In the second part of Screen International's analysis on the effect on the industry of the Sept 11 attacks on the US, the threat of recession on the home entertainment and film exhibition sectors is assessed.
Abstracted from Screen International
Video was an immediate winner from the Sept 11 fallout. Not only did the shares of companies such as Blockbuster and Hollywood Entertainment surge upwards, the underlying transaction numbers jolted ahead.
Rentals in particular increased, reversing the recent downtrend. In the two weeks following Sept 11 VSDA figures show US rentals up first 16% and then 30% on the previous year. Films with themes of prophesy and redemption were particularly popular and many library titles were sparked back into life - including, significantly, Independence Day.
The impact is likely to be felt abroad and to be felt in the sell-through sector too. "The stay at home thing is happening here too," says Peter Dodd, editor of the UK's Home Entertainment Week. "Retail will do well too because it is now firing on two separate platforms - video and DVD. The week before last DVD hit 15% of the rental market for the first time ever." VSDA data showed US DVD rentals up 240% on the same week of 2000. "There is a selection of extremely strong product like Shrek and Bridget Jones in the pipeline," says Dodd.
Twentieth Century Fox chairman, Jim Gianopulos, who recently tied up an internet distribution alliance with Disney, predicts this could be moment for new forms of home entertainment to come to the fore. "With people looking to entertain themselves, video-on-demand (VoD) has a great chance. Equally appealing is the ability to buy. We are expecting a lift in DVD sales."
"The cinema industry has been incredibly resilient in times of economic downturn," says Paul Oneile, chairman and chief executive of UIP, which releases the films of three studios. "But we have had downturns in the last 15 years, so it is not possible to say that it is recession proof - especially when people have so many alternative means of seeing films such as video or pay-per-view TV."
But he argues that the exhibition sector still has room for growth. "Very few European markets are at saturation point. I am not aware of any [general] slackening in the pace of development by the studio-backed or other circuits. Weighing up individual markets is key to development."
In the UK "takings were £1m down on the [Sept15-16] weekend, but were £1m up on the same weekend last year," reports John Wilkinson, chief executive of the UK's Cinema Exhibitors' Association.
"If people stop travelling, the lessons from the past suggest that they do continue to go to the cinema, because it is good value for a night out. They may go to facilities nearer home, which could mean a boost for cinemas. If we were to move into recession that would still hold good."