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September 03, 2013

A Blockbuster Is Hard to Find

In this week’s magazine, our editors and reporters looked in their neighborhoods for rental options. Most found a Redbox location within easy driving or even walking distance.

Blockbuster outlets seemed an endangered species, only happened upon on accident or via a long freeway trip.
And when our editors were able to get to a Blockbuster, it was a quandary to figure out how much a given rental would cost — though the selection was more broad than the Redbox kiosk option.

It is hard to see a former rental Goliath wane, but time may have passed Blockbuster by, leaving only ghosts like those at the Blockbuster in last year’s “South Park” episode. In the Oct. 24, 2012, episode, one of the kids’ fathers, Randy Marsh, buys a Blockbuster Video outlet for “only $10,000,” expecting to make a killing, only to find his customers are literally ghosts from the 1980s, wearing leg warmers and asking for films such as Turner & Hooch.

Whether Blockbuster is an anachronism or not, Redbox has taken steps to make sure its shrinking store footprint is filled. Our editors found Redboxes where there were formerly video stores, such as Blockbuster. The kiosk giant has skillfully filled in, and taken over, the disc rental market as Blockbuster has pulled back.

While our selected visits to Redbox and Blockbuster outlets may not paint the entire picture for the physical rental market, I think the exercise certainly points the way to — and points out — the successes and failings of the current physical rental landscape.

I hope you learn something (and perhaps get a chuckle or two, as I have) from the staff accounts we have supplied. The home entertainment rental business has changed a lot in the years since its inception around 1980, but one thing remains the same. Consumers are always looking for something to entertain them, in a convenient, wallet-friendly package. Whether it be Blockbuster or Redbox or a digital offering such as Netflix, or a disc or digital copy they own, consumers are looking for their own version of a “Blockbuster Night” that doesn’t break the bank.

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September 26, 2011

Studios Are the King Makers

Netflix executives, during the past month or so, may have been wishing all the attention were still focused on their old nemesis Blockbuster. As long as Blockbuster was around, Netflix looked like the new, younger kid; the cool kid; the entrepreneur; the next big thing. Netflix represented the future, Blockbuster the past.

Unfortunately, Netflix had to grow up sometime, and its growing pains are starting to show in the company’s stock price, which has dropped precipitously as it has raised subscription prices to offset greater costs and grow its streaming business internationally.

There are a lot of advantages in being the new phenomenon on Wall Street, which is looking for outsized growth, even if it does come by undercutting an older, established business weighed down by debt like Blockbuster. While Blockbuster struggled to move with an enormous debt shackled to it, Netflix could bob and weave and build a better rental mouse trap, one that didn’t involve cumbersome real estate or a debt load and that got great pricing on streaming licenses from content holders who had not yet realized what streamed content was worth.

Now the entertainment landscape has shifted, and Netflix is in the spotlight. The company can’t get the kind of pass offered to new ventures; it will have to grow and prosper under the weight of expectations — and new, higher licensing fees for streamed studio content.

Oh, for the good old days when Blockbuster took much of the heat, Netflix executives must be thinking. But those days may be past for Netflix, which may now find out that the studios can be king makers in the distribution pipeline. Content holders favor whichever distribution avenue will offer them the most profit, and will wring ever more money from distribution pipelines that use their content.

Content is king, and the studios that own it can make or break a distribution partner. In the case of Netflix, I think executives may be finding out they have more in common with Blockbuster and other past studio distribution partners than they thought. Just as Netflix overtook Blockbuster, there are competitors in the wings targeting Netflix.

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June 29, 2011

Why Is Blu-ray Quality Overlooked?

Last week I wrote a column about the loss of quality in the digital delivery realm, and since then I’ve received some assenting feedback.

“I agree with you 100%,” said one respondent. “I’m in the custom integration business and I have to spend time with each customer explaining to them the quality difference between streaming and Blu-ray. Sometimes I get the glossed over look when people think disc is dead and streaming is high-definition. It’s a war and the Blu-ray disc Association, Hollywood, etc., had better treat it that way. My kids have no problem with physical media so I know that isn’t a stumbling block.”

Others chimed in as well, pointing out the compression of digital files.

My question is: Why isn’t the industry doing more to drive home the quality of Blu-ray as opposed to the current state of digitally delivered files?

Last month we published a comprehensive white paper on Blu-ray Disc at 5, extolling the format’s quality and continued growth despite the headwinds of a terrible economy and a worthy predecessor in DVD. We, as an industry, should be doing more of that.

The digital delivery market naturally will have a cheering squad on Wall Street that is willing to repeat over and over again, “Disc is dead! Disc is dead!” After all, investors are always looking for the newest thing and tend to shun established and mature businesses. They just aren’t as exciting and won’t produce the kind of outsized stock growth that Wall Street craves.

But their (somewhat self-interested) enthusiasm for digital delivery doesn’t mean Blu-ray isn’t the best way to see a movie in the home.

Recently, I discussed this question with an industry observer who noted that many catalog titles actually are doing quite well on Blu-ray. He, too, wondered why the industry isn’t putting more effort into pushing and growing the market for the format.

Certainly, these aren’t flush times at many studios, which have instituted layoffs in recent weeks. But not promoting a quality, growing product won’t make things any better. There’s only so much cost-cutting studios can do to boost the bottom line. I agree that selling catalog at a hefty price to streaming services that go to consumers’ iPads and cell phones will help plug the profit hole, but so will selling consumers on the big-screen quality of Blu-ray.
 

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October 10, 2011

Entertaining Ownership Again

In recent years it has become more fashionable to rent rather than to own. The dream of an “ownership society” has turned into a nightmare, with consumers tied down to underwater homes or losing them to foreclosure.

At the same time, consumers have become less committed to owning entertainment. Rental services, such as Redbox kiosks and Netflix, grew as consumers became less interested in plunking down $10 to $25 to own a DVD or Blu-ray Disc. They instead looked at inexpensive $1 rentals at kiosks or (until recently) $10-a-month subscriptions to Netflix as the more economical and useful way to keep themselves entertained.

But there are disadvantages to the rental model. As with a rented house that you can’t paint bright orange, renting or streaming titles constricts consumer options. Redbox and Netflix don’t offer the perfect catalog for each individual. They are not customized collections. The offerings are limited by studio deals, windows and, indeed, whether or not someone else may be first in line to get a particular title. In the case of Netflix, consumers via their subscription are paying for a whole lot of streaming titles they never will want to see. Such as in the cable business, they don’t have an a la carte option.

Owners have the advantage of possessing just the content they want. They buy their favorite movies and can access them at any time, either via disc or — as is the hope with the studios’ newfangled digital locker UltraViolet — digitally via the cloud.

Ultimately, ownership is a very efficient way to get consumers the movies they want. Until now, the only way to have that custom collection was to buy discs. The studios are hoping to make that ownership option more palatable in the digital realm via the fully interoperable ecosystem of UltraViolet. No more wondering if your digital copy will play on a particular device. No more disappointment when Netflix or Redbox doesn’t offer your favorite comedy.

Consumers don’t really want to watch any movie any time; they want to watch the movies they want to watch any time. And ownership that extends to the cloud, if it lives up to its promise, may be the best solution for that

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November 17, 2017

DEG Honors Innovative Women

In a month that saw such depressing news about women’s plight in Hollywood (and indeed in many other arenas), it was gratifying to attend an event inspired by one of the most brilliant women to ever grace the screen. Hollywood legend Hedy Lamarr not only starred in such film classics as Samson and Delilah, The Strange Woman and Tortilla Flat, but she was also a lifelong inventor who pioneered “frequency hopping,” which became the foundation for technology utilized by the cell phones we carry daily, among other things.

To honor her, DEG: The Digital Entertainment group created an award to recognize and commemorate female industry leaders, and Nov. 15 in Santa Monica, Calif., the group presented the inaugural Hedy Lamarr Award for Innovation in Entertainment Technology to Geena Davis. Davis is the founder and chair of the Geena Davis Institute on Gender in Media, which works to dramatically increase the percentage of female characters and reduce gender stereotyping in media targeting children 11 and under.

“She was just so extraordinary and so incredible that I can hardly even begin to fill her shoes, so I am extremely humbled and grateful for this award. What an honor!” Davis said of Lamarr. “She was a pioneer and a patriot and a heroine.”

She noted that “technology has become a huge part of my institute’s success.”

The institute is using data analysis developed at the University of Southern California and funded by Google to quantify the disparity in treatment of females and males in children’s entertainment.

“I am very confident in predicting that the percentage of female characters in TV and movies made for kids will dramatically improve within just a few years,” she said.

The DEG also recognized three scholarship recipients with the Hedy Lamarr Achievement Award for Emerging Leaders in Entertainment Technology: Johanna Baumann of the University of Michigan; Carolyn DiLoreto of USC and Cherylynn Lima of Smith College.

Nominations are now open for the 2018 awards.

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October 30, 2017

Digital Marketplace Gets Even More Dynamic

This past month, the digital marketplace shifted on both the transactional and subscription VOD fronts.

On the transactional side, five of six major Hollywood studios joined forces for digital locker 2.0, Movies Anywhere, in a renewed attempt to make digital movie collecting easy. Movies Anywhere, a free app and website, launched Oct. 11, backed by four top digital retailers and content from Walt Disney (including Pixar, Marvel Studios and Lucasfilm), Sony Pictures Entertainment, 20th Century Fox Film, Universal Pictures and Warner Bros. Entertainment. After the stalled digital locker effort of UltraViolet, content owners are no doubt hoping the second time’s a charm, and having used the service in the past few weeks, I’m impressed. Family members away at college or during a break at school or work have been able to watch movies via the new service, something they rarely did in the many years we utilized UltraViolet. Kudos to these companies for continuing to improve the collecting experience for consumers, and here’s hoping Paramount and Lionsgate give it a shot, as well as digital retailers other than launch partners Amazon Video, Google Play, iTunes and Walmart’s Vudu. I expect expansion of Movies Anywhere participants soon.

The SVOD marketplace saw pricing moves, both up and down. Netflix raised prices, overcoming any cold feet after a disastrous price increase attempt years ago. Despite its loss of Disney content and the threat of rebellion from cost-conscious consumers, Netflix got a thumbs up from the financial markets. On the other hand, Hulu took the opposite tack, lowering the introductory price for its ad-supported service, among other moves for price-conscious viewers.

Meanwhile, kiosk company Redbox, a physical rental stalwart, also made some digital moves, hiring new executives and selling Digital HD codes. More on that front is sure to come.

Content owners and services are aggressively chasing the digital future, refining the pricing and consumer experience in an attempt to find a winning mix. Dr. Nelson Granados, Forbes contributor and professor of digital innovation and information, addressed this dynamic change at the EMA’s recent Digital Media Pipeline conference. He noted that “channel conflict” is inevitable and that content owners have “got to strike a balance,” he said. It looks as if the shifts to find that balance are accelerating.

 

 

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September 25, 2017

New Format Off to a Great Start, But Still Needs Marketing

In our September issue, we examine the status of 4K Ultra HD with high dynamic range (HDR), a new format that — despite being quite a mouthful — seems to be taking off.

Consumers may not understand unwieldy acronyms, but they understand better quality, especially when they see it. Still, if 4K UHD with HDR is to attract the mainstream consumer, the industry it seems will need to make a concerted effort to demonstrate its virtues. The Blu-ray Disc Association has cited data from Futuresource that shows consumers in the United States are familiar with UHD TVs (75%) but that less than half (44%) are aware of high dynamic range (HDR) TVs. That lower percentage familiar with HDR holds true internationally as well. Since HDR, most industry observers hold, is the key to a higher-quality picture, providing greater contrast and deeper, more lifelike colors, it seems further marketing is in order.

Most consumers who upgrade their TVs will adopt 4K UHD (most with HDR) by osmosis, as the newer models will feature the updated format. To get consumers to spend money on content for the new format will require marketing and demonstrations.

“With 4K Ultra HD Blu-ray, seeing is believing,” noted Eddie Cunningham, president of Universal Pictures Home Entertainment. “Educating consumers around the format’s stunning resolution, color brilliance and multi-dimensional sound is of the utmost priority across the industry.”

“Warner Bros. works very closely with our consumer electronics colleagues to incorporate 4K HDR clips and images from our 4K Ultra HD Blu-ray releases whenever possible,” said Jessica Schell, EVP and GM for Warner Bros. Home Entertainment. “This is an ideal way to ensure that the consumer understands the quality of content available to watch in 4K HDR on these new 4K HDR TVs.”

I know organizations such as the BDA and the UHD Alliance, along with the studios, are working on programs to help boost the format at retail and among consumers. As the industry embarks on the holiday season, when numerous shoppers will be out sampling the latest TVs, the home entertainment industry should take advantage of this great opportunity to showcase 4K UHD with HDR content. 

 

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August 28, 2017

Will Disney's Daring Move Pay Off?

In the battle over whether content is king, The Walt Disney Co. has just thrown down the gauntlet, pulling its movies from Internet goliath Netflix and planning to distribute them on its own service.

It was a daring change of strategy by the studio that had previously been a key partner to the subscription video-on-demand leader, satisfied with collecting lucrative licensing fees while helping to build the library of a digital platform that is increasingly eating into the profits of the entertainment establishment. Having built its service on the content of traditional entertainment companies such as Disney, Netflix in recent years has been creating its own — in effect, becoming a studio itself. Surely, studio executives — including Disney CEO Bob Iger — have taken seriously this existential threat.

At the moment, Disney has a corner on some of the best content Hollywood has to offer, despite the increased investment of Netflix, Amazon Prime and others in original content. That makes the studio perhaps the best content owner to meet the challenge of creating its own service.

Still, is Disney’s Iger crazy to take on Netflix — or is he crazy like a fox?

While I’m not in on the deal that Disney signed with Netflix in 2012, it may be that the studio was getting more out of the agreement than hundreds of millions in licensing fees. The deal may have given the studio key knowledge about the SVOD business, knowledge that it can leverage in building its own service.

Some analysts note that SVOD leader Netflix is so far ahead in the SVOD market that Disney is too late to the party. That may be true, but with SVOD eating into content owners’ bottom lines more and more each quarter, I applaud Disney for attempting to take a bite out of the SVOD business.

"We felt that having control of a platform we've been very impressed with … would give us control of our destiny,” Iger said.

Indeed, Disney’s move could help content remain king.

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July 31, 2017

A Salute to 2017's Women in Home Entertainment

In this issue, Home Media Magazine presents its annual salute to the top women in the home entertainment industry. Women executives are making decisions about how to reach the consumer on the many and various platforms and formats available in the market today — from 4K Ultra HD to Blu-ray Disc and DVD to transactional EST to streaming and virtual reality. They are leaders at the major studios and the independents, in physical and digital retail markets, in the home entertainment distribution chain, and in making that supply chain more efficient.

Every year, I am impressed by the quality of the honorees. They are truly helping to drive the home entertainment business and are integral to the industry’s success. In covering these remarkable women, I am struck by their wide range of expertise. They work on everything from the packaging for physical media to marketing via traditional and new media to content licensing and creation to legal and financial issues.

Women are indeed the backbone of the home entertainment business, and they are focused on satisfying the home entertainment consumer, wherever and whenever they would like to access content. Sony’s Lexine Wong looks to “keep the consumer engaged” in a panoply of entertainment options. Disney’s Janice Marinelli said she is “always looking for effective and convenient ways for consumers to enjoy” content. HBO’s Sofia Chang is focusing on “continuing to expand our subscription and transactional offerings.” Redbox’s Sonia Jain is concentrating on “improving our context mix and assortment.” Amazon’s female executives are both obtaining more content and finding new ways to deliver it via Fire TVs and Alexa. Each executive is keeping her eye on the consumer.

The job of the home entertainment executive has perhaps never been harder and these women are in the trenches, looking to move the business forward via technologies old and new. They are not only dealing with new distribution models but also with new forms of home entertainment, such as virtual reality.

Here’s to the women in home entertainment, an impressive group that spans every segment of the industry and contributes mightily to its success.

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June 26, 2017

Ode to the Retailer

This week, we honor the top 10 retailers in the business as chosen by Home Media Magazine research. We also recognize five other retailers to watch for their innovation and commitment to the industry.

Much of the year, we concentrate on content and how it is being delivered. We highlight the companies that deliver it in ever-varying forms, from physical to digital, from standard to high-def to Ultra HD with high dynamic range. These companies are contacting and engaging with consumers, who after all determine the size, shape and future of our business.

Content may be king, as evidenced by digital services such as Netflix, Amazon and many others creating their own content. But ultimately, it’s the retailer that attracts and engages the consumer in discovery of content. When a typical family decides to look for something to watch on a free night, it’s the retailer that helps them locate the content that will excite them.

“Since its beginning, the delivery of home entertainment to the consumer has been about convenience and value,” noted Mark Fisher, president and CEO of the Entertainment Merchants Association, in our special section. “While what constitutes ‘convenience’ and ‘value’ has changed over time, that essential fact remains. Each of these retailers is successfully serving a segment — in some cases several segments — of the home entertainment market by providing their particular formulation of convenience and value to consumers.”

While delivery of home entertainment in all its forms is more diverse than ever, the job of contacting the consumer and offering convenience and value has become complicated as well. So we salute the retailers, both digital and physical, that are serving the tastes of various consumers, wherever, whenever and however they choose to get their entertainment.

“Bold retail innovation among our physical and digital partners this past year has served to significantly elevate our category,” said Eddie Cunningham, president of Universal Pictures Home Entertainment.

The industry’s retail partners are stepping up to push the business forward, with better delivery and marketing, meeting the challenge of a choosy consumer.

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