirely unavailable (currently The Little Mermaid and The Lion King are off the books). This strategy, of short release windows followed by a period of stock withdrawal has had two key consequences. Firstly, it has meant that Disney's films maintain their value on DVD by virtue of their scarcity. Secondly, Disney's animated films have retained an aura of quality, prestige and exclusivity. It may not feel like this when your child watches Cinderella for the thousandth time, but it does when you are stood in a major retailer paying £30 for a DVD when everything else costs less than a tenner.
Warner Bros has decided to give Harry Potter the same treatment. They are planning to limit supply of Potter DVDs and Blu-rays in order to maintain their financial and cultural value, and it will be interesting to see whether or not the strategy works. After all, Potter has flooded the DVD market for many years, so lots of products must be floating around. If they are successful, then it won't be just be the officially sanctioned releases that increase in value – Potter DVDs clogging up bookshelves across the country may find themselves being dusted off and put on eBay at significant mark-ups by canny sellers. Alternatively, the strategy could easily fail, simply because most Potter fans have already completed their collection.
So, it's a risky scheme, but Warner Bros decision to try it out tells us how Potter will be maintained as a kind of prestige, heritage brand in the future. After all, Warner Bros has a great deal of Potter related material still to sell – a theme park in Orlando, a studio tour about to open in the UK, as well related ventures such as the Pottermore website and an ongoing series of videogames. The studio needs to keep the brand alive in order to maintain some sort of demand for its merchandise. Limited release windows may help in this regard.
More importantly, Warner Bros decision to ape the Disney method gives us some indication of how the major studios may conceive of the ancillary DVD and Blu-ray market in the longer term. As streaming and downloading take off, its possible that ownership of a physical copy will become less common – something for the aficionado, rather than the regular, undiscriminating movie watcher. If the studios can find a way of controlling access to online content, then we may be moving into a period where we make a one-off payment to watch a film via streaming, but where owning films, which we can access whenever we want, is a privilege that we have to pay significantly more for.
• James Russell is senior lecturer in film studies at De Montfort University.
http://www.guardian.co.uk/film/filmb...vanishing-dvds
The answer lies in the changing fortunes of the DVD market. During the 1990s, all of the major Hollywood distributors saw profits from DVD sales rise stratospherically. For some reason, consumers were far more likely to buy DVDs than they had been with video cassettes. What's more, a DVD was much easier to make and distribute than a complicated mechanical cassette, so the profit mark-up was significantly higher. All of this meant that the Hollywood studios experienced an unprecedented period of financial growth during the early 2000s, funded almost entirely by DVD sales.
In Warner Bros case, DVD profits helped to stabilise the company as the consequences of its disastrous merger with AOL played out. The AOL deal wiped many millions from the company's balance sheet, but DVD sales ensured that it still turned a profit. Reliable DVD profits also dramatically enlarged the amount of money a single film could hope to generate, which resulted in increased budgets across Hollywood. Many of the super-expensive blockbusters of the last decade were considered viable because it was thought that they would turn a profit on DVD if they didn't at theatres (and few films today do more than break even at the theatrical box office).
But in recent years, the DVD bonanza seems to have slowed. Profits have been declining for some time, and new formats such as Blu-Ray have not had the same impact. The industry is also struggling to find new business models in the age of digital downloads and the expansion of film piracy via torrenting websites.
So, DVD is not as big a deal it used to be, which is bad news for studios. The old business model no longer seems viable. Previously, film distributors waited until shortly after a film's theatrical release had ended, and then released DVD retailing at around £15. After the most devoted consumers had bought the product at a high mark up, retailers would generally discount the price sharply to encourage casual sales. Consequently, many films could be picked up for as little as £3. Blu-rays retain their value more successfully, but their market still follows this basic framework.
One company, however, treated the market differently. The Disney corporation released its animated films using a more carefully managed strategy, which Warner Bros is now seeking to adopt. Each Disney 'classic' was released for a short window of time, before being withdrawn from sale. At any one time, it is possible to buy several key Disney movies, but they will not be around for long, and some will be entirely unavailable (currently The Little Mermaid and The Lion King are off the books). This strategy, of short release windows followed by a period of stock withdrawal has had two key consequences. Firstly, it has meant that Disney's films maintain their value on DVD by virtue of their scarcity. Secondly, Disney's animated films have retained an aura of quality, prestige and exclusivity. It may not feel like this when your child watches Cinderella for the thousandth time, but it does when you are stood in a major retailer paying £30 for a DVD when everything else costs less than a tenner.
Warner Bros has decided to give Harry Potter the same treatment. They are planning to limit supply of Potter DVDs and Blu-rays in order to maintain their financial and cultural value, and it will be interesting to see whether or not the strategy works. After all, Potter has flooded the DVD market for many years, so lots of products must be floating around. If they are successful, then it won't be just be the officially sanctioned releases that increase in value – Potter DVDs clogging up bookshelves across the country may find themselves being dusted off and put on eBay at significant mark-ups by canny sellers. Alternatively, the strategy could easily fail, simply because most Potter fans have already completed their collection.
So, it's a risky scheme, but Warner Bros decision to try it out tells us how Potter will be maintained as a kind of prestige, heritage brand in the future. After all, Warner Bros has a great deal of Potter related material still to sell – a theme park in Orlando, a studio tour about to open in the UK, as well related ventures such as the Pottermore website and an ongoing series of videogames. The studio needs to keep the brand alive in order to maintain some sort of demand for its merchandise. Limited release windows may help in this regard.
More importantly, Warner Bros decision to ape the Disney method gives us some indication of how the major studios may conceive of the ancillary DVD and Blu-ray market in the longer term. As streaming and downloading take off, its possible that ownership of a physical copy will become less common – something for the aficionado, rather than the regular, undiscriminating movie watcher. If the studios can find a way of controlling access to online content, then we may be moving into a period where we make a one-off payment to watch a film via streaming, but where owning films, which we can access whenever we want, is a privilege that we have to pay significantly more for.
• James Russell is senior lecturer in film studies at De Montfort University.
http://www.guardian.co.uk/film/filmb...vanishing-dvds
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