Hollywood Finds Profit on Direct DVD Route

Brooks Barnes - International Herald Tribune

If you missed the red carpet premiere for the latest "American Pie" movie, you are not alone. There wasn't one. "American Pie Presents: Beta House," the sixth film in the popular comedy series, was sent straight to DVD.

Once a dumping ground for movies considered virtually unwatchable, the direct-to-DVD pipeline is becoming increasingly important to the development and management of mainstream film franchises.

"The direct-to-video business was making titillating, low- quality movies to feed the rental channel," said Craig Kornblau, president of Universal Studios Home Entertainment. "We discovered we could keep franchises alive with made-for-DVD movies if we made them feature quality."

"Beta House," which arrived at retail outlets late last month, was made specifically for a DVD release and will most likely end up being more profitable for Universal Studios than some of the company's theatrical releases.

The movie, which cost less than $10 million to make, is expected to sell over one million units - in line with two previous "American Pie" installments that were produced specifically for a DVD release, according to Universal. That adds up to a profit of about $20 million, before rental revenue is added.

Hollywood's new direct-to-DVD strategy rests on calculating a sequel's chances at the multiplex. Three big-screen "American Pie" movies rained money on Universal, selling over $754 million worth of tickets worldwide, according to Box Office Mojo. But when it came to approving a fourth installment for a theatrical release, Universal had a decision to make.

The third film, "American Wedding," cost $55 million plus tens of millions more to market - far more than its predecessor. Yet its ticket sales were 28 percent lower.

In previous years, the studio would have either pulled the plug on the franchise or continued to serve up sequels in theaters to increasingly smaller audiences. Opting for diminished returns was typically the industry's course (why leave money on the table?), which is how wince-inducing films like "Police Academy 6: City Under Siege" ended up at theaters.

But studios have now realized that the power of the DVD market gives them another option. They drop everything but the franchise concepts and the titles and hire cheaper acting talent. Add a marketing campaign of decent weight to pump the audience that still remains and, presto! More profit, pound for pound, than some big action flicks. Oh, and get rid of that pejorative-sounding direct- to-DVD moniker. Call it DVD Premiere.

"It is a reflection of how people consume media these days," said Tom Siegrist, vice president for production at 20th Century Fox Home Entertainment. "If you approach it in a smart way - looking into your catalog of released films to see what you can build on - these things really sell."

Universal, for example, hired a new cast and released "American Pie Presents: Band Camp" and "American Pie Presents: The Naked Mile" straight to DVD. They performed so well that "Beta House" arrived, and the studio is mulling over a seventh installment.

The direct-to-DVD business totals more than $3 billion in annual sales, according to Adams Media Research.

Warner Brothers entered the direct-to-DVD fray a few months ago with an approach that signals how competitive the business has become. The studio thinks making sequels and prequels of established movie brands is no longer good enough, said Diane Nelson, president of Warner Premiere.

Instead, Nelson is trying out an array of new ideas. For instance, this summer Warner Premiere will release "Get Smarter: Bruce & Lloyd Out of Control" on DVD in conjunction with "Get Smart," a big-screen comedy based on the 1965 television series. The projects were filmed simultaneously, with supporting characters appearing in both. (The star of "Get Smart," Steve Carell, appears only in the bigger project.)

The quality of direct-to-DVD titles may have improved, but few movie fans will confuse these releases with what they see in theaters. For starters, few of the original stars appear. When Universal decided last fall to make a direct-to-DVD prequel to "The Scorpion King," it replaced Dwayne Johnson, better known as The Rock, with a lesser-known wrestler-turned-actor, Randy Couture.

"We weren't going to be able to afford The Rock, but when we took a look at Randy we saw that he is actually quite good," Kornblau said. Johnson now earns some $5 million a film, about what it cost to make "The Scorpion King: Rise of the Akkadian."

DVD Premiere movies are also much raunchier - full-frontal nudity is a hallmark of the "American Pie Presents" titles - because they do not need to meet the same ratings standards as theatrical releases.

"Too graphic, too disturbing and too shocking for general audiences" is how Lionsgate describes some horror sequels in promotional materials, adding that the studio had "defied the system" by sidestepping theaters.

Special effects in these films, while improving because of cheaper digital technology, often require a little more imagination from viewers. "Garfield" and "Dr. Doolittle" were both hits in theaters, but talking animals are expensive. John Davis, the producer behind both franchises, said the direct-for-DVD sequels of those films use less sophisticated effects.

There is one trap that studios are still learning to avoid: not becoming hypnotized by a made-for-DVD movie and giving it a shot in theaters. "Daddy Day Camp," intended as a DVD sequel to the 2002 Eddie Murphy hit "Daddy Day Care," performed so well with test audiences that Sony gave it a shot in the big leagues last summer. It sold just $13 million in tickets.

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