ONE-ON-ONE: Columbia TriStar's Benjamin S. Feingold12 Jun, 2003 By: Thomas K. Arnold
As president of Columbia TriStar Home Entertainment for nine years, Benjamin S. Feingold is now the ranking home entertainment president among the six major studios and an increasingly visible spokesman for the home entertainment industry and DVD -- a platform he played a major role in developing, notably internationally.
On the eve of DVD in 50, a conference produced by Video Store Magazine and the DVD Entertainment Group, VSM sat down with Feingold for a little crystal-ball-gazing.
VSM: While getting DVD into 50 million U.S. households is certainly cause for celebration, the proverbial glass is only half full. How do we get DVD into the next 50 million American homes?
Feingold: We need to continue to build out distribution, which means having more movies available at more retail locations. We also need more locations carrying affordable DVD machines for sale and more marketing to push through the value proposition of buying and renting DVDs.
VSM: When you say you want to expand DVD distribution, what, specifically, are you looking at?
Feingold: Wherever we can. There's a resurgence in rental stores, including independents. Mass merchants and big-box retailers continue to expand their store counts as well as their stores, with home entertainment -- and DVD, in particular -- figuring more and more prominently in the mix. Supermarkets are going to join the bandwagon, regarding the video category as a forethought rather than an afterthought. And you've got services like Netflix that expand the DVD format into a subscription base, so not only do you buy them and rent them and buy them used, but you can also subscribe to a service and get them in the mail.
VSM: What do you believe will happen to the rental business as DVD prices continue to tumble, particularly on the catalog side?
Feingold: I think rental will always be with us, but consumer lifestyles are changing. People are making more trips to mass merchants, mass merchants sell rather than rent, and since mass merchants are the driver in this category, I believe sales will become more and more dominant.
VSM: You seem to have great faith in the big discount chains' ability to maintain their rapid growth of recent years.
Feingold: Mass merchants and big-box retailers are the fastest-growing channels in our business. And one of the reasons they are such a growth engine in DVD is that they have allowed the studios to not only sell to them directly, but also to vendor-manage their inventory. When we sell to rental stores, they decide what to buy. They might be right, they might be wrong. But when we sell to the big chains -- and also when we revenue-share -- we can see how the product is performing and work with them to create a mix that maximizes consumer spending. Ultimately, it is the supplier's responsibility if the product doesn't perform at retail and through revenue-sharing.
VSM: So you're saying the relationship between studios and retailers, which in the old days could often be adversarial, is evolving into more of a partnership?
Feingold: Yes, and that's why these big retail chains are so successful. When retailers are proprietary about information vis-a-vis suppliers, they lose; when retailers share information, it allows us to work together to build a better mousetrap. For rental to survive, we have to start looking at retailers and studios as partners and not as adversaries, which is why we went into Retail Connect. Rome wasn't built in a day, but the concept is to be a partner. We don't necessarily mean we want to revenue-share with everyone, but we do want to be partners.
VSM: The recent introduction of another disposable DVD format, Flexplay Technologies' E-Z Disc, generated quite a buzz in the industry, particularly since it has the support of Disney. Is this something you're interested in?
Feingold: Let's just say Columbia TriStar Home Entertainment has embraced a number of different models, but currently does not embrace Flexplay's.
VSM: What are your plans for next-generation DVD?
Feingold: We are hoping for high-definition DVD to come to market sometime in mid-2005 to early 2006. Because there are going to be 25 million HD-capable households desperately seeking movies, we think there will be a ready audience. The technology, especially Blu-Ray, is unbelievable. We need to keep raising the bar and keep the category exciting. Three years from now, there will be a lot of HD displays in the market, and we want to capture that HD business for prerecorded media first, rather than pay TV or pay-per-view.
Going back to 1995, 1996, one of the things I was saying and Warren [Lieberfarb, then president of Warner Home Video,] was saying is that we need to introduce DVD because we were in a race with digital television. We were anxious to get DVD launched, and we were able to hit a timeline that, to consumers, made DVD “the thing.” Digital television was fine and nice, but it wasn't DVD.
Our whole strategy, this time, is do it all again. We want to make next-generation DVD with unrivaled added value and unsurpassed quality, so that while you may be able to watch a movie on HBO or Starz in high-definition, our window continues to make prerecorded media “the thing.”
VSM: Isn't the current format war -- I think there are something like five competing technologies -- detrimental? I mean, we're less than three years from next-generation's supposed launch. Will there ever be a standard?
Feingold: Of course. The issues today, format-wise, are much less significant than we had in 1995 or 1996. Blue-laser technology is clearly the next-generation channel, not only for movies, but also for games, due to bandwidth requirements, and the broader the platform compatibility, the greater the possibility of success.
VSM: But not everyone's on board for blue-laser. There are some camps that favor maximizing the potential of existing red-laser technology.
Feingold: The reality is blue is “it.” Movies will be available on it eventually from everyone, because it truly is the next generation of technology. Red is just the same generation. I don't think it makes sense to try to make high-definition out of red, because you are basically underengineering the product specifications. Sure, there's the possibility for low-priced goods in the beginning, but I think it's far better to do what we did with DVD in the first place: Overengineer the product and have the potential for mega-interactivity and compatibility with game products.
It's all about creating a better future. And you don't get that if you focus purely on compression and don't have the bandwidth that you do with blue laser.
VSM: We've talked technology, now let's discuss consumer demand -- because that's really what matters most, isn't it? Will consumers once again rebuy their libraries, just a few years after they tossed out all their videocassettes and laserdiscs? The difference between VHS and DVD was quite pronounced, both in physical appearance and in quality. But with HD-DVD, aren't we just talking about a better five-inch disc and about a qualitative difference that will only be evident to those with high-end home theater systems?
Feingold: I think the combination of audio and video quality, which is outstanding, together with having more bandwidth to create a better interactive experience, will drive many people to rebuy. That concept that they won't rebuy is simply not true. Look at what happened when DVD came around -- the vanguard was the laserdisc collector. These people had huge collections and valued every edition they had. One look at DVD and they pitched everything -- to the point where before too long you could buy laserdiscs for $1 or even less. You couldn't get rid of the stuff.
So I really believe the future [for next-generation DVD] is very bright. Also, the concept that people buy to collect is not 100 percent true. Many people buy to watch; they may or may not keep it. And they buy to watch again, especially when the viewing experience is enhanced through picture quality and interactivity.