Interesting. From the Los Angeles Times (5/18):
Even more alarming, especially for studios who've thrived on seducing moviegoers into seeing mediocre product, is the realization that audiences are becoming more quality conscious. In the past, if a forgettable action film hit pay dirt at the box office, it would perform correspondingly well in DVD, allowing studios in greenlight meetings to provide a conversion rate--i.e. that if a movie of a certain genre made $100 million in the theaters, that would equal X millions of units in DVD. But judging from recent DVD sales figures, films that had poor word-of-mouth--signaling significant audience dissatisfaction--were underperforming in DVD, even if they had enjoyed lofty box-office numbers. . . .
No one knows the answer, but in the movie business, executives are unsettled, unsure of what movies to greenlight if they can no longer be sure of which of their old economic models still apply. It's why studios are no longer making deals where talent gets first dollar gross--unless the talent is willing to wait until the studio breaks even first. In Hollywood, executives are a lot like great athletes--if they lose their confidence, they can't do their job well. It takes a lot of built-in swagger to roll the dice on a slate of $100 million-plus movies. But as the DVD numbers continue to slide, studio chiefs are finding it hard to take those big wads of cash out of their pockets. Right now, they're spending a lot of time looking for safe bets.