In spite of a strong set of May releases including X2, The Matrix Reloaded, and Finding Nemo, Hollywood's box office revenues were down some 4.6% during the first half of 2003.  But with consumers spending a record $10.2 billion to buy and rent DVDs and videos Tinseltown is definitely not hurting.  Shed no tears if the Hulk fails to earn back its $150 million cost at the domestic box office -- DVD sales and rentals are almost certain to put the big green guy firmly in the black.  Remember Disney's Treasure Planet (see 'Treasure Planet Tanks'), which took in a paltry $38 million at the box office?  The studio took a $47 million dollar charge against earnings based on Treasure Planet's underwhelming box office take -- but then the film went on to make more than $64 million on home video.  Robin William's creepy One Hour Photo managed only $31 million in the theaters, but has grossed over $72 million on video, and its not just the misfires and little films that are earning the big bucks on video -- Harry Potter and the Chamber of Secrets put $237 million worth of video revenues in Warner's coffers, and the surprise hit My Big Fat Greek Wedding outdid its stellar box office performance with an additional $232 million in video sales and rentals.

Consumers spent $5.85 billion ($4.8 billion of that on DVDs) purchasing home video products in the first half of 2003, but still managed to reverse a declining trend in video rental, which was up 3.5% for the first time in years.  Once again the DVD format is largely responsible as DVD rentals passed VHS rentals for the first time in 2003.  With spending on the purchase and rental of video products at record levels, it is time to reassess the old formulas for determining whether or not a film is profitable.  With studios making a higher percentage of net profit on DVD sales than from either theater admissions or VHS sales, the shift to DVD is extra profitable for the modern movie moguls.  The exploding home video market is clearly the driving force behind Marvel's recent bid for Artisan Entertainment and the strong cash flow from video sales make it ever more likely that studios will invest in potential sources of story material such as comic book publishers.