87.5 F
San Fernando
Monday, Feb 6, 2023

case study

The Optimus Prime collectible found on Target shelves this month is as deceptive as a Transformer can be. Sure, the arms and legs pull out and the alien robot’s armor is finely detailed, but this is no mere toy. For on the back is a round case containing a DVD or Blu-ray copy of “Transformers: Age of Extinction,” the fourth entry in the Paramount Pictures Corp. sci-fi film franchise. The “Age of Extinction” packaging is exclusive to Target, while versions sold at Wal-mart and Amazon.com come with collectible figurines specifically made for those retailers. Prices range from $29.99 to $52.99. Even in the age of digital downloads and streaming of feature films and television series, production companies distribute content in a physical format – and they find there are still profits in DVDs, especially if they come with something extra that a download cannot provide. “By offering a special collectible artifact or character from a film in physical form, it makes it more desirable to buy a physical product,” said Bill Howard, chief executive of Snap Creative, the Camarillo company that has designed the packaging for the “Transformers” home entertainment releases since the first film in 2007. These extras designed by Snap Creative are the latest iteration of what DVDs need to stay viable, the equivalent of behind-the-scenes footage, deleted scenes, outtakes, interviews gag reels and other bonus content. Snap Creative is not alone working in this space. There is also AG Properties, with a local office in Sherman Oaks, as well as the home entertainment divisions of the major studios. Still, releasing content in the DVD format is swimming against the technological tide as more people turn to digital distribution to access movies and television series in the home. This year, U.S. revenue for physical home entertainment releases is expected to be around $12.8 billion while digital formats will bring in about $6 billion, according to PwC, the London-based accounting and consulting services firm. The physical format total is down from $13.8 billion last year and it’s going to get worse. Digital formats are expected to overtake DVDs by 2018 when the physical format will total $9.9 billion compared to $14.7 billion for digital distribution. Still, Jonathan Dern, chief executive of DVD distributor SD Entertainment in Woodland Hills, said that old viewing habits do not die fast and the DVD format will remain around as long as mega-retailers like Target, Wal-mart and Best Buy stay open. “The decline is undeniable but nevertheless there will still be a business there for a while,” Dern said. Big-budget extras Howard founded Snap Creative in 1996 when videotape was primary in home entertainment. One of its first collectibles was a coin for “Space Jam,” the live action/animated sports comedy with basketball legend Michael Jordan and Looney Tunes characters that came out that same year. The company has relationships with all the major studios – Walt Disney Co., Warner Bros. Entertainment, DreamWorks Animation SKG Inc., and Universal Pictures. The company has 10 employees in Camarillo, eight in Hong Kong and two on mainland China where the manufacturing is subcontracted out to several factories. Howard said it is often the titles that determine the extent to which Snap Creative will create striking packaging. “It is not right for every title,” he said. “You are not going to put something with a romantic comedy.” Big-budget action films and animated features make up the sweet spot for Snap Creative’s packaging. When “Jurassic Park” got its release on Blu-ray last year, the company designed a figurine of a T-rex in front of the gates of the dinosaur theme park. For “Despicable Me,” there were replica goggles worn by the yellow, cylindrical Minion characters that accompanied the DVDs sold at Target. DreamWorks contacted the company about putting together a DVD case that folds out into a dragon a la the “Transformers” for the home release of “How to Train Your Dragon 2.” The DVD work, however, is only about 20 percent of what Snap Creative does. The balance is creating figurines, cup tops, key chains, ornaments, and other knickknacks tied to feature films sold at movie theaters and theme parks. Howard would not disclose exact revenue but said there was 20 percent growth this year over last. AG Properties, a division of privately held American Greetings Corp. in Cleveland, creates content around such well-known children’s characters as Strawberry Shortcake and Care Bears. The company sells teaser DVDs with plush Care Bear dolls to spur sales of full-length discs. It also promotes the content with limited matinee runs at movie theaters for pre-school children and their families. The company has a deal with 20th Century Fox Home Entertainment in Century City, which distributes up to three new “Strawberry Shortcake” discs a year, and Lions Gate Entertainment Corp. in Santa Monica, which handles two to three “Care Bears” releases annually. The DVD copies come with a digital download. Fox has shipped more than 18 million “Strawberry Shortcake” titles over the past 11 years. Janice Ross, the vice president of marketing who works out of AG Properties’ office in Sherman Oaks, said packaged DVDs remain an integral part of the business and an important way to get the AG brands out to audiences. “We like the reach, and it’s meaningful for us as part of the larger distribution ecosystem,” Ross said. “People want to consume wherever they are.” AG works with toy maker Just Play of Deerfield Beach, Fla. who manufactures plush Care Bear dolls that come with a 20-minute teaser DVD that retails for $17.99. Those sales, in turn, contribute to sales of the full-length DVDs, Ross said. “It is a great way to integrate the DVD side with the toy side,” she added. Additionally, AG Properties is teaming with exhibitor Studio Movie Grill, an upscale theater chain featuring in-theater dining, to have its direct-to-DVD content play on a big screen at special limited run weekday screenings to have another setting to reinforce the storytelling. “It speaks to the approach of making sure we are everywhere kids are,” Ross said. Future technology AG Properties has a large library of Care Bear and Strawberry Shortcake material on which to draw for its future releases. Additionally, Strawberry Shortcake reaches its 35th anniversary next year which gives the opportunity for repackaging that material into special edition DVD releases. “I don’t have a crystal ball for when people will stop buying (DVDs) but right now it is an important part of the bigger ecosystem,” Ross said. Dern, of SD Entertainment, gives the format another five to seven years before it no longer makes business sense as a distribution method. “Remember, VHS (tapes) didn’t go away until about eight years ago,” he added. That there is a future for the format is an opinion that is also held by Cindy McKenzie, managing director in the media and entertainment practice in the Los Angeles office PwC. While sales are declining, they still total in the billions, meaning there is money to be made by the studios from DVDs. One key to their viability is in doing what a company like Snap Creative and AG Properties do – appealing to the super fan with special merchandise that come in box sets and special editions. “There are a lot of people who are connected to the material,” McKenzie said. Another driver that will keep DVDs viable is if technology can improve the quality of the picture and make for better viewing in the future. “If they come up with something even more compelling there is a section of the audience looking for that premium experience,” she added. With the upcoming holidays creating a market for special boxed sets, Howard expects a strong and busy fourth quarter at Snap Creative. Among the releases is the special edition of this summer’s “Teenage Mutant Ninja Turtles” movie. Exclusive for Amazon is a 6.5-inch tall statuette of one of the turtles, Raphael, posed in a battle-ready stance. “That piece is one of my favorites,” Howard said. “It has so much detail. There is duct tape on the back of the shell and the sunglasses on top of his head have lenses that are translucent.”

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

Featured Articles

Related Articles