Warners Sees the Light (or at least The Bottom Line)

From the LA Times Business Section Tuesday:

Warner to Proceed Straight to Video

The studio is launching a direct-to-DVD business with plans to release 10 to 15 movies a year.
By Claudia Eller, Times Staff WriterMay 30, 2006

Looking for new, less risky ways to boost profit, Warner Bros. is launching a direct-to-DVD business that will release 10 to 15 low-budget movies a year. First up will be a sequel to the studio's 2005 hit "The Dukes of Hazzard," scheduled to go on sale at the end of this year or in early 2007.

Movies made exclusively for DVD typically are done on the cheap without the costly stars and lavish production expenses associated with theatrical films. Adhering to that model, Warner aims to keep each direct-to-DVD movie's production budget to $5 million or less, although some films may cost slightly more. The "Dukes" sequel, for example, won't reunite cast members Jessica Simpson, Johnny Knoxville and Seann William Scott.


The new venture, a partnership between Warner Bros. Pictures and Warner Bros. Home Entertainment Group, aims to cash in on what has been a lucrative, relatively inexpensive business for such rivals as Walt Disney Studios and Universal Pictures."We recognize that the made-for-video business is a place we need to put emphasis and devote considerable resources," Warner President Alan Horn said. "Discipline is the key to the ultimate success of the new venture for us."

Still, the direct-to-DVD business is no sure bet. It faces increased competition from boxed sets of popular television shows such as "Lost," "24" and "Desperate Housewives," one of the hottest areas in home video."The made-for-home entertainment business can be very profitable if you select the right projects, control your development and production costs and time your releases to minimize your marketing expenditures and maximize your exposure," said Louis Feola, Universal Pictures' former home video president who oversaw such popular direct-to-video franchises as "The Land Before Time."


Jeff Robinov, Warner's production president, and Kevin Tsujihara, president of the studio's home entertainment group, will oversee the new division, which is expected to be operating within three months. The two are looking to hire an executive to run the day-to-day operations of the unit, which is expected to have 10 staff members, including its own creative, business and marketing personnel.Robinov said the division would produce live-action DVD prequels and sequels to existing Warner Bros. movies such as "Dukes," which grossed $80.3 million domestically but was not the kind of hit that would justify spending the large sums required to make and market a theatrical release.


Still, Robinov said, "That doesn't mean they don't have audience interest and built-in awareness."Robinov added that although profit margins in the direct-to-video business could be thinner than in theatrical releases, such built-in awareness along with creative marketing could mitigate the financial risks. Tsujihara said a "Dukes" sequel allowed Warner to repackage on DVD the original film and episodes of the popular 1980s TV series it was based on.


Warner's new division also will produce and acquire original made-for-DVD movies running the gamut of genres including horror, comedy and action films. Last month, Warner, a unit of media giant Time Warner Inc., announced it would finance three, under-$5-million DVD-only horror films to be directed by Daniel Myrick ("The Blair Witch Project"), producer Tony Krantz ("24") and TV writer John Shiban ("The X-Files"). Until now, Warner has released direct-to-video titles on a scattershot basis, mostly animated family fare from the studio's "Scooby-Doo," "Tom & Jerry" and "Loony Toons" franchises. The studio plans to continue releasing family-oriented DVDs, including films culled from its DC Comics library of characters, among them Superman, Batman and Wonder Woman.

"We've had an existing slate of four to five of these evergreen titles a year, and they are fairly profitable," Tsujihara said. "We'd like to put together slates that have a mixture of genres."

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Okay so what does this all mean? It means there's more opportunity to make movies above and beyond what they are already doing at Warners. Some of these movies will go to better-known writers who want a gig they can direct as well.

It also means that they are going to produce different genres so your low budget rom-com may have a chance. If it has a (TV) name attached or comes from an established prodco.

Because Tsujihara is involved be assured there will be an internet component to the above.

They are also looking at building up the franchises they already have (DVD sequels) and developing new franchises strictly for DVD release. There's a hint of opportunity that this will include live-action features of DC Comics characters, but possibly not (I'm being wishy-washy, I know). It would be interesting for them to collect some of these fan films (Batman: Dead End, World's Finest) and release them on a disc for the mass market. Same goes for Global Frequency.

Is this their first steps toward synergy? Possibly. We'll know more when they release their first slate of films whether or not the different divisions of the company are going to really work together or if they are going to take the same old stance, "Stay out of my yard!" Either way, it will be interesting to see if outsiders can get into the system over there.