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Big Changes Are Just Beginning

14 Apr, 2006 By: Thomas K. Arnold

The massive reorganization of the executive suite at Sony Pictures Home Entertainment, along with previous shakeups at Warner Home Video and Paramount Pictures Home Entertainment, speak volumes about where our business is headed.

To put it bluntly, home video is now viewed as merely one piece of the pie, one form of distributing content. It's by far the biggest and most profitable, but it's not the only one — and the days when other forms of distribution, such as video-on-demand, were subjugated lest they ping home video, in one form or another, are over.

I'm not saying all forms of distribution will be on equal footing. They're not, and they won't be until one form or another comes within spittin' distance of unseating video as Hollywood's cash cow.

We are, however, seeing a sea change in how decisions will be made in this, the new Hollywood, which by most accounts officially was birthed April 4 when the major studios began making their movies available for download over the Internet.

The mindset used to be, “How will this affect home video?” The new philosophy: “How can we manage our various distribution channels to maximize profits?”

One might argue that's how it should always have been, but keep in mind that for years and years home video reigned, unchallenged, as Hollywood's big financial enchilada. Spurred by the advent of first sellthrough and then DVD, Hollywood's home video fortunes rose and rose until by 2001 the studios were making more money from the video aftermarket than from the primary theatrical market.

Video-on-demand and other aftermarket distribution channels weren't even in the running and were perpetually caught in the same Catch 22: Studios didn't want to take risks and really invest for fear of tipping the video cart, but unless they changed the status quo and, say, released movies to VOD first, any chances of real growth were stymied.

You can't really blame them. Technology wasn't quite there yet, and home video executives were too close to their core businesses to really take a step back and take in the big picture.

Now, technology has opened doors long nailed shut, and executives are stepping out for a bigger, grander view.

If you think you've seen big changes already, with the Movielink and CinemaNow announcements, take a deep breath. You ain't seen nothing yet.

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