Dreamworks not recouped costs on W&G and Shrek 2 DVDs!

[2099net]

Despite selling missions upon millions of Shrek 2 DVDs, Dreamworks has not got back more money than it cost to manufacture, pay royalties and market the DVD release.

Now, sit down quietly and think about that for a few minutes. Go on. And then carry on reading.

What really freaked me out in DreamWorks’ earnings call this week was the fact that executives said their distributor (Universal) has still not recouped costs for the video release of Shrek 2 and Wallace and Gromit: The Curse of the Were-Rabbit.

Now I don't know how many millions Shrek 2 sold, but it sold a fair few.

Back in 2004, DreamWorks projected the title would hit 37 million units by the end of first-quarter 2005. It didn’t, but only by a few million units.

And while W&G may not have been a runaway best seller, it sold close to 1m copies in the first week.

I regularly buy BBC Classic 'Doctor Who' DVDs over here in Britain which sell less than 30,000 copies total and still turn a profit. And these are DVDs with hours of extra feartures, from three hour commentaries, production triva subtitles (again for three hours), to a second disc full of documentaries and archive footage (again, approx 2-3 hours).

Apparently a DVD which sells about 1000% more volume can't be profitable?

It's just insane such high profile releases haven't even broke-even on their DVD roll-outs. Its another example of Hollywood business practice slowly destroying the industry. But of course, its not their fault is it? They had to manufacture millions of discs before release didn't they? They have to pay the voice talent millions upon millions of dollars for a few weeks work. They have to let the same voice talent have a major percentage of the merchandise rights, don't they?

Of course, the real reason for their failing is piracy.

Here's the full story (although oddly, she still missess the point when sales of approx 30m+ units can't turn a profit, wandering into the old cliche about "storytelling", which I guess shows how deep the industry has its head buried in the sand about the big issue):
http://www.homemediaretailing.com/news/ ... ec_id=buzz

[Luke]

Something's not right there. I imagine we can point the finger at voice cast royalties on <i>Shrek 2</i>, but I can't imagine <i>Wallace & Gromit</i> not turning a profit. It's not like it had an insanely high marketing budget as far as I know. Perhaps both can be chalked up to the long-held Hollywood principle that no movie ever turns a profit (for accounting purposes)?

[2099net]

I think the main problem with Shrek 2 is Dreamworks overestimated the sales, and sent them to retailers on a sale-or-return basis. Thus at the end of the day they were left with lots of unsold discs - at a cost to them plus the lost sales they (presumably) previously accounted for.

But lets examine who Shrek 2 was sold in the US and the UK.

In the US, it was a single disc only release. As you can remember, most people on this forum made comments along the lines of "I'll wait for the double disc edition". Customers are getting savy to DVD marketing and sales techniques, and I dare say there was a lot of people who skipped buying the DVD because they expect a better edition to be along later. Meanwhile, adding fuel to the re-release speculation was the fact a bonus disc was made, but only available in the "Story So Far" boxset which not only would force people to rebuy previous discs, but it was fullscreen only.

The whole US release was a marketing nightmare.

Meanwhile, in the UK, we did get a 2 disc release (or as I like to say 1.5 disc release because the second disc was so light on content) but they had a recommended price of £22.99 (that about $40!) Yes, you could get it cheaper if you shopped around, but you can be sure the retailers, not Dreamworks themselves, were expected to lower their profit margin.

But Dreamworks won't admit they made a mistake, no doubt. In the UK, they already blamed it on piracy at one video manufacturing conference

[ichabod]

Whilst I'm not denying that some piracy have affected some sales, I am in complete agreement that Dreamworks made the feux pas here. After all Shrek 2 even though rather highly priced upon its initial release, soon after a relatively short period of time (literally a couple of months in some cases) began to turn up in bargain bins across the land for an average of £5.99, even lower in some stores. Also Shrek 2 seems to have become an almost permanent member of woolworths spend £5 get a DVD cheap scheme, which considering the fact that Shrek 2 is the highest grossing animated film of all time, can't be a good sign.

Even though the report from last year the in the US too many copies of Shrek 2 had been initially made, I think it would be safe to assume that the same thing happened here considering the fact that stores seem almost trying to get rid of them as cheap as they can.

[Karushifa]

If Dreamworks thinks they're in dire straits with home video profits now, just wait until they start releasing movies on Blu-Ray. They better hope those things sell like sno cones in a heat wave...maybe even more.

As for poor old Wallace and Gromit...I think a good way to alleviate some of the so-so sales of that movie would be to have some people stading out in front of movie theaters when the next CGI meh-tacular comes along, and say to people going inside, "Oh, going to see Ice Age 2, are you? I'm sorry, but all animation watchers are required by law to see this first." (hands customer a W&G movie DVD that expires in 10 days, shows them the way out)

[Finchx0rz]

Of course, the real reason for their failing is piracy.

And the reason for that is high MSRPs.

[GhostHost]

Despite selling missions upon millions of Shrek 2 DVDs, Dreamworks has not got back more money than it cost to manufacture, pay royalties and market the DVD release.

Take that you crappy Disney hating movie.

However, it is a shame that a masterpiece like Wallace and Gromitt has not recouped it's costs.