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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.

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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?

27 Sep, 2004

Best-Sellers Section Shows Dominance of DVD

In a recent visit to Target, I noticed that VHS's marginalization stretched even to signage. While signs denoting VHS sections all included the term “VHS” (except one kids-title area), the “Best Sellers” section, which was filled entirely with DVDs, wasn't called “DVD Best Sellers.” The all-important endcap of “New Releases” displayed a similar strategy.

Like that giant hook pulling a falling star off the stage, retail signs have relegated the VHS cassette to a niche. A few weeks ago, I marveled at Target carrying that much VHS at all, but the signs point to its imminent demise.

Could this fourth quarter be the final curtain for VHS? I say watch the signs.

26 Sep, 2004

Taking the Piracy Battle Into Retail

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 it's hurting anyone.

The Motion Picture Association of America (MPAA) has been running those public service announcements in movie theaters for some time that show various folks in the movie business telling us piracy hurts their job security, but that doesn't seem to be resonating. So it was interesting to hear Bo Andersen, VSDA president, during a presentation at last week's Home Entertainment Retail Expo, talk about the cost of piracy being about $30 a day for the average video store. I won't go through his calculations (look for this in a later issue of Video Store Magazine), but they make sense, and if they were found to be accurate, it would seem retailers could lose almost $11,000 a year to piracy. Ouch.

Since you can't take the law into your own hands and start scattering DVDs into the street every time you encounter some peddler on the sidewalk or at a local swap meet, your best option is to attack the problem where you have the most impact: in your own store.

The VSDA is working with the MPAA to develop materials to take the piracy message into the retail environment. The VSDA will offer posters and movie theater trailers from the MPAA that retailers can use in their stores. Some of the materials appeal to the idea of parental guidance — how parents can guide their kids' use of the Internet in a way that doesn't run afoul of antipiracy law. Other material is a bit more aggressive, addressing the downloaded directly with a “you can click, but you can't hide” kind of message.

Retailers interested in getting some of these materials can contact the VSDA via e-mail at vsdaoffice@vsda.org.

Meanwhile, the industry continues to develop the best defense against piracy: offering inexpensive and effective legal alternatives to consumers.

23 Sep, 2004

VIAAC Deserves the Accolades it Bestows on Others

Last night I was honored as one of the Video Industry AIDS Action Committee's 2004 visionaries, an honor that quite frankly means more to me than any of the journalism awards I've won over the years.

I settled on a career in journalism because I wanted to change the world. So far, I don't think I've come anywhere near my goal. VIAAC, the home entertainment industry's only homegrown charity, was launched 15 years ago to help in the fight against AIDS. Since then, VIAAC has raised more than $3 million for various AIDS organizations around the country to help fund the battle against this deadly disease.

With due apologies to myself, that's a much more significant contribution to our world, and to life, than my latest ramblings on DVD extras or the TV DVD phenomenon.

I received my VIAAC Visionary Award for having produced the VIAAC program for the past five years. I'll be the first to admit that's not much, but in my own small way I believe I helped an organization, and a cause, that I wholeheartedly support and champion.

My first personal encounter with AIDS happened in the early 1980s. I was in San Diego, working for San Diego Magazine, the Los Angeles Times and the San Diego Reader as a freelance writer. I wrote a lot about San Diego's redevelopment efforts, and that put me in touch with a man named Monte Kobey, a civic leader who had great visions for what downtown could become. Sadly, Monte contracted HIV through a blood transfusion while undergoing open-heart surgery and died of AIDS-related complications. He left behind a wife and two daughters.

Since then, I, like so many of us in this business, have lost a good number of friends to this terrible, and terrifying, disease — a random, indiscriminate killer. When VIAAC was launched, I was proud that our industry at last had a homegrown charity, and when I was asked to help out on the program five years ago, I eagerly dove in — even after I discovered that “help out” meant “do it.”

But as much work as it is, it's fun. I get to see a different side of the executives I profile, the studio executives who donate thousands of dollars worth of product, and myriad hours of company time, to support VIAAC, as well as the retail leaders who have stepped up to the plate over the years to support VIAAC in their own fashion. I get to see the humans beneath the suits, the compassion and sincere desire to do some good, to make a difference, that you simply don't see when discussing copyright protection and marketing strategies.

It was the same this year, except I got out of writing one profile — my own — at the last minute when Stephanie Prange, our executive editor, offered to step in. She interviewed me, then called me back and said she was having trouble filling the space. “You haven't really had a 500-word life,” she said. “I'm not even sure I can make it to 400.” Thanks, Stephanie.

I had no trouble writing 500 words about the other honorees — particularly those who, er, “helped” me write their profiles, like Fritz Friedman, the affable SVP of worldwide publicity for Columbia TriStar Home Entertainment. Trade reporters know full well how exacting it can be to write a story pitched by Fritz. Now, imagine writing a story about Fritz, with Fritz. I'll leave most of this to your conjecture, but let me just say that I was still on the phone with Fritz at 7:30 one evening. Just after I had read him back his last quote and hung up the phone for what I thought was the last time, he called back. “That part where I say, ‘I've had a good life and a great career' — it makes me sound like I'm dead," he said. "Can you put that in present tense — 'I have a good life and a great career?'" I made the change, but before I could shut down my computer the phone rang again. Fritz. “Could you change ‘great' to ‘wonderful?’I did, but only after I put on my voicemail. But you know what? Fritz was right. Wonderful is a better word — not just for his career, but for him, and for all he has done on behalf of VIAAC. And I can honestly say the same of all the honorees I've profiled over the years. They are all wonderful people, and I was truly honored to stand in their company last night.

22 Sep, 2004

Sears: More Than Just Washing Machines and Refrigerators

In the ongoing commoditization of sellthrough DVD movies by mass merchants, Sears, Roebuck and Co. recently upped its offering of DVD movies from a smattering of titles to 500 releases expected in select stores and online by the end of the year, according to company officials.

The titles, which run the gamut from recent theatrical releases — Shrek 2 (DreamWorks), Scooby-Doo 2: Monsters Unleashed (Warner) and Barbershop 2: Back in Business (MGM) — to catalog fare — The Thomas Crown Affair (MGM); You've Got Mail, The Lost Boys (Warner) — TV DVD fare — Felicity: Season Three (Buena Vista) and special editions Star Wars Trilogy (Fox) — are priced from $5.

A friend of mine, however, wondered aloud why anyone would go to Sears to buy a DVD.

“I wouldn't go there to buy a DVD,” Angela said. “Sears wouldn't even cross my mind.”

A Sears spokesperson admitted the concept has been a work in progress.

“It makes for easy one-stop shopping,” she said. “It's a convenience for our customers. [The titles] are positioned by the electronics area. It's an easy thing to purchase. By the holidays, we should see over 100 new movie titles.”

In reality, Sears, with more than 860 retail stores nationwide and revenue exceeding $41 billion, has had a long history marketing the improbable.

Did you know that Sears rents cars, and sells consumer credit and flowers?

Remember the Sears Financial Network, the company's 1981 foray into investments and real estate?

After acquiring Coldwell Banker and Dean Witter & Co., Sears helped launch the Discover credit card in 1986 and later sold the commercial real estate division of Coldwell, which became CB Richard Ellis.

In 1908, Sears, which originated as a catalog retailer, offered a 68-page supplement with 44 individual house designs, ranging in price from $695 to $4,115. A separate schoolhouse design sold for $11,000.

According to the Web site www.oldhouseweb.com, interested customers could order a model's blueprints and building materials list for $1, which was credited back on the actual home order.

An order arrived by train in two boxcars containing 30,000 pieces, including 750 pounds of nails, 22 gallons of paint and varnish, 20,000 shingles for the roof and siding, and a 75-page leather-bound instruction book.

The home kit did not include masonry and plaster, but the materials list advised that 1,100 cement blocks would be needed for basement walls and foundation.Sears estimated the cost of related labor included $34.50 for a painter and $450 for the carpenter to assemble your house.

More than 75,000 Sears homes were sold; The Washington Times reported in 2001 that a Sears home in Chevy Chase, Md., sold for $816,000.

This summer, Sears spent $621 million to acquire 61 undisclosed Kmart and Wal-Mart retail locations that the company plans to convert into Sears Grand stores, which will reportedly offer a racetrack design, centralized checkouts and a pharmacy.

22 Sep, 2004

Game, Set, Mismatch? Another Front Opens in the Format War

Sony's announcement yesterday that it would use the Blu-ray standard on its new PlayStation 2 is a big, loud shot across Warner and Microsoft's bow.

If we thought the potential for a format war in high-definition DVD was a recipe for disaster, gaming platforms open a whole new front that could change the course of that war.

Whatever happens on the high-definition DVD front, using different formats on game platforms would only increase the conflict. It creates a situation that potentially splits the market between the two formats over movies and games. Sony, for example, could refuse to license “James Bond” games for Xbox. Or Warner could deny PS2 licenses for “Harry Potter” games. The two sides could stockpile content for their preferred formats.

The traditional challenge has been that PS2 has a wider variety of games, but Xbox has the killer graphics. If the platforms split on high-def, they will have to use the extra storage capacity to play to their own strengths. That would seem to put HD in a better position for DVD formats, because it could take advantage of Xbox's killer graphics; or it could open the door for Sony to use the deeper memory of Blu-ray to let gamers drift back and forth between the movie and gameplay.

Gamers have always been accustomed to having to buy different versions of software for their various game platforms. Not so with video consumers. Once the Beta vs. VHS battle petered out, most of the market was on VHS for two decades (of course, there were always laserdisc aficionados in the minority). To most people, “video” meant VHS. In fact, to most people video still means VHS — DVD is a whole different animal.

Gamers tend to be early adopters and could be the deciding force. Sure, a lot of them have more than one game platform. But I doubt that as many will be willing to buy separate movie formats as well as game versions.

Either way, I'm expecting an announcement from Microsoft soon about what will be incorporated into next-gen Xbox. They can't let that challenge go unanswered for long.

20 Sep, 2004

What Do You Call It? Oh Yeah, VHS

This weekend, my 6-year-old daughter asked if we had a movie called The Little Princess on DVD. I said, no, I didn't think so as it was an older movie.

“Can we get it? We have it at school on that other thingy. The big one. You know. The other thingy movies come on,” she said.

“You mean VHS cassette,” I replied, obviously showing that I was on the older side of the generation gap.

“Yeah. Can we get it on DVD?” she said.Her reply seems to me just one more nail in the coffin of the dying format.

My 2-year-old wouldn't even know what VHS is, but she can pronounce DVD.

Just as teens today can't remember vinyl albums, the younger set is burying the cassette. There are those who think VHS will hang on, but I'm convinced it will die very soon.

Recently, I saw a VHS/DVD combo unit (about $400) with DVD recording capability. When customers can transfer those old home movies on VHS to DVD easily and cheaply, VHS will go the way of beta.

19 Sep, 2004

An Online Buyers' Market that Might Help Small Retailers

At this week's Home Entertainment Retail Expo in Baltimore, yet another new online venture will be introduced. But for a change, this is one that could help, not threaten, the smaller home entertainment retailer.

The indieBuyer.net concept (and it's just a concept at this point, since a beta site is not expected until later this fall) has promise, at least on paper. As you can read in this week's issue, this is, essentially, an online buying group with some very interesting twists.

The key ingredient in this model is that participating retailers in indieBuyer place their order for a title prior to prebook date, and the eventual unit price for the title is set based on the number of orders the title gets by the end of its prebook period. Everyone gets the same unit price, no matter if you ordered one or 100. The supplier sets the initial price and target unit goals for when prices can be dropped. indieBuyer will act as distributor and pack and ship to participating retailers from a shipping location in San Francisco, for starters. It charges a transaction fee to suppliers for each order.

The organizers of this venture are the same folks that started Had to Be Made Films, which has been for the past two years pursuing avenues for indie film producers and suppliers to market and sell their product into the home video market through virtual film festivals and by running an independent film conference track and tabletop display area at the Video Software Dealers Association's (VSDA) annual convention in Las Vegas.

Their focus has always been in serving the “understandably underserved” mutual interests of the small, independent producer whose title rarely makes it to the top of most distributors' lists (if they are picked up at all) and paring them with smaller independent home entertainment retailers of all sorts who can differentiate themselves in the market by having an eclectic and cutting-edge selection of films the big chains and mass merchants won't have.

Mike Kyle, CEO of Had to Be Made/indieBuyer, explained to me that the intention from the outset has not been to build a distributor type of business competing with the likes of Baker & Taylor, but I wasn't necessarily surprised when he offered that during the VSDA show, two major studios expressed interest in indieBuyer as a possible outlet for some product.

indieBuyer is free and open to any and all retailers, big and small, to participate as much or as little in the online system (and claims to have 1,400 retailers already signed up), and the same holds true for suppliers, Kyle said. Whether his transaction fee is competitive compared with major distributors, and whether major studios and big retailers can find value in the system as well is secondary, Kyle said, to the future of indieBuyer. He believes there is so much content out there and retailers who are looking for it at the right price that indieBuyer's success doesn't require playing with the big boys.

It's an interesting model we'll be tracking this fall and into the new year.

16 Sep, 2004

MGM Acquisition a Good Move by Sony

No sooner had the ink dried on Sony's “agreement in principle” to buy MGM for nearly $5 billion than the industry was abuzz over the motive.

Generally, analysts concur Sony is both gambling on DVD's staying power and betting against it.

On the one hand, as the august Wall Street Journal puts it, Sony “is betting that Hollywood's DVD cash cow will continue gushing money.” Consumer spending on DVD has risen steadily each year, with last year's spending total estimated at $11.8 billion. That's more than consumers ever spent on movies in the VHS era, and a record that's likely to be shattered this year, when spending on DVDs for the first half is already at $6.6 billion, according to Video Store Magazine Market Research.

Indeed, DVD has proven so lucrative that studio executives have become a lot less nervous when movie production budgets balloon, so confident are they that the risk will be mitigated through boffo DVD sales on the back end.

MGM has a huge library, one of the biggest in the business, and while many of these have already been released on DVD, the number of new DVD households keeps growing. We're still nowhere near the 70 percent mark, which is a key indicator of a mature market. New collectors are being born every minute, and at the same time Sony's home video division, perhaps more than any other studio, knows how to double-dip (score twice by releasing a superior DVD weeks or months after a regular one).

Thus, the fact that MGM has already released most of its sellable titles on DVD is hardly a deterrent; the folks at Sony are ready and willing to do it again, convinced there's more money to be squeezed out of classic library titles from John Wayne's The Alamo to the “James Bond” collection.

That said, Sony is also betting against DVD with its proposed acquisition of MGM. Sony heads one of two competing next-generation optical disc formats, Blu-ray, which is vying to become tomorrow's high-definition standard. The opposing camp, HD-DVD, has the backing of Toshiba.

There's a lot at stake. Sony has been left in the dust once before — in the early 1980s, when its Beta cassette lost out to Matsushita's VHS. Sony was at the vanguard of developing DVD as well, but walked away with only a partial victory when the MMCD format it had developed with Philips was integrated with Toshiba-Warner's SD after computer companies demanded a single, standard format.

Both competing next-gen camps are currently in a race to the market. All the studios except Columbia TriStar Home Entertainment, owned by Sony, are still on the fence. If Sony is having a hard time convincing a second studio to line up behind it, what better tack than to buy one — particularly one with as formidable a library as MGM?

With MGM, Sony will command a library of some 8,000 movies titles — ready and ripe for the next-gen pluckin', and a snub in the face of HD-DVD, which as of yet has no major studio behind it.

There are plenty of skeptics who question Sony's wisdom in buying MGM for so much money. Even the Wall Street Journal is raising eyebrows, touting the fact that some analysts believe DVD growth will slow and that eventually the entire packaged media category will fade “as more viewers turn to movie-on-demand services and run out of old favorite video flicks to replace.”

But I disagree. I see DVD sales maintaining their robust clip well into the future, fueled by such out-of-nowhere niche markets as TV DVD and music DVD, and also by the continued shift of consumers toward buying and collecting movies the way they buy and collect CDs and books.

And if and when DVD sales fade, there will be a new packaged media format to pick up where DVD left off.

Whoever's got the content will win, and with MGM under its belt, my money's on Sony to secure many, many happy returns.