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Warner Bros focuses on video games

Warner Brothers Entertainment, the Hollywood studio owned by Time Warner, is bolstering its presence in video games with the acquisition of Snowblind Studios, a Seattle-based developer.

The deal comes as traditional home entertainment groups are moving to reposition themselves amid an industry-wide slump in DVD sales. Warner Bros has amassed a 20 per cent stake in Eidos, the UK company behind the Tomb Raider and Hitman franchises.

Sales of video games rose 19 per cent in 2008, according to NPD, the research firm. That growth is in contrast to sales of DVDs, which represent the largest part of Warner Bros’ home entertainment business.

DVDs have been Hollywood’s most reliable cash generator for the past decade, but studios are grappling with a severe decline in sales over the past 12 months as the format matures and consumers tighten their belts.

Blu-ray, the next-generation DVD format, enjoyed healthy growth in the run up to Christmas, with Warner Bros having sold close to 2m units of the The Dark Knight. But the studio does not expect total home entertainment sales – which include Blu-ray, digital downloads and DVDs – to return to growth until 2010, although this may become difficult if conditions continue to worsen.

With an eye on increasing the sales of films over online platforms, the studio has reorganised its international home entertainment and digital distribution businesses, bringing them together under one roof.

“We need to have a unified strategy, especially in the markets where we don’t have the scale that we have in the US,” said Kevin Tsujihara, president of Warner Bros’ home entertainment. “We want to get the organisation more aligned to improve the bottom line.”

He added that home entertainment was “changing because of the challenges facing packaged media”.

Walt Disney has also taken steps to restructure its home entertainment business and said this week that it would look to reduce costs at the division.

Warner Bros has the biggest home entertainment business in Hollywood and the largest international distribution infrastructure. The studio wants to use this pipeline for the distribution of video games as it builds up that side of its business.

The group has been linked with a bid for Eidos, although Mr Tsujihara declined to comment on the group’s plans for its stake in the company.

But he said Warner Bros was committed to increasing its presence in video games, pointing to its investment in Snowblind and other developers, such as TT Games, a Manchester-based company.

Источник: Financial Times

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