Media Money with Julia Boorstin

Disney's 'Alice' Re-Writes DVD Rules

With the DVD business continuing to fall down the rabbit hole, movie studios are looking for new ways to boost revenues, and "Alice" may be part of the solution.

This weekend Disney's "Alice in Wonderland" will re-write the rules of the game, opening the door for more experimentation with the home entertainment model down the line.

Studios typically start selling DVDs four months after a movie opens in theaters, waiting to ensure DVDs don't steal from ticket sales. But Disney is releasing 'Alice in Wonderland' DVDs a month earlier than usual, just 13 weeks after its big screen debut.

And every theater company is on board with this plan.

The big surprise isn't that Disney wants to accelerate its DVD release, but that it's pulling off this faster DVD release without movie theater protest.

Disney's DVD plans for "Alice" prompted two major European theater chains to threaten a boycott of the film. And industry insiders in the U.S. raised concerns that this could discourage moviegoers on the fence from shelling out thirteen bucks for a 3-D ticket. But now all the theaters are on board and AMC, one of the nation's largest chains, even issued a press release in support of the film's "technological innovations."

Theater chains (RGC, CNK, IMAX) expect this to be an ongoing issue, so they're negotiating with studios to limit shorter DVD windows to a few movies a year. It's possible that they'll also demand a larger percentage of ticket revenue from films with a faster DVD release.

A shorter DVD release window will likely have a minimal affect on the box office, according to Adams Media Research. But on the flip side, Disney's move could prompt positive change for the DVD business.

So what's the big deal for the movie industry?

Movie DVD sales declined 13 percent last year, and with increased digital piracy, the studio is eager to get legal copies of their films on sale as quickly as possible. Releasing a DVD earlier allows DVD to tap into the marketing and buzz around the theatrical release, saving millions in marketing. Disney says it aims to get the DVD out before "World Cup" mania distracts shoppers from DVD release.

Video-on-demand releases are generally tied to DVD releases, timed about a month later, so this allows studios to start offering films on demand earlier. Video-on-demand is the most profitable revenue stream for the studios by far, so we can expect the timing of this revenue window to be in the spotlight.

Warner Brothers has also been looking to change the rules. The studio's home entertainment business, run by Kevin Tsujihara has been experimenting with releasing video-on-demand earlier, in some test cases before a DVD comes out. Last month Warner Bros. announced it's doing a faster DVD release for "Guardians of Ga'Hoole," which is coming out in the fall.

The goal there is to get the DVD out before Christmas.

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