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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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12 Oct, 2004

Hurricanes No Disaster for Netflix

It's been a rough couple of months for the Southeast. Other than Movie Gallery, which said that hurricane-related closures will cost it a half percent in same-store sales this quarter, it hasn't really showed up yet in numbers.

This week, Netflix reports its quarterly data. I know there are a lot of questions swirling around right now about the change to amortization formula, and I don't fully understand it myself yet. I'm sure the call will shed some light on the subject.

But you could fairly expect Netflix to be doing slightly better this quarter, depending on how many of its customers are in the Southeast.

Two things accrued uniquely to Netflix's benefit this quarter: the hurricanes and the Olympics.

Both events are tough on video rentals — in the one instance because the power is off, and in the other because people are watching swizzle-stick gymnasts instead of renting movies. It's why we see Movie Gallery lamenting storm-related closures and the brick-and-mortar chains decrying the pull of the Games.

So who wins? Netflix. Because Netflix subscribers are, by definition, subscription renters. The company actually makes more money when people rent fewer movies. CEO Reed Hastings has said in the past that the break point is about seven or eight movies per month — if a subscriber on a three-out plan rents more than that, the company is in the hole on that subscriber for the month. But this quarter, subscribers kept paying even though many may not have been renting.

It's an interesting side of the subscription business that has yet to show much muscle with other rentailers. Now we'll have to see how much help it was for Netflix.


11 Oct, 2004

TV on DVD a Treat for Posterity

Last weekend, I took some time to watch the 6th season of “Buffy the Vampire Slayer.” While many probably don't yet consider this show a classic, to many of my generation it is. This is that pivotal season that features the reincarnation of Buffy on the show and on UPN from the WB. It also included one of the most innovative, acclaimed and creative episodes ever, “Once More, With Feeling,” in which the characters sing certain parts as if they were in an old-time musical.

I had kind of burned out on “Buffy” since its demise in 2003. I'd seen numerous reruns and first-runs. At one point it was kind of hard to miss “Buffy” on the tube.

But tempered by some time away, the series still holds its charm. It's fun to travel back to that 6th season, even several years later. It's also enjoyable to watch it in order, unhampered by the vicissitudes of my own schedule and reruns.

On DVD, the series can be viewed like a book, chapter after chapter, without missing any important details. I'm sure it's how I would want my work remembered if I were a TV writer/producer. And it's definitely a treat for the fan.

While reruns are great (hey, I was raised on them), the DVD collection is the ultimate rerun, viewed in order without commercials.


10 Oct, 2004

How Low Can You Go? Probably Lower.

How low can you go? Perhaps the question is how low should you go?

That's the previously viewed title (PVT) pricing question addressed in a front-page story written by senior editor Holly J. Wagner in this week's edition of Video Store Magazine.

The fact is that the much-anticipated commoditization of DVD may be looming in the not-too-distant future, based on the pricing trends from big-box outlets selling catalog titles for $5.50 to mom-and-pop rentailers selling previously viewed DVDs for an average of less than $10. (The average price for a PVT title is now $9.70, down from $14.51 in 1999, according to VSM Market Research.)

So many factors are at work in the “race to the bottom,” as some are wont to call it, that it's hard to see where there might be a control point to the process. As Wagner uncovers in her article, it begins with the shorter window between theatrical and video, and the pressure to maximize video revenue on new video releases in the first couple of weeks. After that, with the market perception being that demand for those titles has been largely sated at both retail and rentail, studio repricings and PVT sales and now the growing trade-in business prompt the inevitable slide downward. That, in turn, also puts pressure on catalog DVD releases to come out of the chute at a low price, which also sees an eventual slide into the $5.50 bargain bin.

Meanwhile, the tidal wave of DVD releases into the market continues, and consumers are finding more choices to fix their DVD cravings in virtually every kind of public environment in which they find themselves, from fast-food restaurants to convenience stores to supermarkets and mini-marts in gas stations. And, of course, traditional home entertainment retailers, a group that encompasses a huge range of retail outlets in its own right, are in a daily pitched battle to outprice each other on the hits, while finding niches in which they can try to find better margins.

How low can you go? Well, with some of the new studio DVD rev-share deals and trade-in programs under way, the margins on low PVT pricing are still quite good, thank you, so the answer may be … we can go lower. With retail shelf space shrinking and DVD player household penetration cresting, studios with unreleased catalog product still burning a hole in their corporate pockets will do what they can to cash in on the DVD market with those titles while the getting is still good; so, yeah, they'll probably price accordingly to move that product out.

The question then becomes, is there a place in this market dynamic that could allow studios and retailers to slow this downward progression? TV DVD and other gift sets offer some opportunity. And while it's been heartening to see hit movie new releases maintain their pricing levels, I wonder when we might start hearing a new consumer mantra — “I'll wait for the used version” — to start creeping into use, supplanting the now universally acknowledged “I'll wait for the video.”


7 Oct, 2004

TV DVD Market Reaching Saturation? New Report Says Hell No

On the eve of Video Store Magazine's second annual TV DVD Conference comes a new research report from Merrill Lynch that predicts a 30 percent annual growth rate for TV DVD over the next four years.

Jessica Reif Cohen, one of the Wall Street analysts the Hollywood studios respect the most, predicts consumer spending on TV DVD product will rise from a projected $2.3 billion this year to $3.9 billion in 2008.

Overall U.S. DVD spending, she predicts, will reach a record $16.5 billion, with TV DVD's cut a healthy 14 percent.

That's all well and good, but the real promising news in the analyst's report is her contention that “TV DVD is a new high-growth category that does not cannibalize other operating segments.” She believes TV DVD will be a “significant contributor” to studio growth for at least three more years, with international markets likely to benefit for at least five years.

I hope TV executives are reading this. I can only imagine what they were thinking in recent months, as retailers around the country began significantly expanding their TV DVD footprint — as what had still been considered by some as a novelty began showed signs of becoming a viable and long-lasting business.

“It's going to hurt viewership.”

“It's going to kill syndication.”

“How can we get a piece of it?”

The first two fears are groundless, I am convinced — particularly for newer shows still on the air. TV DVDs of, say, “24” let people catch up with past seasons and episodes they might have missed and probably generate even more anticipation and demand. If you missed a show or two, no need to drop out — just keep watching and then fill in the gaps when the DVD comes out.

The DVD sets also broaden the audience, I would assume. My wife never watched “Alias” until I brought home Season One after our first TV DVD conference in October 2003.

Now, she's hooked — both to the weekly series and to the Season Two and Season Three DVD boxed sets.

I also don't see TV DVD hurting syndication. Old sitcoms, in particular, are great late-night or casual viewing, especially those marathons on Nickelodeon and TV Land. If you see one you really like, you'll pick up what's available on DVD, but sometimes it's still fun to just plop yourself in front of the TV and channel surf until you find something you like.

If anything, syndication is going to act as an infomercial for the classic TV sets that are out on DVD. Again, my kids fell in love with “The Munsters” by watching reruns on TV; now they can't wait to dig into the DVD collection. But that hasn't prompted them to tune out of Nick at Night; to the contrary, they're more eager than ever to check the channel out just to see what other cool old shows they might now know about.

The only fear that is viable is No. 3. But hey, we can't have everything!


5 Oct, 2004

It's Your Right to Create; It's My Right to Criticize the Creation

I'm proposing a new column for our magazine. It would be a single column in the reviews section called “Not Worth Your Time.” Or maybe, “Two Hours of Our Lives We'll Never Get Back.” All of the reviewers would be eligible to nominate titles.

You see, we got an e-mail last week from an indie producer whose movie I panned in a review. I like the genre, and I really wanted to like the movie, but about halfway through I found myself struggling with a decision of whether to finish my mineral water while watching or just break the bottle and eat the glass shards.

So really, what is the point?

One editor here said it's our job to “weed out” the bad films that shouldn't get to market anyway but do because digital technology makes it easier for anyone to get a movie to video.

I wrote a review and someone got thin-skinned. It happens all the time: to people who have invested their lives in one project for months or years, it's the most important thing in the world. To people who see a much bigger universe, it's a blip on the screen. They view it as the whole world, and we see it as an entry in the mad derby that is the whole world of entertainment.

But there's the rub, isn't there? All of those indies invest their time and dreams hoping to be the next Blood Simple or Blair Witch Project, but most of them are deluded. Just like I wish I had a Pulitzer, but I don't. I'm learning to live with the pain.

We all do what we do. I had to learn a long time ago that if you are in a profession that demands professional and public scrutiny — like, say, filmmaking or journalism — you'd better have a thick skin. Or consider a career in the exciting field of dental assistance.

If memory serves, the law that established Fair Comment as a doctrine for reviews and editorials (and a defense against libel claims) had something to do with a drama reviewer saying that Glenda Jackson performed like “a trained seal” in a big Broadway play.

The overarching principle is that if you create something for delivery to a broad, public audience, you are opening yourself to whatever comment observers might make. If you send a film for review, you have to accept where the chips fall.

When I write a commentary, I know that you all will keep me honest. You may not agree, and usually I learn from that. Once in a while, y'all are off your flippin' rockers. Somebody has to say so. Just like you write in when you disagree with me.

My special skill in life is seeing the emperor's new clothes. It's not my fault if some people don't want to know when the emperor is naked.


4 Oct, 2004

A Commentary on Commentaries

When I finish watching a DVD, especially one that I really like, I go right to the extras and often watch most — if not the whole — film again with the commentary. Certainly, this is a time-consuming process. Am I the only one hooked on commentaries? I doubt it.<

This may be a shock to those directors who like to do off-the-cuff commentaries, rambling as they watch the film. Many, no doubt, think no one is listening. But I am, and so are many others.

For films such as JFK, in which the filmmakers' reasoning behind each shot is integral to the plot, the commentary can be almost as illuminating as the film itself. But I even listen to commentaries on no-nonsense action films, such as The Day After Tomorrow, in which filmmakers spend their time discussing how each shot is set up and executed.

That's why it's very refreshing to hear a filmmaker talk about taking some time with his commentary. After all, it will be recorded for posterity (barring any 10th, 20th, 25th, etc., editions). I was gratified to learn in reading an interview with Frank Darabont, writer/director of The Shawshank Redemption, in this week's magazine that he took some care in crafting his commentary for the 10th anniversary edition.

“If somebody's been interested in listening to what I have to say about this movie and waiting for 10 years, I want to make it of value,” he said, noting that he spent a week recording and rerecording his commentary.

I think that's a great policy because — believe it or not —£many are listening.


4 Oct, 2004

It&#39;s Getting Tougher for Pirates

It's getting rough out there for those who attempt to pirate and/or distribute copyrighted entertainment.

Last week, the U.S. House of Representatives voted in favor of a sweeping copyright bill that, among other things, makes it a federal offense to videotape a film inside a theater, and will punish Internet users who distribute $1,000 or more in copyrighted material with three-year prison terms and $250,000 in fines.

Meanwhile, the much-maligned Induce Act, which would make illegal any technology or service that could induce someone to distribute and/or swap copyrighted material electronically, was set for an important congressional committee vote. Analysts said the bill hasn't much of a chance, as it needs to be more narrowly written before it gets broad legislative support. We'll have to wait and see.

Entertainment piracy is such a nebulous, shadowy sort of transaction that it's easy to see why surveys show that many of those who illegally download copyrighted entertainment don't really feel they're hurting anyone.

I went through this issue with my teenage daughter almost two years ago when she was downloading music files from a variety of peer-to-peer (P2P) sites.

I cannot remember when, but eventually she stopped downloading music as P2P sites kept going in and out of business. Recently, she had to have her hard drive de-fragmented after an attempt to delete the file-sharing program Kazaa crashed her system. There's some justice for you, I can hear music industry execs say.

Meanwhile, the Video Software Dealers Association has calculated that video retailers lose on average $11,000 a year in lost rentals and sales to piracy, and have come up with a plan to take the piracy battle to retail. It's making available to retailers Motion Picture Association of America posters and video trailers that make an appeal to parents to educate their kids that downloading copyrighted material is illegal.

There is no doubt that the movie/home entertainment business is aggressively attacking piracy on all fronts — deterrence measures, technical plans for the future such as “broadcast flag” requirements for digital TV broadcasts and more stringent protection being built into next-generation high-definition video discs.

Of course, for every technological lock, someone, somewhere usually manages to find its technological key. That's why some argue that the best defense is a good offense. If the entertainment industry can provide online services that offer more selection, better service and a reasonable price, then piracy fades away.

Movielink and others of its ilk — progressing slowly through the minefield of studio divisional profit motives and release windows — may eventually be as effective in putting the kibosh on the attraction to pervasive piracy as any legal or technology barrier the industry can put in place now and in the coming years.


1 Oct, 2004

T.K. Returns Next Week

Thomas K. Arnold's Morning Buzz column will resume next week.


30 Sep, 2004

Singing the Praises of the Independent Video Retailer

I've been thinking a lot about independent video retailers. Maybe it's the documentary on the Clerks X disc that sparked it.

It's a great doc, and in it we watch Kevin Smith and crew nightly destroy the indie convenience store that served as the film's backdrop and set up editing camp in the attached video store in the months following filming, all with the blessing of the indie owners.

What if those indie storeowners hadn't supported Smith and, by extension, independent film in general? I, for one, am glad they did. (My affection for Kevin Smith and View Askew Productions should be well known by now, so I'll move on from Clerks now, but you get my point.)

Call me crazy, but I got a really good vibe from the independent retailers who showed up at the Home Entertainment Retail Expo in Baltimore a few weeks ago.

In the sessions I attended, these smaller retailers or one-store indies were open to sharing ideas with their counterparts, were largely positive about their respective businesses and our industry as a whole, and were interested in learning about any avenue that could increase their bottom line.

There was very little gnashing of teeth or complaining about the “big guys” and a lot of pragmatism, optimism and a sense of camaraderie.

I felt the same thing sitting in sessions at this summer's Video Software Dealers Association Convention, mostly during sessions focused on iDEA, the VSDA's new indie-centric organization.

At both shows, there were brand-new faces, new business owners, folks getting into the industry who are interested in learning from the veterans. And the old-school guys are ready to help, it seems. And they're not as “old school” as you may think. Some of these indie retailers have some really innovative ideas on how to compete in the current big-box-dominated market environment.

I think independent video retailers kind of get the shaft sometimes, both from content suppliers and the trade press. It's easy for us to do that when half or more of the market can be covered by tracking the activities of about 10 retail chains.

But I also think indies can come back into their own, especially if a merger with their fellows on the music side can come to fruition.

I know my favorite shopping experiences are always at smaller, independent stores. Sure, I'll run into a Best Buy or a Borders to grab something quickly. But I've always loved hitting up small, eclectic one-store or small chains for browsing and discovery. (I feel the same way about restaurants, but that's another column.)

One of the owners of Amoeba Records said something to me that sums it up: “People like to be around like-minded people.” I think the independent video retailer can provide that. An indie store could well be a film-lovers haven, as well as a place to find the newest hottest releases. It certainly is a less sterile experience than customers will find at the massive chains.

I think there are a lot of people like me out there. I know there are. I hope indie video retailers can find a way to navigate the content in the industry to continue to create those havens for us.

Mike Kyle, one of the founders of the Had to Be Made Film Festival and indieBuyer.net, an in-the-works plan to give indie retailers stronger buying power and better wholesale costs by pooling orders through an intricate retailer/consumer Web site, thinks so.

This guy digs indies — he really does. How many people do would drive an RV around the country and spend months stopping at every independent video or music store he could, talk to the owners, find out their stories, learn about how they run their businesses? Not many. But he did — more than once.

And at the Home Entertainment Retail Expo, Kyle and his crew started making the word “indie” cool again. I saw plenty of people at the indieBuyer booth perusing through and grabbing handfuls of the company's stash of cheeky little green buttons touting phrases like “Kiss me, I'm indie,” “indie groupie,” “get indie,” “indie babe,” “indie rebel,” “indie maniac” and so on.

You know what? I say wear 'em. And wear 'em with pride.


28 Sep, 2004

Are the Hollywood Natives Getting Restless?

A strange thing happened at a DVD launch event I attended recently. We were all there to celebrate the DVD launch – except, apparently, the cast and crew at the event.

The group seemed happy to discuss the film and reminisce about making it, but loathe to discuss DVD. At the time I had no way of knowing, although the talent most likely did, that the Directors Guild of America (DGA) had just agreed to new contract terms that did not increase directors' roughly 2 percent share of DVD profits.

There was only one director in the bunch, but other unions have tiddlywinked their negotiations because the DGA was perceived as the muscle on the issue. The Writers Guild is working without a contract after a negotiating stalemate – partly over DVD – and the Screen Actors Guild is up next. The DGA's results are widely seen as a bellwether of what the other unions can expect.

So while the guilds seem to be making gains in health benefits, DVD residuals are, so far, unchanged.

If the DGA board and membership approve their deal, it will mean that any larger share of DVD profits will have to be negotiated in individual contracts. Not bad for Dave Chappelle, who reportedly gets 50 percent of DVD profits from his shows past and future in exchange for staying with Comedy Central. It may be great news for Peter Jackson, who can have pretty much anything he wants after The Lord of the Rings, or The Governator, the latter of whom reportedly got a $75,000 payment for his commentary on Terminator 3.

But for less successful films, we may be in for more fringe commentaries. I have joked with colleagues about the commentary from the key grip's niece, who happened to visit the set one day during shooting. OK, it's not that bad – yet – but you get the idea.

Even for big box office movies, studios may find it more economical to include commentary from reviewers who panned a flick, like the three we are expecting on the 10-disc Matrix set, than to have to give the title's talent anything more.

Wouldn't it be ironic if, just as the studios all agree on a next-gen disc format, they found themselves with nobody to fill up that extra storage space?