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Viacom’s Home Entertainment Business Struggled in Fiscal 4Q17

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Softness in fiscal 4Q17 

Viacom’s (VIAB) home entertainment business, part of its filmed entertainment segment, reported revenue of $189 million in fiscal 4Q17, a fall of 5% YoY (year-over-year) primarily driven by a 16% YoY fall in international home entertainment sales. This fall was offset by a 3% rise YoY in the domestic home entertainment business.

In the chart above, we can see that in fiscal 4Q17, the company generated its lowest home entertainment revenue in the last five quarters. During the period, its revenue fell at a CAGR (compound annual growth rate) of 1.2%.

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Strong movie titles helped in fiscal 2017

Overall revenue from Viacom’s home entertainment business rose 8.4% YoY to $849 million in fiscal 2017 driven by the releases of hit titles such as Star Trek Beyond, Jack Reacher: Never Go Back, xXx: The Return of Xander Cage, and Transformers: The Last Knight.

According to movie database and research company The Numbers, Fantastic Beasts and Where to Find Them collected the highest revenue of nearly $50 million from home video sales in fiscal 2017 followed by Star Trek Beyond. Even carryover revenues from Teenage Mutant Ninja Turtles: Out of the Shadows helped the business unit to drive revenue in fiscal 2017.

The success of Viacom’s home video business is highly correlated with the performances of newly released movies. According to The Numbers, in the span of 25 years, Disney (DIS) continues to lead in the home video business with $10.6 billion in revenue. It’s followed by Warner Bros. (TWX), Universal (CMCSA), Fox (FOXA), Sony, and Paramount with $8.5 billion, $8.4 billion, $8.4 billion, $7.1 billion, and $5.8 billion in revenue, respectively.

In fiscal 1Q18, the company’s home entertainment business may gain from the release of the hit movie Daddy’s Home 2.

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