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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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29 Apr, 2004

Barney in the Backseat Causes Legal Quandary

While some of the sharpest minds in Hollywood are debating the pros, cons and “what ifs” of the high-definition, next-generation optical disc, good old DVD continues to forge ahead, setting new sales records and changing the way consumers regard movies, from a simple transitory pleasure to something to buy, keep and cherish.

Not only does the DVD market continue to be on an upward sales trajectory, but the format's mass appeal is branching outward in some surprisingly ways.

We've all been monitoring the rise of mobile DVD — specifically, DVD players in SUVs and minivans to keep the kids occupied on road trips. Barney in the backseat, as it's referred to at those mobile electronics shops that advertise complete car setups for as little as $600 installed.

But Barney's getting some company. Tony Perez of Ground-Zero Entertainment told me last year that a good chunk of his urban and Latino films were being purchased by teens and young adults who considered front-dash DVD monitors a must-have bling-bling.

And now comes Time magazine with a report on yet another mobile DVD mutation, and one that gives “Barney in the backseat” a whole new (and salacious) meaning.

“Dirty Driving in the DVD Age” is the headline. The article talks about a legislative crackdown on “drive-by-porn — that is, folks playing blue movies in their cars.”

According to the article, parents whose children “have been exposed to the stuff by seeing the images as they pass a car are urging lawmakers to curb the road shows.” Already, the Tennessee state legislature has passed a bill prohibiting drivers from screening “obscene or patently offensive” videos in their cars if said videos can be seen by passing motorists. The measure is expected to become law July 1, according to Time.

The article notes that civil-rights advocates oppose this latest incarnation of the age-old attempt to legislate morality because it is too vague and may violate free-speech and privacy rights.

“Would a cop levy a fine for airing, say, an NC-17 flick like Showgirls or only for more explicit fare like Debbie Does Dallas?” Time asks. “Republican Mark Norris, a sponsor of the Tennessee bill, has an idea but can't quite put it into words. Scooby-Doo, he says, is fine, but ‘if it's another Scooby, that's another matter.’

Something to ponder, eh?


28 Apr, 2004

Video Industry Should Learn From Its ‘Older Brother's' Mistakes

In discussions with various home video distributors at the recent National Association of Video Distributors (NAVD) powwow in Santa Monica, Calif., Kirk Kirkpatrick, president of Waxworks, remarked that a strong rental industry discourages piracy.

He cited ever-shrinking rental rates and consumer-friendly return terms as psychological deterrents as potent as software firewalls against illegal copying of DVD movies.

“When a movie is $3.50 [to rent], the perceived [economic] value of watching a movie is lessoned,' Kirkpatrick said. “So why go out and make a copy?”

He said the movie industry has to look no further than its brethren, the music industry, to see how a stubborn devotion to the CD at the expense of the single (download) has resulted in soft sales and booming piracy.

“We owe a lot to having an older ‘brother' like that,” Kirkpatrick deadpanned.

Makes sense to me.


27 Apr, 2004

DVD Trading Will Drive Prices Down Like Nothing Else

A couple of recent articles in The New York Times and the Wall Street Journal told how studios are selling the same titles we buy here in other countries, notably Mexico and Russia, for about one-fourth of the price. The idea is that people will buy the authorized copies if they are affordable — a standard that is vastly different in other countries from what it is here.

The implication is that piracy here could drive the prices down here, too, if more people buy bootlegs or the folks on Capitol Hill get less sympathetic to the content industries.

You can't blame downloading for everything, though it's at the heart of a bigger truth: A lot of music retailers went down and record labels suffered losses because the industry wouldn't keep up with the times.

The music content providers hamstrung the retailers with format and prices. They tethered techie consumers to CDs and then overcharged for them (I know, because I recently got my $13.86 check from the class-action settlement the industry made for overcharging consumers for CDs for years).

In the movie industry, disc prices are not the same issue. Consumers abandoned CDs partly because they could get a movie and hours of bonus features for the same price. The value proposition is clear.

What else is clear is that pricing pressure will come from a different quarter in the United States — consumer trading. Whether it's sharing titles with friends, trading them to acquaintances or selling them to retailers, consumers have figured out that there are more economical ways to watch movies.

Most retailers are still focused on just selling off their rental copies that are no longer doing brisk trade. It's hard to predict what effect Blockbuster moving a third of its domestic store base into consumer trading will have on the marketplace, especially on independent dealers.

But I think this will end up being hard on the studios and on Netflix. I'll be quite surprised if Blockbuster doesn't reduce its buy rates on a lot of new releases as the trading model takes hold.

Sure, some customers still want to see the new release at street date. That's why Netflix plans to spend millions to beef up its new-release copy depth. It's why mass merchants use new releases as loss leaders every week.

For most of the rest of us, there still isn't any such thing as a video emergency. We can wait a week or two until the price comes down and still have something with trading value after we're done watching. That may not be good news for the suppliers.


26 Apr, 2004

What's on Target … and Not … at Target

I recently perused Target's DVD section and came to the conclusion that it has a very serviceable section for new releases. But I also thought there's an opportunity being missed on the sellthrough side in targeting catalog.

Certain titles, such as The Breakfast Club and Police Academy, were tossed on endcaps as if they were new releases, with nary an indication as to why a customer should buy these catalog entrants.

What about creativity? I have no doubt an indie retailer could come up with something to put the big box to shame. Teen and tween titles are all the rage in theaters. Let customers know that Molly Ringwald of The Breakfast Club was the Hilary Duff or Lindsay Lohan of her day. The film should still resonate with today's teens.

With the comedy Police Academy, a retailer might quote one of the famously funny lines or scenes.

As for the new releases, Kill Bill Vol. 1 could have been marketed with other Quentin Tarantino titles, such as Reservoir Dogs.

The big-box guys may offer low prices, but they make customers work too hard. I'd love to hear some innovative merchandising techniques from others.


25 Apr, 2004

The Growing Impact of Previously Viewed/Used Sales

We have spent a good deal of column inches in Video Store Magazine on the subject of the burgeoning previously viewed and used trade-in economy in home video over the past year, and with good reason. It continues to have a major and beneficial impact on the video specialty business.

In this week's issue, we have several related items, not the least of which is our annual Top 100 report, which includes data on the top retail leaders in the sales of previously viewed DVD and VHS.

Of course, one of the big news stories of last week was Blockbuster's announcement that it would offer a DVD trade-in program, offering store credit for DVDs brought in, in about 2,000 stores by the end of the year. CEO John Antioco believes the business could turn out to be one of the chain's most profitable business lines, and, of course, is a great way to drive traffic into the store.

Blockbuster, meanwhile, generated some $222 million in the sale of previously viewed DVDs and VHS in 2003 to lead the pack, followed by Hollywood Video with $139 million and Movie Gallery with $57 million, according to Video Store Magazine Market Research. Check out this section of the Top 100 for the other seven retailers in this category.

It was also interesting to note that the previously viewed business has become significant enough that most specialty retailers are balking at DVD revenue-sharing deals because it would put limitations on their ability for quick turnaround of rental copies headed for the previously viewed bin, according to distributors meeting last week at the NAVD conference in Santa Monica, Calif. Coverage of that meeting is also in this week's issue of Video Store Magazine.

Earlier this year, the Video Buying Group released data that showed that its members were enjoying higher returns on their rental inventory investment when they put rental copies out for sale at about $9.99 - $12.00 after the copy's sixth to eighth rental turn.

Previously viewed sales are expected to top $1 billion in 2004. This year's Top 10 in this category saw previously viewed account for anywhere from 5 percent (Blockbuster) up to 16 percent (Easy Video) of their total annual revenue. How the business will fare in the future is anyone's guess, but it appears that the concept of trade-ins will fuel more product for sale, which ought to potentially change the dynamic of this side of the business. How will used (previously owned) prices compare with previously viewed (rented) prices, and what impact will that have on overall ROI for Blockbuster and other chains that try the concept?

I'd welcome an e-mail with your thoughts on this.


22 Apr, 2004

Put Down Your Lasers and Come Up With a Standard!

The drive to come to market with a high-definition optical disc is accelerating as the deadline for HDTV draws nearer. At this point, it's looking like a two-horse race, with one camp pushing for a technological revolution and the other, more of an evolution.

Blu-ray uses a whole new technology that employs a blue laser rather than a red. HD-DVD, on the other hand, favors maxing out existing DVD technology in the belief that letting manufacturers keep the same plant and equipment to replicate the new high-def discs will keep costs down — and at the same time minimize consumer confusion by retaining the “DVD” tag, which Blu-ray won't.

The big challenge, at this point, is for both sides to come to the table and work out a compromise, much like the competing DVD camps did in 1996, a year before DVD's launch. This is a must — if two competing next-gen formats come to market, consumers will thumb their noses at both, and the launch will be a disaster, a train wreck every bit as devastating as the music industry's ill-fated push for a next-generation CD with two incompatible formats: DVD-Audio and SACD.

I'm assuming this won't happen on the video side — after all, look how neatly a compromise was brokered for DVD, and how successful the resultant hybrid has been.But even if all goes well and the first high-definition product hits stores in time for the 2005 holidays, I wonder how this rollout will compare to DVD.

Of course, both DVD and its high-def successor will coexist for some time, much like DVD and VHS. In each case, the new format required a new player, but in the DVD-vs.-VHS case, the differences in picture quality, sound quality and capacity were so great that despite a somewhat rocky launch DVD's success really was never in question.

But to notice the difference between DVD and a high-definition optical disc, consumers won't just need a new player, but also a new TV — a high-definition TV.And this, really, is where the next-generation product's fate lies.

There are two schools of thought here. One is that because ordinary DVD is still relatively young, you won't see the maddening rush to convert that you did with VHS. Keep in mind that when DVD arrived on the scene, the home video industry was in trouble — VHS penetration was north of 90 percent, and the novelty had long ago worn off.

DVD still excites people — and with the extra hardware purchase required to experience the benefits of high-def, the transition curve to Blu-ray or HD-DVD or whatever they call the compromise that will surely be hammered out (BVD? Sorry!) might be a lot less pronounced.

And yet there are those who believe the high-def disc will catch fire with the public even more rapidly than DVD. They note that HDTV isn't even going to be an option two or three years down the pike — broadcasts will be in high-def, and that's going to make consumers want everything in high-def. Furthermore, the rise of DVD saw a similar ascension of elaborate home theater systems, many already equipped with high-definition TVs.

“We'll have a waiting audience,” said a top executive with one of the rival camps. “They won't think twice about buying a player, so what I think you'll see is a faster adoption rate than DVD.”

Interesting point. We'll just have to wait and see.

But first, let's get a standard. Otherwise, I can tell you right now how fast the new format will catch on.

Never.


21 Apr, 2004

Popcorn and Other Food for Thought

When you work in the video industry, it’s easy to get in a rut of waiting for the DVD to see a film. I know my actual theatrical movie attendance has diminished quite a bit as of late.

I can count on one hand the number of times I’ve gone to see a movie in the theater in the past six months (including two press screenings just last week) — and I love going to the movie theater (yes, part of it is for the popcorn).

I’ve had interesting experiences during the exhaustingly long preview reels for two of the films I’ve caught in theaters lately.

The first was at the midnight screening the day The Lord of the Rings: The Return of the King hit theaters. There was a sense of camaraderie in the air — after all, we’d been sitting there together waiting for several hours.

The previews finally started to roll, launched by that antipiracy PSA that’s been cropping up so often these days. In it, an everyman Hollywood crew guy spoke very endearingly about his work and what movies mean to him, pointing out that they are his livelihood. Now he’s not rich or famous, but he relies on movies to pay his bills, he reminded the audience. The PSA ends with a phrase that goes something like this “Stop illegal downloading and keep everyone working — movies….they’re worth it.”

OK fine, on with the rest of the previews, one a sci-fi action sequel that shall remain nameless. In the seconds of silence following it, one audience member let out a loud guffaw and said “Yeah, that’s a download.”

Snickers came from the rest of the theater along with a loud, sarcastic retort from a moviegoer across the room. “Aww, but think of the lighting guy.”The rest of the theater erupted in laughter.

Now I’m not judging, and I’m actually hopeful that the MPAA or other groups can inspire a strong enough sense of integrity or even shame to curb illegal downloading of films, after all my livelihood kind of depends on it, too. But more importantly, it’s illegal, it’s thievery, and it’s just plain wrong.

However, I don’t think many people like to feel like they are being emotionally manipulated, which was how that PSA came across that day.

Another anecdote made me think about how reliant the studios are on DVD revenue. That’s an obvious statement, but one that hit home while I was watching the previews before Kill Bill Vol. 2 last weekend.

To not embarrass the studio, I won’t mention the name of the movie, but let’s just say it’s an action thriller sequel with no major stars, not the highest level of special effects — basically a direct-to-video hit.

The audience actually laughed at the preview in all its hyperdramatic previewness.Now maybe it’s a good movie, maybe the preview just didn’t play well, but judging by how much of the plot it gave away (I hate that) it’s pretty safe to say this flick won’t be in theaters long.

It seems to me that the supplier for this (let’s face it) ‘B’ movie is banking on the idea that a splash of awareness that will come from a theatrical burst will boost DVD sales and rental revenue.

Music DVD suppliers have learned lately that a theatrical “premiere” can do a lot for the all-important first-week sales, and I think that’s what’s happening with this particular feature, and others.

Around the watercooler at Video Store Magazine we often discuss how a theatrical run can serve as a marketing tool — granted an expensive one — for the eventual DVD release, if the window is small enough. And it will likely work.

I’m willing to bet that a press release for the preview I saw last weekend will slither across my desk fairly quickly.


20 Apr, 2004

Preserving the First Sale Doctrine in the Digital Age

DVDStreamer.com's entrepreneurs, who earlier created a free software-based media player called Flashdust and are testing their new online rental business concept, believe their new model is covered by the First Sale doctrine. Others believe the service, which charges a $15-a-month subscription fee to stream DVDs to viewers over the Internet, falls afoul of the Digital Millennium Copyright Act (DMCA).

To the entrepreneurs, their business is no different than a brick-and-mortar video store, except that their movies get returned a lot faster because they are considered back on the shelf whenever a viewer finishes the stream. First Sale protects the business, they contend, because they maintain a 1:1 ratio — that is, they will only serve a title to as many viewers at one time as they have copies of that title on legally purchased DVDs. They don't crack the copy protection or region codes to offer the service, and they don't advocate copying, they say.

That may sound like enough in theory, but the DMCA goes beyond earlier copyright law. The mere act of recompressing the data from a DVD to transmit it over the Internet may well be enough to persuade a court to shut the service down.

These things get fuzzy — pixilated, perhaps — in the digital world. If there were no DMCA, or if it was differently written, would the DVDStreamer people be on firmer ground? Possibly. Or not.

Several companies are in courts fighting to define what Fair Use means in the post-DMCA world. First Sale may well be the next battleground, especially as the used-disc trade gains steam. Like book publishers, studios will not be happy about others profiting from reselling studio products without paying the vig. Before video retailers get their knickers in a twist about a service that's experimenting with a new delivery system, it's important to look at the big picture.

You can't fault people for innovating, but maybe a little more legal homework was in order for DVDStreamer. Or maybe this company will end up fighting the battle to preserve First Sale for everyone.


19 Apr, 2004

Symbiotic Relationship Between DVD and Theatrical Releases Is Growing Stronger

With Miramax Films' successful $25 million box office theatrical launch of Kill Bill Vol. 2 coming just days after the DVD launch of Kill Bill Vol. 1, the relationship between DVD and theatrical releases is closer than ever.

Miramax executives have even attributed the bigger bow of the theatrical sequel to the availability of the first volume on DVD, and the studio launched the week's festivities with a gala party at the Playboy Mansion in Los Angeles — not for the film, but for the first volume's DVD. With this new strategy, it's hard to determine whether the DVD is piggybacking on the film or vice versa.

As DVD has grown in stature in the creative and theatrical community, so has its strategic value in the box office arena. We've seen several free movie ticket offers packaged in DVDs, with accompanying friends helping to boost initial weeks' box office tally. The “Lord of the Rings” franchise boosted box office in this way. Most recently, Warner Home Video's direct-to-video DVD release of an animated “Scooby-Doo” title included a free child's admission to see the theatrical release Scooby-Doo 2. Certainly, each child brought along at least one parent or friend to increase the take for that film.

Still, the strategy employed by Miramax and Buena Vista Home Entertainment for Kill Bill appears to have taken the relationship to a new level. Could we soon see films waiting to piggyback on a DVD?


18 Apr, 2004

What Is It About Violence in Video Games That's So Different?

There has been a consistent and ongoing legislative effort across the country to “do something” about violence in video games.

The most recent example we're reporting on in this week's issue (see page 8) is the set of bills presented to committee in the California state legislature that attempts to restrict and control the rental, sale and merchandising of some violent video games and ‘M'-rated games.

There have been similar efforts in states, counties and cities across the United States in the past couple of years, many of which have either failed to pass or, once passed, have been rejected in federal and state courts of appeals, or are still hung up in the appeals process. There are dozens more bills and local laws pending in state and local governments in New York, Florida, Washington, New Jersey and Delaware, and I may be missing some.

But despite the apparent Constitutional problems with attempting to restrict what the courts have judged on several occasions to be material covered under free- speech provisions, we're seeing a record number of efforts to make it a criminal offense to sell or rent these games to persons under 18.

Why are video games garnering this obsessive attention? Why not violent movies on home video, for instance?

It's simple. In a violent movie, you may watch some guy burying a hatchet into an unfortunate victim's head. But in the video game, you may very well be the guy wielding the hatchet! That visceral experience, even on a computer screen, to digitally shoot, stab, maim and kill one's “enemy” is, I think, the reason we may not see an end to these legislative efforts anytime soon. Production quality is only improving, and the reality of the gore and characters that producers are able to create is technically impressive.

The ability to wreak virtual mayhem is unsettling enough that otherwise rational people are ignoring the First Amendment and judicial precedent in these issues and pressing ahead with their bills and local business codes.

No one is questioning their concern about what impact such games might have on young, malleable minds, although their political motives to make hay over an issue they know to be legally unsound might be questioned. But they also seem to ignore the fact that the retail industry, including the Video Software Dealers Association, is well aware of parental concerns over these games, and have taken stringent (and successful) steps to ensure that ‘M'-rated games cannot be rented or sold to minors unless the parents deem that it's alright for their children, just as a parent can accompany a child to a film that's rated more appropriate for an older age.

Perhaps the video game industry just seems like a safer target than Hollywood for most legislators.

The VSDA and partner associations are going to have their hands full for the forseeable future defending themselves against what some feel may be part of a growing and disturbing trend to legislate and control media around the country.