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Insights from home entertainment industry experts. Home Media blogs give you the inside scoop on entertainment news, DVD and Blu-ray Disc releases, and the happenings at key studios and entertainment retailers. “TK's Take” analyzes and comments on home entertainment news and trends, “Agent DVD Insider” talks fanboy entertainment, “IndieFile” delivers independent film news, “Steph Sums It Up” offers pithy opinions on the state of the industry, and “Mike’s Picks” offers bite-sized recommendations of the latest DVD and Blu-ray releases.


Opinion
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11 Mar, 2003

Why Technology Isn't the Problem

There's a lot of brouhaha surrounding personal video recorders (PVRs) like TiVo and Replay TV. They are probably the closest thing to true video-on-demand (VOD) because they store your favorite shows automatically and let you play them whenever you want, with all the control features of a DVD like fast forward, pause and rewind. Plus you can skip commercials. It's no accident that TiVo users are very loyal.

This terrifies broadcast television executives, who are watching their revenue base erode before their eyes as people figure out how to skip past ads. The TV minds are doing their best to thwart this, with tactics ranging from lawsuits to a technology that digitally changes brand labels on items in existing shows to a pending variety show that hearkens back to the age of sponsored shows like Texaco Star Theater.

Advertainment is nothing new, although we are seeing some of its earliest manifestations return to the market. Strawberry Shortcake was a creation of American Greetings, conceived in the Reagan era of deregulated broadcasting to sell a line of greeting cards, figurines and manufacturered collectibles. In fact, Saturday mornings in the 1980s were a time slot given over almost entirely to advertainment. The airwaves were populated with cartoons promoting everything from Rainbow Brite and the Care Bears to their antithesis, G.I. Joe.

Movies are next, with a unit of Peter Guber's Mandalay Pictures called Mandalay Branded Entertainment actively shopping industrialists to finance advertiser-supported features for TV and theatrical release. From a branding standpoint, I guess that kind of melds ball park/event sponsorship with filmmaking. But it's going to have to be seamless, or most people will tune out.

And even with all this technology, people will find ways -- sometimes decidedly low-tech -- to filter out what they don't want.

A while back at Broadband Plus I remember chuckling when one of the cable executive panelists talked about the lengths to which people will go to get rid of crawlers and icons on their TV screens. She described people who put sticky notes on their TV screens to cover the translucent digital channel ID icons or duct tape across the bottom to eliminate crawlers.

While that seems a bit goofy, it illustrates a point that major studios and TV networks have yet to grasp: no matter how cool you think your advertising technology is, people who don't want to see it will always find ways not to watch.


10 Mar, 2003

With DVD In the Fast Lane, Consumers Are Passing on VHS

In talking to DVD-only retailers for a recent article, it became clear to me that previously viewed DVD sales are an important part of the new format's market.

As this week's online poll (over there, on the right) shows, retailers are garnering a good part of revenue from sales of previously viewed discs. My bet is that previously viewed DVDs are fueling a rise in revenue for rentailers, even as rentals may be taking a hit from sales. Consumers perceive pre-viewed DVDs to be more valuable than their VHS counterparts; indeed, many consider pre-viewed discs more valuable than a brand new cassette.

Consider this exchange, which I observed during a visit to Blockbuster over the holidays.

A woman asked the clerk if the store had National Lampoon's Christmas Vacation on DVD. She'd seen it on TV and wanted to add it to her collection. The clerk said they had some brand new copies.

“Do you have it previously viewed?” she asked, evidently looking for a better price.

“No,” he said. “It's too old.” (It wasn't a new release that had migrated to the pre-viewed bin.)

The clerk then showed her the new VHS copy, which cost about $2 less than the new DVD – a seemingly good option for a cost-conscious consumer.

Though she admitted her household had only one DVD player to its three VCRs, the customer did not buy the cassette. She opted for a new DVD. But her first choice obviously was a previously viewed disc.

I'm sure this scenario plays itself out continually in the rentail store. Customers look at a used disc as if it were a high-end car with only a couple thousand miles on it – in short, they see it as a really great deal. Whereas pre-viewed VHS is the old Pinto of video, DVD is the nearly new BMW. With DVD, rentailers have a really hot sellthrough product that puts them on a more level playing field with Wal-Mart.


9 Mar, 2003

Studios Look to Veterans to Keep Home Video at Top Speed

The final open spot in home video unit leadership positions at the major studios has been filled with the appointment last week of Mike Dunn as president at 20th Century Fox Home Entertainment.

He replaces Pat Wyatt, who had departed in December as head of consumer products (which included home video as well as licensing and merchandising of Fox Filmed Entertainment) to pursue the launch of a new production company specializing in anime product.

Dunn, with Fox for some 16 years, is the latest industry veteran to assume the wheel of a home video unit. Jim Cardwell, after 20 years with Warner Home Video (26 years with Warner Bros.), recently took the reins of the studio's home video business. Tom Lesinski, a mere pup in this group with 10 years at WHV, including running its domestic video business, moved to Paramount Home Entertainment for the chance to head its global video business. Lesinski just last week also wisely tapped Meagan Burrows as head of Paramount's domes-tic video business. Burrows spent 17 years climbing through the Paramount video ranks.

It is often the case that companies look elsewhere for “fresh” talent — even outside their own industries — for executives untainted and unencumbered by the internal politics and tired ideas of the company or industry they are entering to lead.

But it's not surprising, and I think its encouraging, that these home video companies all chose to either promote from within or hire industry veterans from other companies.

These home video units are responsible for significant revenue and cash flow for studios, and the very dynamic business climate and shifting operational challenges facing home video companies right now means that, more than ever, it's important that one has experienced hands on the wheel. It's the sort of position that requires a lot of institutional and industry memory. There is little time for new people trying to reinvent the wheel or getting up to speed.

That's not to say it will be business as usual with this new group of studio leaders, as if business as usual were possible in the home video industry right now.

Indeed, these executives, with their years of experience, have ingrained knowledge that will only serve to make whatever changes they bring to the business that much more targeted. (Whether you agree with them is, of course, another matter.) They know what the hot buttons are.

As Tom Rothman, co-chairman of Fox Filmed Entertainment, said, he looks for Dunn to approach this dynamic business “creatively, and not be bound by conventions or tradition.” I expect the same could well be said for all of the new, and existing, video unit leaders.


6 Mar, 2003

Leaving one family to care for another

The good guys just keep leaving. The latest veteran player in the home video industry to jump ship and either pursue other opportunities (as they say) or retire is John Thrasher, the longtime VP of video purchasing at the troubled Tower Records and Video chain.

I don't think there's anyone out there who doesn't know John and who hasn't felt John is remarkably in tune with this business and where it's headed. Back in the late 1980s, when I first started writing about video, John was one of the big believers in sellthrough; I remember an early interview in which he told me Tower's policy was to merchandise videos for sale and for rent right next to each in the chain's dedicated video departments because that way consumers had a choice. Tower's goal was to become a movie store, regardless of the business model.

John was so respected a buyer that in the fall of 1991, when Video Store Magazine was developing a prototype for its transition from a monthly to a weekly, John was our first cover boy — and our first “Handicapper,” whose weekly buys would be positioned as a model for other retailers to follow.

As sellthrough flourished, John was one of the first home entertainment retail guys to rail, loudly and angrily, against the deep discounting of product, first at the mass merchants and later by the online sellers. I remember John being particularly ticked at Reel.com for selling Titanic for less than 10 bucks. He felt the loss-leader strategy would devalue video and was unfair to other retailers who maybe couldn't afford to take it in the shorts just to build market share.

When DVD came around, John was in his element. While Tower patriarch Russ Solomon was in the limelight as one of Warner Home Video president Warren Lieberfarb's hand-picked poster boys for the new format, it was John Thrasher who was making things work, busily working behind the scenes on product mix, merchandising and other key elements in Tower's enormously successful DVD strategy.

Now, John's dad needs him, and he's moving to Bakersfield to take care of him. That's John — a good guy. We're going to miss him.


4 Mar, 2003

For Your Consideration…

With the Motion Picture Association of America (MPAA) getting limited results chasing down every potential file trader from college students to Internet service providers and corporations and notifying them of crackdowns, 20th Century Fox is set to take a new tack: anti-file-trading ads in movie theaters.

A Los Angeles Times article from ShoWest in Las Vegas says Fox will raise the curtain on a two-minute trailer that is supposed to “put a human face on the victims of piracy”.

I suppose Fox is choosing the appropriate arena, since a copy of Attack of the Clones that showed up on a file trading service while the movie was still in theatrical release was reportedly traced to a video camera at the back of a screening room at George Lucas' Skywalker Ranch. Clearly some folks like to tape the show with a handy cam. But I suspect anyone in most theaters who actually engages in movie piracy will take special delight in reproducing the trailer as well.

I can hardly wait to see what these ads will look like. I'm expecting something like the national office of drug policy's TV spots about how popping one pill or smoking one joint funds assassinations in other countries. Not that I'm personally endorsing those activities, either, but the ads are so heavy-handed they just make you want to go out and defy authority. Or at least eat an extra dessert. You have to love Ariana Huffington's parody version jibing SUVs.

Considering Monday's Wall Street Journal article on how many pirated DVD copies have been ripped from Academy screeners this year alone, creating “a pirate product that is superior to typical bootlegs,” the theatrical trailer seems like a lot of window dressing. Really, how serious can the studios be if they are passing out digital copies before their commercial release?

Only Disney refused to send its Oscar screeners on DVD this year. Then again, all Disney had was the box office pooch Treasure Planet and Spike Lee's 25th Hour, so the studio had less to lose than others. Corporate sister Miramax sent out hundreds of copies of Gangs of New York and Chicago on disc. Six copies of Chicago are available for sale on eBay as I write this column.

I guess the studios have a right to try any avenue they can to discourage piracy. But until they control their own pre-release digital copies, I hope they don't expect anyone to take them seriously.


3 Mar, 2003

Kmart Says Savings Are Here to Stay; I Say What Savings?

Kmart just launched its new “Savings Are Here to Stay” promotion designed to entice customers from closing stores to ones that will remain open, but if the closeout sales are any indication, the “savings” may be in the eye of the promotions department only.

I happen to live near one of the shuttering Kmarts, and we stopped by this weekend in the hope of picking up a few bargains. Big signs touting “30 Percent Off” and the like were posted throughout the store, and constant “Blue Light Special”-reminiscent announcements rang over the PA system. Fighting through the crowds of bargain hunters, I noticed people weren't buying much, and neither were we. And it was no wonder. The prices – when you could find them and calculate the savings – were no better than those at competing stores like Target and Wal-Mart — stores that weren't closing. Despite the “everything must go” come-ons, it seemed as if Kmart wasn't offering bargains, but instead was selling us bill of goods.

Many of the items offered at percentage discounts looked like they had been marked up to offset the cut. The upshot was often a price that was no bargain at all. “I've seen it cheaper at Target,” my husband commented about one item. And forget about Wal-Mart; that chain's everyday low prices beat many of the “closeout” prices in the Kmart store. In the end, the trip wasn't really worth the time it took to peruse the aisles and wait in the understaffed checkout line where these mysterious sale calculations cost time and caused much exasperation.

Now, I'm not the only one who has noticed this faux sale; at least one of my neighbors noticed the same thing. If the new management at Kmart is hoping to bring back lost customers, they certainly got off on the wrong foot with at least a few shoppers. I left with the impression that Kmart offered the same not-so-low prices and the same bad service, but at a louder, more annoying promotional pitch.

This “sale” strategy may work to boost the bottom line for a while. I'm sure many shoppers bought a few things just to keep from making the trip for nothing. But I wonder if they'll be back for more closeout merchandise or for the “Savings Are Here to Stay” offers at the remaining Kmart stores.

If Kmart managers hope to turn the chain around, they need to drastically change things on the customer level. They've got to offer good prices, not faux sales; they've got to beef up the number of clerks; and they've got to stop alienating shoppers with an unpleasant shopping experience.

Speaking of annoying customers, our theatrical brethren recently got in a bit of legal hot water over those commercials they are showing before the feature. Seems moviegoers got miffed enough at the reams of ads running past the appointed feature start time to file lawsuits charging fraud. Chalk up another advantage for DVD; you can skip the commercials and the popcorn's a lot cheaper.


2 Mar, 2003

No Dearth of Movies Evident at AFM

Walking through the hallways of the Santa Monica Beach Hotel last week during the American Film Market (the AFM takes over the hotel each year, with more than 300 suppliers taking meeting rooms) I was struck by how many movies are made that one never hear of.

According to the MPAA, in 2001 (2002 figures not yet available) some 739 films were given a rating and 482 of those made it to a domestic theatrical release. I don't have a quantifiable number as to how many films are made each year, but one has to figure its certainly more than a thousand and maybe more, if you count international films that make it to our shores.

Many of the films I saw promoted at AFM were, at least on their face, your basic classic formulaic genres of horror, urban/hip-hop, comedy, etc. I saw marquee faces adorning posters for films I had never heard of, as well as what appeared to be serious dramas and concept films that l would probably have stopped to watch if they were accepting sit down patrons in these meeting rooms.

As MTI's president Larry Brahms said after visiting the market, “It was really nice to see hundreds of companies still making movies, and the ones we saw looked very good.”

My AFM visit simply served as a reminder that there is a tremendous amount of film to be watched — and that people want to watch — outside of the major motion picture hits that, while we may all agree “drive” the home video market, comprise only a small portion of the films being made today.

It was a reminder that hits bring customers into the store, but what keeps them loyal to your store versus another may hinge on your ability to find the quality genre-driven and small-budget concept-driven independent films that deserve viewer attention and can deliver the entertainment goods in between the hot box office winners. That selection, and the ability to browse the selection, is what keeps the rental store, especially the knowledgeable independent rental store, a viable and valuable service to their community of serious film lovers.

It's certainly like there isn't a lot to choose from.


27 Feb, 2003

Is Online Rental A Flash in the Pan?

Online rental is the big rage these days, with Netflix recently signing its millionth customer and big-scale competition from Wal-Mart and Blockbuster heating up.

But falling DVD prices make me wonder whether the whole online rental concept is a bubble waiting to burst. The fact is, Netflix was launched and achieved its early growth at time when the selection of rental DVDs at typical physical video stores was severely limited, if not nonexistent.

Consumers were hot to try this new technology, but they wanted a huge selection from which to choose — and Netflix emerged as a simple and convenient way to tap into the growing catalog of DVD product without driving all over the place, trying to find out who has what.

The Netflix model still makes sense, to a large degree. The selection is fabulous, unmatched by even the biggest Blockbuster, and the subscription charge is about half what the average basic cable bill is — small potatoes, even to those who don't subscribe to HBO.

But as more and more consumers walk by those $5 DVD dump bins at Wal-Mart, the perceived value of DVD is going down, down, down. Sure, the cheapie DVDs are deep catalog while NetFlix offers all the latest new releases, but the most active renters rent an assortment of product, not just the hot new releases. And if they subtract two or three $5 oldies from their monthly rental menu, it's going to be a little harder to justify that $20-a-month subscription charge.

To be sure, that mindset won't hit everyone. But it could hit a fair amount of people, to the point where the market for online rentals is likely to shrink — or at least, in these DVD boom years, of not growing as fast as it used to.

Factor in the entry of the big physical stores — and a lot of small players, as well— and you're faced with a bleak prospect: A flattening market, and a growing number of mouths eagerly going after a taste of the pie.

Therein lurks the potential for disaster. If the decline in DVD pricing begins to spread beyond deep catalog — and at least one studio, Warner Home Video, has made no secrets of its quest for mass distribution and prices of about $10, even for new releases — then the rental business is going to suffer.

If DVDs routinely sell for $10, chains like Hollywood and even Blockbuster will be in the catbird seat—they'll be the ideal destination for consumers who want to rent some titles and buy others.

The online renters, meanwhile, will have to do something else to make up for lost business, for the migration of renters into the ranks of buyers. The natural choice, of course, would be to offer sales as well as rentals. Many already do.

But given the strength of established online sellers like Amazon.com, that transition could be tough, if not downright impossible.


25 Feb, 2003

The Age of Digital Darwinism

So, content providers won a round in their bid to demand (and get) the identities of individual file sharers from their Internet service providers (ISPs) so they can bring the battle against piracy to consumers' front doors.

I wrote about this almost a year ago and guess what? It's not going to work any better now than it would have then.

A federal court recently ordered Verizon to give up the name of a customer the Recording Industry Association of America (RIAA) said was illegally trading copyrighted material (Verizon is appealing the decision). Another hearing in the matter is scheduled for tomorrow. That may make identifying file traders easier, but I don't think it will do much to help RIAA, for a few reasons.

First of all, anybody who's been online for, oh, a week or so, knows there are so many ISPs out there they can switch whenever they like. If I were illegally trading files, I would change my service provider often to escape notice.

Now, that may seem like an obvious ploy that would be easy for RIAA to defeat, if not for one key point: RIAA regards technology much like cave men regarded fire. And understands it about as well.

Consider that the RIAA Web site, RIAA.org, has been hacked seven times in the last six months. As I write this, the feds are looking into who kept the site down for at least four or five days.

These people would have us believe they understand, embrace and support digital technology. But obviously they can't protect their Web site any better than they can protect their CDs, which leads me to view them in the same light as cave men: chin-stroking, head-scratching, cranially challenged folk who still wonder why it burns every time they stick their hands into the flames. If only they could harness that new discovery!

I wonder how much this has to do with Hillary Rosen's decision to quit her job as RIAA president by the end of the year. It can be pretty embarrassing to spend so much time squawking about how technology is looting your industry, especially when that industry is still paying out a nationwide class action settlement to consumers for keeping CD prices artificially high (check out musicscdettlement.com to claim your $20).

Especially when artists like Eminem have a No. 1 CD on its first day in release because selected songs were leaked and traded online in advance; and artists like Jack Johnson, who likely would never have been noticed commercially, can create demand by offering their wares online when record companies ignore them. It makes blaming file traders for the industry's decline a tough sell.

That ‘s doubly true for MPAA, which seems to take no interest in recovering the copies of Academy Award screeners up for sale on eBay. Not past hits, mind you, but titles like About Scmidt and The Hours that are still in theaters.

Welcome to digital Darwinism, a world in which only the tech-savvy survive.


24 Feb, 2003

The Long Shadow of Lieberfarb Extends Even to Board Games

Playing the new 20th anniversary edition of Trivial Pursuit recently, we came across a question I would have had a unique advantage in answering. (Unfortunately, it went to the other team. Curse my luck.)

Under the “Inventions” category was the question “What medium is Warner Bros. home-entertainment chairman honcho Warren Lieberfarb hailed as ‘the godfather of'?”

It was an easy question for my husband to answer, being married to an editor of a magazine covering DVD, but its appearance in the time-honored trivia game seemed to cement in my mind Lieberfarb's place in the history of home entertainment.

With so much of Lieberfarb's strategy still in place in the home entertainment marketplace -- even if the man himself is absent after leaving Warner -- it seems destined that his vision of low-priced DVD and the demise of the store-based video rental model in favor of video-on-demand will become reality. But will it?

Certainly, the first part of that vision is taking hold. Consumers seem to be buying up low-priced DVDs in ever-increasing numbers. The pricing structure of the disc has succeeded in changing consumer habits to a certain extent. Formerly conditioned to rent the titles they wanted, consumers now think to purchase many of them instead. Heck, even rental giant Blockbuster Video is encouraging customers to buy DVDs.

But is the rental model going to take the hit he envisioned? It may be suffering from the competition of low-priced DVDs, but the VOD future seems as far off as ever. Rental permutations such as Netflix's subscription model seem more of a threat to the traditional rental business than does VOD at the moment.

Two years ago, our magazine had on its cover the headline “Antioco vs. Lieberfarb” (with a graphic of the two titans in boxing gloves) and detailed the long-running difference of opinion between the heads of Blockbuster and Warner Home Video. In a New York Times piece quoted in the article, Antioco said, “DVD sales will never replace rentals” and in a story in the same magazine, he opined that VOD would ultimately attract value-minded sellthrough buyers rather than renters.

As Blockbuster replaces rental shelves with sellthrough racks, I can't help but think Lieberfarb has won the match, but it remains to be seen how far the long shadow of Lieberfarb will reach.