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Studio Presidents Sound Off at Home Entertainment Summit

18 Jun, 2007 By: Chris Tribbey

HBO Video President Henry McGee was driving recently with his young daughter when she opened up her laptop and began playing a downloaded copy of West Side Story (purchased, not pirated, of course).

It was a sign to him of the digital delivery future, he said.

But capitalizing on — and profiting from — that future remains a difficult prospect for the home entertainment industry, studio executives said June 18 during the President's Panel at the sixth annual Home Entertainment Summit, DVD & Beyond, in Century City, Calif.

Much of the discussion among the six heads of major-studio home entertainment divisions fell along the same lines, exploring the good and the bad in all corners of their business.

They're expecting possibly the biggest fourth quarter in DVD's 10-year history. But they predicted the home entertainment industry would end the year flat, or just slightly up or down from 2006.

Direct to DVD, which is finding an increasingly comfortable home among the big studios, has become extremely lucrative. And extremely risky.

TV on DVD remains a hot commodity, but one executive lamented that it took consumers' time away from movies.

And then there's the high-def format war.

“The question asked is when will the format war end,” said Mike Dunn, president of 20th Century Fox Home Entertainment. “The answer is when the consumers say it's over. The consumer votes with their dollar.”

Bob Chapek, worldwide president of Buena Vista Home Entertainment, said he hopes the battle between HD DVD and Blu-ray Disc doesn't become “futile.”

“One man's awareness is another man's confusion,” he said. “Whatever benefits we think we're gaining [with two formats, such as lower price points] is lost because consumers are staying away. Because they're confused.”

Ron Sanders, president of Warner Home Video, added: “The reality is it's a lack of content on both sides that's [adding to] the problem.”

Blu-ray received a boost earlier in the day when Blockbuster announced it would only allow Blu-ray on the shelves of its 1,700 company-owned stores, an announcement Dunn called “a big, big milestone.”

While the high-def format war will likely one day have an end, the days of studios' involvement in digital delivery are just beginning, the executives agreed.

“I think it's going to be big someday,” Chapek said. “Whether or not packaged media can coexist with it, I'm not sure.”

McGee added that with digital delivery, some cannibalization in home entertainment dollars is inevitable. “But the pie will grow as well,” he said.

“There's probably an upside that we haven't even imagined yet,” Dunn said.

But for today, and for the near future, there is no replacement for packaged goods.

“Right now the retail shelf is still the most effective way to market the movies we have to show profitability on,” said Stephen Einhorn, president of New Line Home Entertainment.

Direct to DVD product is no longer the small, independent's path to retail, as studios have been giving it plenty of market play this past year.

“It comes down to selectivity,” Chapek said. “It has to be something that's got some equity from which to base the future on.”

Dunn added: “It's really interesting how it's not box office based [for us]. Our best direct to video is [a sequel to] The Sandlot.”

Sanders said his company is focused on direct to video titles that are “prequels, sequels” and “brands with built-in equity.” Anything that's a companion piece to a theatrical release is likely a safe bet, he added, assuming it's marketed accordingly.

“There's a real opportunity to lift the overall market,” said Kelley Avery, worldwide president of home entertainment for Paramount Pictures. “We have some tremendous franchise opportunities.”

Not a new question to these executives, they were also asked about how they're fitting everything on store shelves, especially with high-def product added to the mix.

“The shelf space squeeze means retailing partners are pretty unforgiving,” McGee said. “Retailers have a very quick trigger finger on returns.”

The executives were also asked what they look for in picking a fourth quarter DVD street date for those all-important summer blockbusters.

“The biggest guy on the block gets the date [of choice], and retailers help you spread [the rest around],” Sanders said, adding that box office results are the first thing all the studios look at in prioritizing their releases.

“The big dog eats first,” Chapek agreed, saying he favored the week before Thanksgiving as the No. 1 release date for a summer hit.

Dunn said street dates are also contingent on the title in hand, offering the example that a Little Miss Sunshine would be good right before a holiday for a quick sale, while the latest “Shrek” film should be allowed a few weeks to fly off store shelves.

Even without a crystal ball to predict the future of high-def or the path to wealth in digital delivery, the executives on this year's President's Panel seemed upbeat about the future of their industry.

“This year, actual DVD sales are down a bit,” said Home Media Magazine publisher Thomas K. Arnold, who moderated the panel. “But nobody's screaming that the sky is falling.”

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