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2016 Year in Review

19 Dec, 2016 By: Erik Gruenwedel

It was another year of rapid change in home entertainment that produced some strange bedfellows. Digital distribution widened its appeal, spearheaded by over-the-top offerings, while a new format, 4K Ultra HD Blu-ray, emerged to give physical distribution a boost.


➤ DEG: The Digital Entertainment Group reports that consumer spending on home entertainment in 2015 topped $18 billion, up 1% from 2014, driven by gains in subscription streaming.

➤ Entertainment retail chains report a bump in winter sales led by Trans World Entertainment, which saw same-store sales at its f.y.e. (For Your Entertainment) chain increase 2.5% for the five-week December period ended Jan. 2, 2016. It was the best December comp sales in 10 years.

➤ Spurred by 5.6 million new subscribers worldwide in 2015, Netflix begins 2016 with 75 million total subscribers, up from 57.3 million a year earlier. At CES in Las Vegas, co-founder Reed Hastings announces Netflix is live in 196 countries. For the second consecutive quarter, domestic sub growth fails to meet projections, which the company attributes to rollout of new consumer credit cards with chip technology.

➤ Dish Networks’ Sling TV is projected to end 2016 with 2 million subs, compared to 350,000 at the end of the third quarter in 2015, according to Goldman Sachs.


➤ Online movie ticket service Fandango acquires Flixster.com and Rotten Tomatoes from Warner Bros. The deal does not include Flixster Video; its UltraViolet-registered users will be transitioned to the rebranded Fandango Now platform.

➤ Best Buy rolls out 4K Ultra HD Blu-ray Disc movies and a Samsung UHD BD player ahead of the official March 1 launch date.

➤ Streamlined release slates undermine studio financials. Lionsgate reports a 23% drop in home entertainment revenue; Warner Bros. Home Entertainment revenue declines 10%; and 20th Century Fox reports a $34 million decline due in part to lower global home entertainment revenue. Disney and Universal Pictures report revenue gains.

➤ Lionsgate and Starz consider a merger, according to a regulatory filing. Starz Distribution, which includes Anchor Bay Home Entertainment, reports 2015 revenue dropped 17% to $163.4 million.

➤ Private investor group Engaged Capital sends a letter to the board of Redbox corporate parent Outerwall, urging it to return the publicly held kiosk vending subsidiary to private ownership.

➤ Google-owned YouTube continues to dominate online video traffic, generating 243.6 million unique visitors in February, ahead of Facebook with 206.4 million, and Yahoo and Microsoft with 204.4 million and 201.3 million, respectively.


➤ Following a disappointing fiscal quarter, Redbox corporate parent Outerwall initiates a process to “explore strategic and financial alternatives,” including selling the company to maximize shareholder value.

➤ Despite pledging allegiance to pay-TV, The Walt Disney Co. increases forays into digital distribution, including direct-to-consumer. The media company in late 2015 in the United Kingdom launched DisneyLife, a subscription streaming service.

➤ The United States is runner-up to Spain in the number of cord-cutters among pay-TV subscribers, according to Parks Associates.

➤ Time Warner CEO Jeff Bewkes defends the $15 monthly pricing for HBO Now, the premium pay-TV channel’s upstart subscription streaming service.   

➤ Video-on-demand use continues to rise, with 65% of respondents in a Nielsen survey saying they watch on-demand programming, including recorded and third-party video streaming.


➤ Amazon launches a standalone Prime Video subscription service for $8.99 — identical to Netflix’s entry-level price. The regular Prime membership, which includes free two-day shipping, is available for $10.99 monthly.

➤ Sling TV, the online TV service operated by Dish Network, says it won’t move to acquire original content as a point of differentiation. Instead, the service is focusing on the user interface and on-demand access, says CEO Roger Lynch.

➤ While 25% of respondents said they'd pay a premium for access to new-release movies in the home, a MarketCast study finds that premium VOD would diminish consumer demand for movies.

➤ Twitter becomes the first social media app to gain authorization to stream 10 NFL Thursday Night Football games, beating out Facebook, Amazon Prime, Verizon and Yahoo.  


➤ DEG: The Digital Entertainment Group reports first-quarter consumer spending on home entertainment topped $4.55 billion, down 1.8% from $4.64 billion in spending during the prior-year period, spurred by subscription streaming.

➤ It is announced that veteran Lionsgate marketing chief Anne Parducci is leaving the company to focus on producing children’s animation projects, including several projects for Lionsgate.

➤ Comcast’s $3.8 billion purchase of DreamWorks Animation will likely include Universal Pictures supplanting 20th Century Fox distributing the former’s theatrical and home entertainment titles, Comcast CFO Mike Cavanaugh tells an investor group.

➤ Studios post mixed first-quarter financials. Lionsgate and Sony Pictures report declines, while Warner Bros. Home Entertainment and 20th
Century Fox Studios report revenue gains of 31% and 23%, respectively.

➤ Amazon launches Amazon Video Direct, a new platform enabling aspiring filmmakers to sell content directly to consumers, including Prime members.

➤ Turner Broadcasting System launches a subscription streaming service devoted to classic movies, co-managed by Turner Classic Movies and The Criterion Collection.

➤ Rovi Corp. acquires digital video recording pioneer TiVo for $1.1 billion in a cash and stock transaction that results in Rovi melding into TiVo's corporate brand.


➤ Warner Bros. bows Warner Bros. Digital Networks with a mandate to develop digital and over-the-top video services. The unit is headed by Craig Hunegs, president of business and strategy at Warner Bros. Television Group.

➤ Xbox and PlayStation 4 separately announce 4K Ultra HD functionality on future versions of their consoles, including UHD Blu-ray for Xbox One S, a 40%-smaller version of Xbox One.

➤ Power struggles ratchet up when Sumner Redstone, the 93-year-old chairman of Viacom, and his vice chairwoman daughter, Shari Redstone, move to replace five board members, including CEO Philippe Dauman.

➤ A federal appeals court upholds the Federal Communications Commission’s open Internet ruling from 2015. In a 2-1 vote, the court ruled against scaling back the government’s landmark decision classifying the Internet as a utility.

➤ MovieStop, the Atlanta-based buy-sell-trade packaged-media/entertainment trend retail chain goes out of business — two years after being bought by the owner of Amarillo-based retail chain Hastings Entertainment.

➤ Domestic consumer spending on subscription streaming video is projected to decline 2% in 2016 to $1.19 billion, from $1.21 billion in 2015, according to British research firm Strategy Analytics.

➤ Nearly 30% of 1,086 respondents in a survey conducted by Limelight Networks said they prefer watching Netflix and other OTT video services, compared with YouTube at 45%. The same survey the previous December found 26% favored OTT video services, compared with nearly 50% for YouTube.


➤ Lionsgate acquires Starz, the premium TV network, in a cash and stock deal worth $4.4 billion. The agreement is approved by the boards of both companies, though the deal doesn’t close until December.

➤ Cinedigm announces it has $30 million in potential revenue distributing physical and digital content following the bankruptcy filing of Alchemy (formerly Millennium Entertainment) and other industry consolidations.

➤ Nielsen reports the percentage of domestic households with a DVD/Blu-ray Disc player tops 77% in the first quarter, down 3% from the previous-year period. More people (93 million) per month use a DVD/Blu-ray Disc player than use a video game console (61 million) or streaming media device (60 million).

➤ In an effort to accelerate virtual reality content production, the Advanced Imaging Society forms The VR Society, a new division supported by all the major studios.


➤ DEG: The Digital Entertainment Group reports consumers spent 4% more on buying movies and other content on disc as well as digitally in the second quarter than they did in the second quarter of 2015.

➤ A new report from Gaff surveyed 1,006 consumers and found respondents continue to prize DVDs and other physical media, including bonus materials not typically found in digital media.

➤ In an era of low-cost subscription streaming, Apollo Funds’ $1.6 billion acquisition of Redbox parent Outerwall appears to be a shout out to DVD and Blu-ray Disc. The $52-per-share purchase price announced in July represents a 51% margin on Outerwall’s Q1 stock price.

➤ New data from a survey of 1,209 domestic households from Littman Research Group finds 59% of households have at least one SVOD service, compared with 47% in 2014.

➤ Time Warner acquires a 10% minority stake in Hulu, the subscription streaming service co-owned by Disney, Fox and Comcast. The $583 million investment values Hulu at $5.8 billion — reportedly three times what it was worth in 2012.

➤ NBC reported 2.7 billion live-streaming minutes from the 2016 Olympic Games, more than double the live-stream totals (1.2 billion) for every previous Olympics combined.

➤ Trans World Entertainment sets plans to open 18 reformatted For Your Entertainment (f.y.e.) retail stores prior to the winter holidays, increasing focus on trend categories such as collectibles, T-shirts, posters, action figures, TV shows and popular culture.

➤ Cloud-based digital movie service Disney Movies Anywhere announces its first premium-TV distribution pact, with Verizon Fios. Fios subscribers can purchase and watch Disney movies directly through their set-top box and other compatible devices.

➤ Panasonic launches a 4K Ultra HD Blu-ray Disc player in domestic stores, priced at $699.99. First unveiled at CES in January, the DMP-UB900 is the most expensive UHD Blu-ray player on the market.

➤ RLJ Entertainment asks shareholders to approve a proposed $65 million financial agreement with AMC Networks that will enable the pay-TV distributor to take control of the home entertainment company formed in 2012 through the merger of Image Entertainment and Acorn Media Group.

➤ Lionsgate and Univision announce a partnership for the launch of a movie subscription-streaming service in 2017 — the first SVOD service targeting Spanish-speaking and bilingual Hispanic consumers in the United States.

➤ Just months away from the launch of DirecTV Now, AT&T’s monthly subscription-based online TV platform, CEO Randall Stephenson welcomes the possibility the new platform could siphon consumers away from linear pay-TV.

➤ CBS All Access, the media giant’s subscription streaming video service, bows an ad-free monthly plan for $9.99 — 66.7% above the standard $5.99 fee.

➤ Federal Communications Commission chairman Tom Wheeler proposes requiring pay-TV operators to offer free app-based video distribution alternatives to the set-top box. However, opposition to the plan leads to a delay in voting on it, and an analyst declares the proposal “95% dead” after Donald Trump wins November’s presidential election.

➤ A video trend report from Digitalsmiths indicates consumers buying or renting movies online or via kiosk in the second quarter dipped slightly.

➤ About 2.3 million Twitter followers live-stream a NFL game on Sept. 15, the first of 10 NFL games to be streamed on the social media app this season.

➤ Comcast CEO Brian Roberts formally buries the hatchet with Netflix at the Goldman Sachs investor event. He makes a presentation to analysts of direct-access to Netflix through its broadband-based X1 set-top box.


➤ Citing the regulatory environment for foreign content, Netflix announces plans to distribute content in China through third-party streaming services, instead of launching a standalone platform.

➤ AMC Networks and RLJ Entertainment announce a partnership aimed at exploiting the latter’s subscription streaming video businesses, which include Acorn TV and Urban Movie Channel.

➤ To satiate their more than 100 million combined monthly subscribers, Netflix and Amazon Prime spent $7.5 billion in 2015 licensing and creating TV programming — more than CBS, HBO and Turner Networks, according to IHS Markit.

➤ Netflix signs an agreement with iPic Entertainment to screen new-release movies day-and-date with their global streaming access.

➤ AT&T’s pending online TV service, DirecTV Now, will bow with a $35 monthly subscription fee, CEO Randall Stephenson says. The service will include content from Starz and Viacom’s TV line-up, among others.

➤ Google-owned YouTube reportedly signs a carriage agreement with CBS for a pending online TV service launching in 2017. The Walt Disney Co. and 21st Century Fox also are in negotiations to offer select channels to the service, which is expected to launch in the first quarter.

➤ The 4K Ultra HD Blu-ray format sells its 1 millionth disc, racking up more then $25 million in consumer spending, according to data from Futuresource cited by the Blu-ray Disc Association.


➤ Media company Turner launches FilmStruck, the company’s first domestic subscription video-on-demand service. Developed and managed by Turner Classic Movies, FilmStruck is the exclusive streaming home to the Criterion Collection library via a premium add-on tier, The Criterion Channel.

➤ Lionsgate announces plans to integrate Starz Distribution into its home entertainment operations, headed by Jim Packer, president of worldwide TV and digital distribution, and Ron Schwartz, president of home entertainment.

➤ Following consummation of AT&T’s $85 billion acquisition of Time Warner, Kevin Tsujihara, CEO of Warner Bros. Entertainment, is expected to remain in his position, along with senior executives at HBO and Turner Broadcasting, Time Warner CEO Jeff Bewkes tells analysts.

➤ The latest report from DEG: The Digital Entertainment Group shows an estimated 6% spike in Blu-ray Disc sales in the third quarter of the year, and that Blu-ray Disc sales continue to climb 10 years after the format’s launch. Overall, subscription streaming — mostly Netflix — continues to drive home entertainment spending in the three-month period that ended Sept. 30, the DEG reports.

➤ Characterizing the emergence of online TV platforms “an exciting moment of growth” in the pay-TV ecosystem, James Murdoch, CEO of 21st Century Fox, says services such as AT&T’s DirecTV Now and next year’s Hulu Live should be embraced, not feared.

➤ Facing a GOP-led Congress and President-elect Donald Trump next year, Dish Network CEO Charlie Ergen said the new administration could help trigger regulatory changes and infrastructure opportunities for video distribution, including over-the-top.

➤ Scripps Networking Interactive won’t re-up a streaming video distribution agreement with Netflix when it expires at the end of the year. COO Burton Jablin says the strategic decision not to extend the 2-year-old SVOD agreement came down to economics.


➤ Shareholder approval of Lionsgate’s $4.4 billion purchase of Starz is accompanied by news that longtime Anchor Bay Entertainment president Bill Clark will exit the company early next year.

➤ Netflix announces it is giving subscribers the ability to download movies and TV shows for offline viewing and that the service is available for mobile phones and tablets on Android and iOS.

➤ Warner Bros. CEO Kevin Tsujihara tells an investor group the time has come to afford consumers with the option to watch studio movies earlier at home concurrent with their theatrical run.

➤ The crush for early access to theatrical movies in the home continues to gather momentum, with Apple reportedly in talks with studios regarding making movies available on iTunes.

➤ Google announces its rebranded Google Play Movies & TV platform is now selling access to 125 movies in 4K Ultra HD resolution. The titles can be purchased on Android devices or the Internet.

➤ AT&T formally launches its separate DirecTV Now standalone over-the-top video service aimed at a market segment (20-plus million households) that eschews traditional pay-TV.

➤ Amazon announces it is making Prime Video available to consumers in more than 200 countries and territories worldwide.

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