"Direct-to-video" (now commonly referred to as "direct-to-DVD") used to be code for cheap features with lesser-known actors and those perceived to be on the downward trajectory of their careers. Now a $3 billion per year industry, direct-to-DVD productions have earned a higher profile, attracted major studios and A-list talent, and are expected to boom.
According to industry research, the DVD market will eventually trounce the theatrical box office. A recent report from capital fund management company Veronis Suhler Stevenson predicted DVD sales will total $40.4 billion per year by 2009, while box office profits are projected to be $10.6 billion. A poll conducted by Ipsos for The Associated Press and AOL News in June found that 73 percent of 1,000 people said they prefer to watch movies at home on DVD, VHS, or pay-per-view rather than go to the cinema.
This summer's record-setting low box office may also indicate that audiences prefer to stay home with their DVD players, more than 75 million of which are currently in American households.
The Screen Actors Guild said its members not only expect more work in a direct-to-DVD boom but also higher residuals than those for theatrically released films. According to the Guild, an actor in a theatrically released film may receive 4.5 percent of 20 percent of the distributor's gross on the first million dollars; the percentage rises to 5.4 percent after the film makes $1 million. An actor in a direct-to-DVD feature, however, receives 6 percent of the gross after the first 100,000 DVDs are sold. In the case of made-for-pay-TV series that are later sold on DVD, such as The Sopranos, actors receive 6 percent after 75,000 are sold.
Seth Oster, SAG's communications director, said a boom in direct-to-DVD would create more opportunity for members, but theatrically released films should not be counted out. "The Screen Actors Guild is supportive of any business model that creates more revenue for actors," he said. "Increased production of direct-to-DVD films would certainly do that, particularly as these films fall under a residual formula that gives our members a fairly immediate share. It should also be said that preserving the theatre experience is important. We hope the studios will make every effort to ensure the theatrical window continues to thrive."
"I think the most important aspect for actors is that you have to act," said actor Lance Henriksen, whose career has thrived in the home entertainment market. "You can't sit around waiting for A-movies all the time, or you won't get anything done. You have to keep that acting muscle going." Henriksen has appeared in more than 30 direct-to-DVD features, usually playing the villain in thrillers and horror pics, and worked with other A-listers, including Ray Liotta in No Escape, Giovanni Ribisi in The Outpost, and Dennis Hopper in Unspeakable.
Henriksen, who negotiates his own share of the profits from his direct-to-DVD titles, said actors can often contribute more creative input to direct-to-DVD films. "Because of the size of the budget, guys can't throw money at stuff, so you'll be able to do more creative work. They'll listen to you. You can get away with things and go into areas that aren't cliché or everybody's seen about 50 million times." He said he reworked dialogue with the director and producer before filming began on his recently completed direct-to-DVD revenge movie, Bone Dry —an opportunity rarely extended on a studio film.
Other big names are discovering creative freedom in direct-to-DVDs—in front of and behind the camera. Hilary Swank produced and stars in an upcoming drama for New Line Home Entertainment titled 11:14, which also features Rachael Leigh Cook, Colin Hanks, and Barbara Hershey.
Senior Vice President of Acquisitions and Programming for New Line Home Entertainment Kevin Kasha said his company has profited so much from direct-to-DVD films, it's devoting more marketing dollars to its home video releases. "I think the lines are very blurry between seeing a movie in theatres and watching it in the comfort of your own home on your big-screen TV and surround-sound system," he said. "People have busy lives. It's tough to get to the movies. It's like you have to choreograph the whole event."
New Line is banking on direct-to-DVD sequels to theatrical titles. The company is considering a direct-to-DVD sequel to Harold & Kumar Go to White Castle, a film that floundered theatrically but thrived on home video. It is also working on sequels to direct-to-DVD franchises that have become brand names, such as House Party, Poison Ivy, Friday, and Set It Off.
"The home entertainment marketplace is very competitive, and I think the consumers become much more selective," said Kasha. "We're looking for films that are brands, franchises, line-extendible programming, and sequels certainly fall into that."
All five major studios made their presence known as purveyors of direct-to-DVDs at the 2005 Video Software Dealers Association's Home Entertainment Convention in July, which saw an increase of 10 percent in retail attendance and 27 percent more exhibitors. This year was also the first time in three years that representatives from all five major Hollywood studios attended the convention.
"It's getting more competitive because there's so much more product out there," said Carrie Dieterich, vice president of Marketing & Industry Relations for the Video Software Dealers Association, the producers of the event. "I think that DVD has brought a certain amount of glamour into home video, so it's not looked down upon."
VSDA's research, however, indicated that the number of direct-to-DVD titles has fallen since its high point in 2000. According to its annual report, home video generated $21 billion in 2004, 12 percent of which were direct-to-DVD properties. In 2000 direct-to-DVD titles made up 18.8 percent. Low profits reported by DVD distributors Netflix and Blockbuster also raised questions as to whether direct-to-DVD films will sell. But Dieterich said the low percentage and poor profits are misunderstood. "DVD sales are not down, they're just not growing at the rate they had been," she said.
Despite a rocky summer in the stock market, DVD distributors Netflix and Blockbuster predict a bright future for direct-to-DVD titles. Steve Swasey, Netflix's director of corporate communications, believes Americans are looking for entertainment they can't find in movie theatres. "We ship out 1 million DVDs a day. And of that 1 million, we ship out 35,000 unique titles, which proves that America has a broader movie appetite than what is available in cinemas," he said.
Shares of Netflix stock steadily dropped during the summer, but jumped 7 percent on Sept. 8 when the company announced it expects to reach its goal of 5 million subscribers in 2006—a year earlier than previously predicted. The company predicted it will reach 4 million subscribers by the end of 2005 and 20 million in the next five to seven years.
"If you look at the stock price over the last 23 quarters, it's been up and down," said Swasey. "But if you look at the performance of the company over the last 23 quarters, you'll see a consistent upward motion of subscribers."
Netflix is even exclusively distributing certain direct-to-DVD titles. "We truly love it when it goes directly to DVD and we have it first," said Swasey. The film version of Tim Robbins' antiwar play Embedded Live was exclusively available on Netflix, as was last year's Academy Award winner for best feature documentary, Born Into Brothels. The success of these and other direct-to-DVD titles led to the development of a Film and Video Content division based in Beverly Hills that identifies movies to be released exclusively by Netflix.
Blockbuster, which posted a $57.2 million loss in its second quarter, hopes to get a boost from the increase of direct-to-DVD titles. Blockbuster's product director of Rental Films, Keith Leopard, said, "More direct-to-DVD movies are being released than ever. [Studios] can be very profitable putting these direct-to-videos out. You can have a higher budget because you don't have to worry about the prints and advertising."
New Line, for example, could easily promote its direct-to-DVD titles when its summer blockbuster Wedding Crashers hits Blockbuster's new-releases wall. "When Wedding Crashers comes out on video, they can cross-trailer their direct-to-DVD [movies], and how many zillions of people will see that?" said Leopard, who also found that consumers don't necessarily distinguish a theatrically released film from a direct-to-DVD. Customers are less concerned with how much money a film took in at the box office than finding an entertaining feature for the night.
"Things come and go so quickly now in theatrical, people really don't pay that much attention," Leopard said.