Studio Presidents Tout Digital at CES9 Jan, 2014 By: Chris Tribbey
LAS VEGAS — During home entertainment’s prolonged drop in annual revenue, David Bishop, president of Sony Pictures Home Entertainment, was as worried as any other studio president.
Thank goodness for digital.
Cloud-based services such as UltraViolet and the addition of more major electronic sellthrough retailers — such as Target and Comcast — helped make 2013 a flat year overall for the home entertainment industry, and a banner year for digital, which was up 23.9% to $6.46 billion, according to data from DEG: The Digital Entertainment Group.
It also gave Bishop — who’s stepping down from his position in March, after leading SPHE since 2006 — and the rest of Hollywood reason to celebrate.
“[Early digital] gave retailers something more to offer to consumers,” Bishop said, speaking at the International Consumer Electronics Show (CES). “The other thing you can’t discount is cloud technology. It changed everything."
“Now the focus has to be on the value of ownership going forward. What we’re trying to do is get the transaction mix back to 2006 levels,” he said. In 2006 the share of home entertainment was split 70% rental, 30% sellthrough. Today that’s roughly 80% and 20%, Bishop said.
Amit Balan, head of marketing and merchandising for Walmart’s Vudu movie service, said Vudu enjoyed an amazing year with digital movie sales, especially thanks to early digital offerings before disc.
“Early EST was amazing for us,” he said. “For us we also doubled down on TV [content] and it surpassed all our expectations for 2013.” He said that one in four Americans streams TV or movie content, and that “they care about the movie, they don’t care about the format.”
Mike Dunn, president of 20th Century Fox Home Entertainment, said there are as many as 38 million people who are inclined to buy digital content, and that consumers are adapting to the changing release patterns of home entertainment content, mostly because all the studios are on the same page.
“What’s really interesting is you can see the tipping point of digital happening right in front of us,” Dunn said. “It feels like this year we’ll take it mainstream.” Dunn said a full third of new EST buyers are those who previously were only renting digital content. Digital ownership is meaningful now, Dunn added.
“The digital purchase model will accelerate,” Dunn said. “There are more consumers in line than over the turnstile, and they’re all bunched up.”
Giving consumers more with their digital purchase is a key component, according to Steve Nickerson, president of Millennium Entertainment. Working with producers and actors early on in the process makes all the difference when it comes to home entertainment bonuses, he added.
Nickerson also noted that even a film that does $100 million at the box office is still only viewed by five million households. Because of that, his studio has experimented with every release strategy you could think of: day-and-date, early digital, even a JFK film that was released in theaters only days before disc. “We do what’s best for the product,” he said.
Balan agreed that digital ownership is becoming increasingly popular, noting that Vudu.com forum members are apt to list how many digital movies they own, like a badge of honor. “You reach a point where a customer has eight to 10 movies in their collection, and it becomes pride of ownership,” he said.
Deborah Bothun, advisory leader of American entertainment, media and communications for PricewaterhouseCoopers, said her company’s research has shown original programming has become a big appeal for consumers looking for a digital content service. “Most of the consumers the last survey we did are using at least two online services,” she added.
In other CES news:
TiVo’s new data on second-screen behavior and consumer binge watching is eye-opening.
About 78% of TiVo subscribers capable of streaming content are doing so to their mobile devices at least once a month, and the average number of streaming sessions by TiVo users grew nearly 50% during the second half of 2013.
TiVo credits its results to the launch of the TiVo Roamio DVR device this past August.
“Swift adoption of this innovation highlights that consumers are spending an ever-increasing amount of time viewing television on second screens and enjoying the value they place on the flexibility that TiVo provides,” said Tara Maitra, SVP and GM of content and media sales for TiVo. “With recorded content accounting for 76% of all streaming sessions, viewers are telling us they want the second screen to liberate the shows they regularly record.”
Four of five TiVo streaming sessions were used via tablets, and the company’s research found 89% of users binge-viewed in the past few months, with “Breaking Bad” being the most binge-watched show.
UltraViolet, the buy once, play anywhere cloud-based digital content service, has made some major gains in the past year, but it’s still mainly the playground of major studio content.
To satisfy the independents’ need for an open, Internet-based platform for digital distribution to consumers, enter Platform Purple, which already has 100-plus companies enabling 11,000-plus titles for cross-platform distribution.
“Whether they’re small or just an enterprising label, this gives them a direct relationship with the consumer,” said Bill Perrault, president and COO of the company. He said the service will be announcing its biggest customer yet in the coming weeks.
“Ten years ago, life in the video product industry was simple,” said Josh Mellicker, Purple’s founder and CEO. “All video producers, large and small, published on DVD. All retailers, large and small, could promote and sell whatever DVDs they liked, and consumers could keep all their DVDs on one shelf and play them all in one player. But so far, in the digital age, premium video has been a confusing, fragmented and unreliable proposition.”
Purple enables retailers and content owners to open their own branded digital content stores, and Perrault said they can launch them at no initial cost and with few technical obstacles. Purple retains a percentage of each consumer transaction.
“Our unique hybrid technology, combining download and streaming, has enabled Purple to achieve a 99.4% perfect delivery and playback metric, rivaling VHS, DVD and Blu-ray reliability,” said Grace Fioravanti, Purple’s CTO. "And unlike competitors, who only deliver a virtual ‘strip of film,’ the Purple product format is technically a full-blown software program, meaning Purple is ready today as content producers evolve to creating more highly interactive, more-engaging media experiences for consumers."
Samsung’s newly introduced 105-inch curved Ultra-HD (UHD) TV and 85-inch bendable UHD TV will be available to consumers during the second half of 2014, the company said during CES.
“Given the tremendous media and industry reception for these new products, we are excited to bring our 105-inch curved UHD TV and 85-inch bendable UHD TV to consumers around the world,” said HS Kim, EVP of the visual display business at Samsung Electronics. “People who are passionate about entertainment will have a whole new way to experience the content they love with these exciting new models that showcase exceptional design and UHD picture quality.”
The company did not release prices for the sets.