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Do Teenagers Hold the Key to Success in This Economy?

Lionsgate Films (LGF) rocketed higher Friday after the company turned in a better-than-expected earnings report. The company said video sales for “The Hunger Games”.

The company reported EPS of 53 cents per share, walloping the mean analyst estimate for 9 cents per share.

Lionsgate seems to have found a niche that allows it to compete with other, larger movie studios. That niche is turning wildly popular young-adult books into movies. Lionsgate didn't pioneer this strategy (See: Potter, Harry), but it wisely bought the rights to “Hunger Games” and then purchased Summit Entertainment, the studio behind the first three films based on the “Twilight” novels earlier this year.

There are still at least two more films to be made from the book trilogy that “Hunger Games” is based on, and the final movie based on the “Twilight” books is scheduled to open this month. The company has already hinted that it could make additional “Twilight” movies.

Compare those results to those from entertainment giant Walt Disney Co. (DIS), which yesterday warned that home video sales would hurt results in the current quarter, and you see that Lionsgate seems to be on to something that runs counter to the broader trend.

Sales of physical media have been in steady decline for years, with both DVD and CD sales falling as people have transitioned to finding ways (both legal and illegal) to get their entertainment needs met online.

Of course the rapid sales of Taylor Swift's new album “Red” show that there is still a group of people who will buy physical media. Interestingly enough, it seems to be the same group who go to see the “Hunger Games” and “Twilight” films, 17-year-old girls.

Perhaps the rest of the economy should take note, teenage girls have money and are willing to spend it.

 

Bobby Raines is the Managing Editor of the Market Intelligence Center. He has degrees in Mass Communications and History from Emory & Henry College. Bobby worked at a mid-sized daily newspaper before making a switch to covering the financial industry full time in the years leading up to the financial crisis. He has been a member of the Fresh Brewed Media team since 2011 and has served as a writer and analyst. You can write to him at braines@marketintelligencecenter.com.

Bobby Raines

Bobby Raines is the Managing Editor of the Market Intelligence Center. He has degrees in Mass Communications and History from Emory & Henry College. Bobby worked at a mid-sized daily newspaper before making a switch to covering the financial industry full time in the years leading up to the financial crisis. He has been a member of the Fresh Brewed Media team since 2011 and has served as a writer and analyst. You can write to him at braines@marketintelligencecenter.com or follow him on Twitter: @BRatMICenter.