M+E Daily

LOS ANGELES — Twentieth Century Fox New Media and Digital Distribution President Peter Levinsohn made a bullish case for the impact of global digital revenue on studios’ bottom lines at the Variety Entertainment & Technology Summit here Monday.

Levinsohn noted that consumer spending on home entertainment in the U.S. grew by 1.5% in the first half of 2012 after years of declining, driven largely by growth in digital channels, especially electronic sell-through. “Many of these new services are reaching critical mass,” he said.

Levinsohn was also optimistic about digital distribution channels in international markets, likening their growth to the “virtuous cycle” in theatrical revenue outside the U.S. As movie-going increased in emerging markets, he noted, exhibitors began to invest in more and better theaters, which in turn drove even greater theatrical admissions. “We see a similar opportunity in digital,” Levinsohn said, noting the rapid increase in fixed broadband penetration and mobile connectivity in emerging markets.

The critical issue for the studios, Levinsohn said, is to find innovative ways to capitalize on the growth in digital distribution that preserves the value of the studios’ content, pointing to Fox’s recent digital release of Prometheus three weeks ahead of its release on Blu-ray and DVD as an example of that kind of innovation.

Prometheus was the first title released as part of Fox’s Digital HD initiative, which will make all Fox new releases available for electronic sell-through two to three weeks prior to their arrival on disc for $14.99.

Levinsohn said more than 30% of the digital purchases of Prometheus came from consumers who were either making their first digital purchase or were trading up from their usual digital habits, suggesting the strategy drove significant incremental revenue for the studio.

Separately, Fox Home Entertainment president Mike Dunn told Variety that 71% of the subsequent disc sales of Prometheus within the first few days of their release came from Blu-ray, indicating the early HD VOD availability did not alienate premium disc buyers or cannibalize those sales.

“Results in those first weeks were really solid,”Dunn said. ” ‘Prometheus’ (downloads) actually outsold ‘Avatar’ by 11%, and while digital sell-through product is usually about 3% of total revenue in the first year of release, this will be more like 12%.”

Levinsohn called the conventional wisdom that consumers are moving, en masse, from physical media to virtual formats “a gross over-simplification,” noting that 61% of consumers buy and rent from more than one channel.