Steve Burke, Comcast CEO: ‘Movie Business Is In Steady Decline’
On April 27th, 2012 The Wrap revealed that Comcast's CEO (and remember Comcast owns NBC Universal, one of the six major studios), Steve Burke, thinks the Old World movie business is in “steady decline.”
According to Sharon Waxman's reporting for The Wrap, at a CAA retreat "Burke provided a litany of facts and figures supporting the case: double-digit declining DVD sales, insufficient replacement revenues from online streaming sources."
According to CEO Burke, the collapse of DVDs are only the leading edge of a business model that has been suffering since at least 2007. The man who presides over venerable Universal Studios also observed that theatrical revenue, digital sources, and TV deals are not making up for the decline in DVDs: "[P]rofit margins for the movie business have gone from double digits, to single digits to nonexistent."
Steve Burke's analysis is in line with recent numbers from independent sources. For example, Netflix lost 2.76 million DVD subscribers in the 4th quarter of 2011.
The Old World - and the old ways of monetizing motion pictures - is being disrupted.
For over 20 years, physical copies of movies (Betamax and VHS and then DVDs) were a great method of delivery for the major studios - because the studios could capture a lot of revenue for every physical copy sold or rented. Those days are over.
In the New World, customers will no longer be buying physical copies - they will be accessing content from the cloud.
If Universal and the other major content producers can't figure out a New World revenue model (a bigger payout every time a movie streams? a levy on every movie viewing device sold?), there will be even more wrenching changes ahead in the theatrical feature film business in Hollywood.