The Land Before Time franchise has produced 11 direct-to-home features and has earned over a whopping $1 billion for Universal.

The Fat of the Land
Because production is less expensive than for theatrical releases, and therefore the profit margin is greater, studios find it a worthwhile investment to distribute direct-to-home animated titles. Financing is arranged through co-production agreements (allying with other companies to share the cost of services and expertise), co-financing deals (including presales with home entertainment distributors in different territories), negative pickups (bank loans against guaranteed presales), and internal funding.

While models for financing vary, co-production deals are common between the rights holder and the distributor. Depending on its available capital, the rights holder may largely fund production, with distribution partners in different territories contributing advance money against future royalties to cover the remaining costs. Royalties paid to distributors are typically 10% to 25% of the wholesale price of the video/DVD, with 20% being the most common cut. Sometimes, distribution partners are approached as investors; without having to bid for distribution rights in their home territories, and given the incentive of back-end profit participation, distributors may be able to invest more upfront than in a straight presales deal.

For traditionally animated, 2D features like Charlotte’s Web 2: Wilbur’s Great Adventure (produced by Nickelodeon and distributed by Paramount), or Balto 2: Wolf Quest and The Land Before Time: The Great Longneck Migration (produced and distributed by Universal Studios), the general production cost is $5 million to $15 million, with an approximate schedule of 70 weeks (38 weeks for preproduction, 36 weeks for production, and nine weeks for post-production). Thus far, the successful Land Before Time franchise has produced 11 direct-to-home features, earning over $1 billion for the studio.

Ben Hur, distributed by GoodTimes Entertainment, is a co-production of Agamemnon Films, GoodTimes and Tundra Productions. While Ben Hur came out in 2001, it seems to have longevity in stores. It is a 2D/3D hybrid, with a traditional look and feel. Bill Sondheim, president of retail and entertainment at GoodTimes, explained that for properties with evergreen sales such as Ben Hur, the initial release might account for 60% of its total business.