How We Did in 2006

Watching some of my usual publications, a lot of sales/profit-and-loss information is starting to come out about the entertainment industry in 2006. A couple cases are really catching my interest.

First off: apparently, Viacom's profits improved by 271% last year, which the New York Times says is mainly the product of their acquiring Dreamworks. What really interests me, though, is what about this move really affected their profits. DVD sales appear to have been one of the biggest factors, particularly for Over the Hedge and World Trade Center.

Lesson 1: DVD's are important, disproportionately to what kinds of things are emphasized in film school. They're relatively cheap to produce and easier to make money on, especially when you have box office sales records to go on. Furthermore, they have an unlimited shelf life, whereas theatrical releases have a limited window in which to make money. A straight-to-DVD release that's well promoted (e.g. Final Fantasy VII: Advent Children) can easily do better than a major motion picture that flops (e.g. Marie Antoinette).

And secondly: profits in the book industry were down 2.9% this year. The odd thing is how many segments of the industry showed improvement—graphic novels are doing better than ever, and Penguin logged healthy increases as well. Where are the declines coming from?

Publishers Weekly says...

Sales, Earnings Drop at Harlequin
by Jim Milliot

A stronger Canadian dollar and problems in its direct-to-consumer business led to a 9.6% decline in revenue at Harlequin in 2006, with sales falling to C$471.8 million ($405 million).

Ah so. Lesson 2: the books that make the most money aren't the ones getting the shiniest reviews in the New Yorker. They're romance paperbacks, Star Wars tie-ins, and self-help. Harlequin Romance is the bestselling imprint in North America; most people aren't aware of that because Harlequin doesn't have an outspoken fan base and they sell many of their books (though not so many this year, apparently) through a subscription program that delivers a certain number of new titles to customers by mail each month. When Harlequin takes a hit, the industry feels it.

One of the less glorious aspects of working in the business is learning to look past the grand, literary, lofty stuff that most of us got into it for, and to pay more attention to the straight-to-video features and mass market paperbacks that keep us afloat.