Warner Bros., Universal Seek to Merge Faltering DVD Units
16 January 2020 - 4:40AM
Dow Jones News
By R.T. Watson
Two of Hollywood's biggest studios are proposing to combine
their North American home-entertainment operations, the latest sign
of weakness in a segment that was once a bedrock part of the movie
and television businesses.
Comcast Corp.'s Universal Pictures and AT&T Inc.'s Warner
Bros. aim to form a joint venture tasked with distributing DVDs and
Blu-ray discs in the U.S. and Canada, the studios said. The
proposed deal, which is subject to regulatory approval, would
include new and old movie titles along with TV programming.
The strategy highlights the medium's decline since the DVD boom
of the early and mid-2000s, which peaked in 2005, when disc sales
were strong enough to eclipse theatrical ticket sales.
U.S. DVD sales have fallen nearly 80% since that year's high
point, when consumers spent $16.3 billion on the shiny discs,
according to Digital Entertainment Group. Theatrical box-office
receipts tallied nearly $9 billion that year. In 2019, Americans
spent just $3.3 billion on all packaged home-entertainment
products, according to the trade organization's preliminary
statistics, versus a projected $11.4 billion in ticket sales.
Disc sales eroded under pressure from cheap rental options, such
as Redbox and Netflix Inc.'s original disc-by-mail service, along
with online sales and rentals like those offered by Apple Inc.
Streaming services from Netflix and Amazon.com Inc. offered
unlimited access to programming for a flat monthly fee -- and
represented one more reason for consumers to forgo discs.
Digital home entertainment revenues in the U.S. surpassed sales
from physical products in 2016. Last year digital sales in the
U.S., which includes streaming and downloads, rose to $20.4
billion, according to DEG.
If approved, the joint venture would likely help Universal and
Warner trim costs as both companies prepare to launch their own
streaming services. The companies declined to say how much money
they expect the arrangement would save.
Warner and Universal hope to have the joint venture operational
by the beginning of 2021.
Additionally, the two studios want to enter an international
licensing agreement to distribute each other's DVDs in various
overseas markets. Warner plans to distribute its rival's titles in
the U.K. and Italy. Universal would do the same for Warner Bros. in
nations such as Germany and Japan.
(END) Dow Jones Newswires
January 15, 2020 12:25 ET (17:25 GMT)
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