For most of this decade, Hollywood movie studio heads enjoyed a relatively stable tenure (3-5 years or more). A few box office flops here or there were expected, and even tolerated by corporate parents. Not so anymore. Within the last 2 weeks, David Linde & Marc Shmuger at Universal and Dick Cook at Disney have all been shown the door by their respective bosses, Ron Myer and Bob Iger. But who installed the new revolving door at the top of the Hollywood executive suites? Turns out the true culprit, who is never given any credit for the firings, is DVD sales.
Universal has had a dismal year at the box office with such high profile flops such as Funny People, State of Play, Land of the Lost, Public Enemies, Love Happens, and Duplicity. While Disney has had such awful films such as G Force, Race To Witch Mountain, Surrogates, Confessions of a Shopaholic, and Bedtime Stories. With both Universal (15-20 films a year) and Disney (10 films a year), 5 flops in a row at the box office is now almost half your slate.
For the early part of the decade, in most consumers minds, if a movie was a flop at the box office, that doesn't necessarily mean a consumer would not buy it or rent it on DVD. DVD sales would largely compensate for a failed box office release. In fact, there were even consumers who were willing to wait for the DVD release just so they could watch it in their homes versus the "hassle" of going to the movie theater to see it. But DVD sales turned out to be Hollywood Heroin, as the market became oversaturated with product, BluRay is not filling the DVD revenue hole due to a higher price point and equipment upgrades, and the recession, have all put new pressure on the theatrical box office. Have a flop at the box office now, and no one is buying the DVD to cover the revenue shortfall.
It's time for the heads of studios to make more hits at the box office to keep their jobs.
Kevin McCormick is out as President of Theatrical Feature Production at Warner Bros.
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