In this issue of Playback, we launch a home video column to accompany our regular box office write-up on p. 4. (For those of you looking for our TV ratings column, you can find it on p. 6.)

While many still romantically look upon theatrical box office as the be all and end all, producers and distributors now generally make their money in the ancillary markets – primarily cable and home video sales and rentals.

Exhibitor news so far in 2006 has been discouraging, with weekly box office revenue in North America mostly down from one year ago, enjoying a momentary bump from the opening of Inside Man. This is coming off a year in which the overall Canadian box office was already down 16%. While many exhibitors blame Hollywood’s recent output as the reason more filmgoers are steering clear of the local multiplex, to my eyes, the balance between quality and dreck coming out of Tinseltown has not changed dramatically.

Meanwhile, DVD sales and rentals remain robust, with the home video market now estimated to be worth three times the value of theatrical. And it’s not surprising. A DVD version of an appealing movie, offering crisp digital picture and sound, can usually be purchased for less than the cost of two tickets at an urban cinema. Played on a 5.1 surround-sound home theater system – and with widescreen HDTVs becoming increasingly within reach for many consumers – DVDs provide an irresistible option that has taken a huge bite out of box office. Exhibitors are silently aware of this and are hard at work devising new ways to lure the digitized couch potato back to their palaces.

The DVD phenomena is also a blessing for the Canadian production industry. Producers and distributors have long accused exhibitors of not granting enough screens to domestic fare, but home video is far more democratic. If you have a strong enough product and can create some buzz around it – even if it vanished from the local art house after one week – audiences will seek you out on home video, and won’t have a hard time finding you. On the heels of the recent Genie Awards, for example, amazon.ca is promoting 16 nominated titles for sale.

An interesting case study is The Snow Walker, itself a nine-time Genie nominee, which reaped $400,000 in theaters and $425,000 on home video for distributor Lionsgate Films. Distributors of Canadian films don’t expect to turn a profit on a theatrical release, but a run on the big screen gives a film the chance to build awareness for its home video life, where margins are better anyway.

Smart distributors are taking advantage of the potential for bonus features that the DVD format allows, providing another hook for consumers. For example, one of the latest releases, David Cronenberg’s A History of Violence, offers an enlightening one-hour making-of documentary by the director’s wife, Carolyn Zeifman, and both have done interviews in support of the DVD’s release (through Alliance Atlantis in Canada). On home video, which still includes the moribund VHS format, Violence is, at the time of this writing, the top DVD renter in the U.S. and the number two seller. Cronenberg has said that he believes the film’s home video revenue can surpass its theatrical performance, which sits around US$50 million worldwide.

Meanwhile, the DVD of Deepa Mehta’s Water includes a whole other version of the film spoken in English (the film was released theatrically in Hindi). Distrib Mongrel Media is not merely throwing the DVD out there, either: print ads have appeared and a disc-signing appearance by the director and star Lisa Ray got some media play.

The release of C.R.A.Z.Y., from Distribution Select, meanwhile, is perplexing. The film, of course, was the box office story in Quebec last year, bringing in $6.2 million. The DVD gives the film a chance to conquer the English-Canadian market that has thus far eluded it, but the disc is clearly not designed with that in mind, as its bonus features do not include English subtitles.

For all its benefits, there are also downsides to the digital revolution. The ease of DVD duplication has brought with it an explosion of piracy, although the kind of person who would pay $5 for a bootleg disc shot on a camcorder in a movie theater does not represent the industry’s target consumer, who is looking for a premier product.

And, of course, the DVD’s days are already numbered, with the battle underway for its format successor – either Blu-ray Disc or HD-DVD. But industry insiders predict a lifespan for DVD of another five years or so. Whatever the case, home video has become dominant in the entertainment marketplace and will remain stable regardless of format. And huge rewards can be had for distributors that offer quality product properly tailored to its format and backed by enough marketing savvy to maximize the opportunity.

Note: Sean Davidson, our intrepid news editor and an integral part of the Playback editorial team for the past four years, has been promoted to associate editor. Congratulations, Sean, on a well-deserved promotion. Also, senior writer Marcus Robinson will be leaving us for a few months on paternity leave. Following a summer of changing baby Sydney’s diapers, Marcus will return in time for the lead-up to TIFF. Marcus, enjoy your latest addition.