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Blu-ray Shines at Lionsgate

Sandy Brown

Independent film producer and distributor Lionsgate (LGF) announced its first slate of high-definition DVD releases using the much heralded Blu-ray format.

The company's first 10 releases on the next-generation hardware will hit retail this coming spring, and will include recent titles such as Lord of War, The Punisher and Saw along with catalog selections including T2: Judgment Day and Reservoir Dogs.

Lionsgate, along with larger movie studios including News Corp's (NWS) 20th Century Fox and Viacom's (VIA) Paramount, last year embraced Sony's (SNE) Blu-ray digital disc technology, citing its antipiracy measures.

Other factors, including DVD companies' ability to mass-produce discs at a reasonable cost and benefits such as the impact "on high definition package media from the upcoming launch of Sony's PlayStation3 computer entertainment system and the prospect of having its catalog of titles available for the system," are cited by the company in support of the Blu-ray rollout.

Lionsgate will continue to make new and catalog library releases available on Blu-ray throughout 2006.

At midday, shares in Lionsgate were trading up over 4% to $8.12.

The studio, however, was humbled last month when it lowered its annual forecast on the heels of a disappointing theatrical release and other factors including DVD softness. The stock reacted accordingly, falling to below current levels and well off its 52-week high of $11.63.

Still, the company has enjoyed success thanks to a conservative production budget model that gets films made for under $20 million. That strategy is normally coupled with a marketing tactic that sees the purse strings cut when a film fails to generate early returns.

The success of last year's Crash, which cost under $7 million but grossed $80 million at the box office, and an extensive film library for future exploitation has generated buzz that the company might make an attractive acquisition target.

Meanwhile, Lionsgate President Steve Beeks, in a statement, heralds Blu-ray and its greater capacity. "The high-definition DVD revolution has arrived and, through Blu-ray, consumers will be able to experience our library of movies with sound and picture quality beyond anything they could have ever imagined."

The overarching problem that Blu-ray copyright protection technology is supposed to address, however, is rampant movie piracy, and that remains an open case.