Stat Sheet

Report: Studios’ digital revenue will grow 15% a year - May 22, 2008

Between 2007 and the end of 2011, studios’ worldwide feature film revenue from theatrical, home video, on-demand, pay TV and broadcast, will jump from $34.9 billion to $46.1 billion. Digital content sales and rentals will expand during that time, averaging a 25.4% compound annual growth rate (CAGR) between 2007 and 2011 off a small base, after experiencing a 14.6% CAGR from 1998 to 2007. 


Physical media, including standard DVD and Blu-ray, will remain significant, as they will represent over half of studios’ total film revenue, according to the report. Video rental revenue will grow at a CAGR of 2.3% from 2007 to 2011, according to the report, with video purchases growing at a slightly higher rate 2.9%.

Although Blu-ray and digital delivery will help fuel studios for the next several years, rising film production costs should still be a concern to studios’ bottom lines. Adams Media/Screen Digest report that the average film budget, encompassing private equity investments, grew from $46.9 million to $63.2 million between 2004 and 2007. Overall during that frame, expenses for Motion Picture Assn. of America members rose from $9.7 billion to $13.2 billion. At the same time, worldwide revenue from these films actually shrank from $36.6 billion in 2004 to $34.9 billion in 2007.

Between 2007 and 2011, worldwide studio revenue will enjoy a modest 6% annual growth rate between 2007 and 2011.

“When DVD hit the scene, it changed the way studios made their money,” said Adams Media president Tom Adams. “Blu-ray won’t have the same impact, but this time around, studios and those invested in them have a greatly expanded universe from which to draw revenue. Although we expect continued revenue expansion, the market won’t be returning to DVD-era growth anytime soon, so it’s crucial that studios pare down expanding costs and wisely manage upcoming film slates to maximize their profitability.”

For more information on the study, dubbed “Film Entertainment Worldwide: The Private Equity Era, visit the Adams Media Web site, www.adamsmediaresearch.com.      -- Susanne Ault

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