Time Magazine 2012 Annual Report Download - page 24

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theatrical and television product through licenses of motion pictures and television programming to subscription
and transactional on-demand services, including iTunes, Comcast’s Streampix service, Amazon, Hulu, Netflix
and others. In addition, the segment generates revenues from the development and distribution of videogames in
traditional console and digital formats.
The segment also generates licensee fees and royalties from the license to manufacturers, publishers,
retailers, theme park operators and other licensees of the names, likenesses, images, logos and other
representations of characters and copyrighted material from motion pictures and television series produced or
distributed by Warner Bros. Licensing revenues are typically derived from royalties based on the licensee’s
revenues.
Warner Bros. produces feature films both wholly on its own and under co-financing arrangements with
others, and also distributes its films and films produced by third parties. Warner Bros.’ feature films are produced
under the Warner Bros. Pictures and New Line Cinema banners.
Warner Bros.’ feature film strategy focuses on offering a diverse slate of feature films with a mix of genres,
talent and budgets that includes several “event” films each year and building and leveraging franchises, such as
Batman,The Hangover,Harry Potter,The Lord of the Rings,Sherlock Holmes and Superman. During 2012,
Warner Bros. released 17 original feature films for theatrical exhibition in the U.S., including The Dark Knight
Rises,The Hobbit: An Unexpected Journey,Magic Mike,Journey 2: The Mysterious Island and Argo.Ofthe
films released during 2012, four were released in 3D format, including The Hobbit: An Unexpected Journey and
Journey 2: The Mysterious Island, and eight of the films released during 2012 were formatted for viewing on
IMAX screens, including The Dark Knight Rises,Dark Shadows and The Hobbit: An Unexpected Journey.In
addition, The Hobbit: An Unexpected Journey was released in HFR for viewing on a limited number of screens.
Warner Bros. released five films in the first quarter of 2013 and plans to release 15 additional films in the U.S.
throughout the year, including 300: Rise of an Empire,The Great Gatsby,The Hangover Part III,The Hobbit:
The Desolation of Smaug,Man of Steel and Pacific Rim. Of the original feature films expected to be released
during 2013, Warner Bros. expects to release eight in 3D format, including 300: Rise of an Empire,The Great
Gatsby,The Hobbit: The Desolation of Smaug and Man of Steel, and seven formatted for viewing on IMAX
screens, including 300: Rise of an Empire,The Hobbit: The Desolation of Smaug and Man of Steel. In addition,
The Hobbit: The Desolation of Smaug is expected to be released in HFR for viewing on a limited number of
screens. Feature films released in 3D, HFR or formatted for IMAX viewing are generally sold at premium
pricing. Release dates for Warner Bros.’ feature films are determined by a number of factors, including
competition and the timing of vacation and holiday periods.
Warner Bros. distributes feature films for theatrical exhibition in more than 125 international territories. In
2012, Warner Bros. released internationally 18 English-language films and 23 local-language films that it either
produced or acquired.
After their theatrical exhibition, Warner Bros. licenses its newly produced feature films, as well as films
from its library, both domestically and internationally for distribution in various windows on broadcast and cable
networks and premium pay television services, and also distributes its films on DVD and Blu-ray Discs and
through digital retail services for ownership and rental. Newly produced feature films are released in the home
entertainment window approximately four to six months following their release to theatrical exhibition, with the
release date being influenced by seasonality, competitive conditions, film attributes and expected performance. In
the U.S. and most major international markets, Warner Bros. has generally released all films simultaneously for
sale on DVD, Blu-ray Disc (including, for new release titles, an UltraViolet digital copy), and via VOD and EST
(e.g., download to own); however, in 2012, Warner Bros. began releasing some of its films in EST approximately
two weeks in advance of their release on DVD, Blu-ray Discs and VOD. Warner Bros. generally releases newly
produced films to brick and mortar retailers and by-mail and kiosk rental services 28 days following their release
to other home entertainment channels. Following the release of newly produced films in the home entertainment
window, Warner Bros. licenses its newly produced films, as well as films from its library, for distribution in
various windows to broadcast and cable networks and premium pay television services both domestically and
internationally and, in most cases, other exhibitors such as airlines and hotels. Warner Bros. also selectively
licenses feature films for exhibition online in the U.S. and internationally to SVOD services such as Amazon,
Netflix, Hulu and LOVEFiLM.
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