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Kornblau Sees DVD, HD, Download Coexisting

27 May, 2006 By: Erik Gruenwedel


Craig Kornblau


Craig Kornblau is the recipient of the fourth annual DVD Visionary Award at this week's Fifth Annual Home Entertainment Summit: DVD's Nine Lives.


HMR: What is Universal doing in the digital distribution realm?

Kornblau: We are getting very aggressive about offering download-to-own movies on Web sites. We're talking to traditional brick-and-mortar stores and their e-tail sites, as well as new distribution partners. Everyone you've ever heard of, from BitTorrent and Google to Yahoo and AOL, we are talking to them. What is important to us is the ubiquitous distribution of our product. We want our content out there everywhere.


HMR: What approach are you taking with online vendors?

Kornblau: What is critical to us is establishing collaborative relationships with these new e-tailors similar to what we have with our brick-and-mortar retailers. We want to do everything and anything to get these e-tailors up and running in this business. The reality is that our business is at risk from people stealing our product online. What we cannot do is hang back and watch. We have to get very aggressive and get product out there with legitimate electronic sellthrough services, such as Movielink.


HMR: What are your goals this year?

Kornblau: Hopefully dozens of companies [will get] aggressively into electronic sellthrough this year. We want to be as encouraging as we can for two reasons. One, we want to offer consumers a legitimate offering, and two, we want to spoil the free ride that is out there for pirates.


HMR: Is piracy the primary concern, or is changing consumer habits?

Kornblau: Piracy is a substantial issue, and it is growing. [But] the important thing is that consumers want digital utility, and we have to offer them that at a competitive price.


HMR: How will digital distribution impact packaged media?

Kornblau: It is going to impact packaged media just like every other form of entertainment. Each platform offers the consumer a whole different set of benefits. Frankly, some of it will be cannibalistic, but another way to look at it is that it attracts a different group of consumers. The one thing we have seen throughout time in this business is that as new platforms and formats come along, they, for the most part, can happily co-exist.


HMR: Where does digital downloading fall in the distribution food chain and its impact on theatrical and packaged media?

Kornblau: I never think about food chain and No. 1 and No. 2. To me, they are about mutually exclusive opportunities for the consumer. We have made a decision [with Movielink] to release all content day-and-date with DVD and electronic sellthrough. There are consumers of packaged media who want to proudly display their libraries, and there are others who don't want to touch it. I think of this as different opportunities and different experiences. Ultimately, there will be movies you want in digital form only and others that you want in packaged media. It is really about happy co-existence.


HMR: How does HD DVD fit into all of this?

Kornblau: If you've seen a display of HD DVD on a 1080p high-def TV set, it is absolutely spectacular and you've got to have it. All of these platforms are going to co-exist because there are certain movies you just have to see in high-def, and then there are others where watching it on a small screen will be just fine.


HMR: What impact does digital distribution have on rental?

Kornblau: We have built a huge business for those who want to own our content. But there are a lot people who have chosen not to purchase. It is really important through traditional rental and VOD offerings to offer content to serve consumers who only want that rental experience. Clearly, the studios are going to put their efforts on the sellthrough side of the business. And why? Look at the business. If you look at the numbers, consumers are spending twice as much money on the sellthrough side. We are about to see the same thing on the digital side.


HMR: How strong is the portable media market, considering screen size, storage capacity and battery life?

Kornblau: All of these issues are going to be solved. I think the video iPod is really exciting. It is a very impressive entry into the burgeoning portable video market. We are still looking for critical mass, and we are experimenting with what type of content we can bring to that market that is unique to that market.


HMR: So you believe the market is big enough to incorporate all of the distribution platforms?

Kornblau: Yes, I do. I think we are in for some real growth. Portability gives us tremendous opportunities.

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