Hollywood Finds Digitization Isn't So Scary After All

Film premieres get all the attention in Hollywood, but the cash cow for years has been selling those silver DVDs to a home video market far more predictable—and profitable—than the hit-or-miss theatrical release game. That’s why it was widely thought the movie business would take it on the chin as disc ownership gave way to digital distribution of content, just as the music business has been decimated by the shift to MP3s. Yet Hollywood is discovering there’s life after the DVD. With Netflix, Amazon.com, and soon Verizon Communications and Redbox bidding for rights to stream movies on Kindles, iPads, and TVs, the studios are enjoying a boomlet that’s taking the edge off declining disc sales and rentals.

Studio-backed pay-TV channel Epix became the latest to strike gold earlier this month when it signed a multiyear agreement with Amazon to supply such films as The Hunger Games and Marvel’s The Avengers for Amazon’s Prime Instant Video service. Epix, co-owned by Viacom’s Paramount Pictures, Metro-Goldwyn-Mayer, and Lions Gate Entertainment, ended its exclusive deal with Netflix and is expected to make as much as $80 million more a year selling the same content to the two streaming rivals and a third venture financed by Verizon and Coinstar’s Redbox, BTIG Research analyst Rich Greenfield says.