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The latest “Lord of the Rings” installment, The Return of the King, is very long (three hours plus), and despite the fact that my husband offered to watch the kids while I trekked to the theater to see it, I still decided against visiting the box office this weekend.
Honestly, I would rather wait for the DVD.
I know Return of the King has been widely acclaimed and has topped the box office several weeks in a row. It's also the kind of epic many think is best viewed on the big screen, but I think I would rather watch it in the comfort of my own home on my DVD player.
In the old VHS days, when the picture and sound quality just didn't measure up, bypassing such an epic on the big screen would have been unthinkable to me. But the home viewing experience on DVD is so stellar that a trip to the movie theater seems like a chore.
I'd prefer to watch it at home, where I can choose my own intermission and snacks, and can get up and walk around a bit.
As far as this moviegoer at least, the home video experience has begun to rival the big screen. The ‘Rings' numerous-hour extended editions are probably the best and most definitive versions of the trilogy, but they'd be a pain to view in a movie theater — even in the most comfortable of seats.
As ticket prices skyrocket along with the price of theater snacks, the DVD viewing experience looks better and better. At least one colleague has mused that home video may finally be taking a bite out of theatrical revenue — and, this weekend at least, I tended to agree.
Each month in Video Store Magazine we take a look at the upcoming month's slate of theatrical titles coming to video that generated at least a million dollars at the box office.
February's offering, as we point out in this week's issue, is woefully short of “event” titles save for Spy Kids 3-D: Game Over, which earned Buena Vista/Dimension more than $111 million. After that, the next biggest box office winner coming in February is Runaway Jury from Fox which earned a little over $49 million. There are a total of 18 titles that earned $1 million or more coming to home video in February, and this batch, as a total, generated just over $470 million in ticket sales.
By contrast February 2003's slate of 22 titles earned a more exciting $780 million, and included HBO's sleeper hit My Big Fat Greek Wedding among three $100 million plus titles that month.
By now you have heard that theatrical ticket sales and revenue dropped last year and there is certainly an argument to be made about a link between the escalating price of a movie ticket and the dropping prices of DVD as a factor in theatrical's poor showing. The result is that, more so than ever, good films, albeit not the kind that are “must see” on the big screen, are being hurt at box office by the “I'll wait for the video” effect.
So while this February's theatrical slate is by far smaller in box office power than last year's I think this year's February offerings, a terrific bunch of films, will perform better on a comparative basis. There are some strong films in this group, with major stars that received plenty of promotional push leading into the fall and have garnered, in some cases, great critical acclaim like American Splendor, due out next month from HBO, as well as Lost in Translation from Universal.
Along with the above mentioned titles consider Under the Tuscan Sun, Secondhand Lions, Matchstick Men, Intolerable Cruelty, The Missing, The Fighting Temptations. All films with major stars and plenty of promotion push.
While box office performance has always been the lead indicator of a video's potential success, home video's impact on theatrical may, oddly enough, skew those indications to a greater extent in the future. It'll be interesting to see if this effect occurs regularly over the next 12 months.
The fourth quarter of 2003 saw consumers spend around $4.5 billion on buying DVDs, and much of the money went to the big blockbusters that each week battled it out for supremacy on the shelves of the big chains.
If the studios learned a lesson, it is this: You had better take an in-your-face attitude toward marketing, because if you don't make a big splash the first weekend, you're likely not going to have a second chance. The concept of “legs” disappeared long, long ago — the days when a title, like the original Lion King cassette in 1995, could rack up strong sales for several consecutive weeks are over, and the new reality is that if studios don't sell at least one-third of their shipment by the first weekend, they're out of luck.
As a result, virtually every studio executive with whom I've spoken said consumer marketing dollars are headed for a huge uptick in 2004, and living or dying by the hits bears increasing relevancy. Just like in theatrical, there's generally only one big winner each week, and if you're sharing a Tuesday release date with two or three other heavyweights, as you're likely to do in the typically crowded fourth quarter, you need to do all you can to stand out and grab the consumer's attention so you finish in the money and not in a pickle.
The problem in this isn't just the risk inherent in a first-week battle of the heavyweights, but what to do when there are no heavyweights. Not all studios have golden runs, and if you depend entirely, or even mostly, on your parent company's theatrical slate, you wind up with very little control over your division's fate — and your professional destiny.
So in addition to upping the marketing ante next year, what I'm hearing from smart studio executives is the pressing need to broaden their product offerings. The feeling is that with buy rates still up in the 15- or 16-DVDs-a-year range for even the newest generation of DVD owners — the ones who weren't motivated to buy players until this past holiday season, when the price dipped to as low as $19.99 — the bottom isn't about to fall out of the sale market.
New DVD households are almost as hungry as their early adopter predecessors — and you'd better feed the kitty while you can. Observers don't forecast any significant drop in buy rates until penetration hits the 70 percent mark, and that's still about two years off.
In the meantime, the prevailing sentiment is to offer DVD consumers the widest possible assortment of product. And without giving away any secrets — a lot of these studio executives with whom I've spoken are fearful of word getting out about their specific plans for '04 — let me just talk in generalities about some of the trends and developments we're going to see in the coming year.
1) Short-form children's programming will continue its rapid transition from VHS to DVD. If you dissect their numbers, the Digital Entertainment Group (DEG) sees as many households buying a second DVD player this year as coming online for the first time. That means the old adage about the VCR moving to the bedroom, or the kids' room, is no longer correct — it's moving into the trash. And if you factor in the PlayStation 2 phenomenon and the anticipated growth in other ancillary playback devices, including DVD players in SUVs and minivans, there's a huge gaping market that won't be satisfied with the handful of features aimed at kids that are released on DVD each year.
2) TV DVD will continue to sail away. There are gobs of great stuff still sitting in the vaults, and consumer research has found that once you get into the habit of watching TV shows on DVD, you're likely to stick with it. Expect some shows you never thought would see the light of day — heck, maybe we're even in for a complete first-season set of that treasured Jerry Van Dyke classic, “My Mother, the Car.”
3) Old movies will come out in droves. A few years back, some studios put a temporary halt on pushing their catalog out on DVD because the price points were so low. They wanted to wait until the price went back up. Guys, that ain't going to happen. Prices have come down even more — and yet demand has gone up so astronomically that studios would be foolish to sit on the sidelines any longer.
4) Look for December 2004 to bulge with hot new releases. I remember lots of skepticism about Disney's decision to not issue Pirates of the Caribbean on DVD until December. “They'll miss out on sales” was the common refrain. Well, Disney sold 11 million DVDs in a single week and easily won the battle for fourth-quarter market share, while studios that pushed their hot titles out early suffered from soft sales. Guess who's laughing now.
5) We're going to see a uniform next-generation standard simply because we have to. High-definition is coming fast, and our industry can't afford to let satellite, cable, or even broadcast TV get it first. My money's on Blu-ray, a true next-generation format. I see a lot of pride-swallowing in the coming months, and an agreement by year's end.
I've got several other prognostications to make, but this column is running a bit long and I'd better stop. Perhaps I'll touch back on this topic in a few weeks. In the meantime, check out what's happening at retail this month. From most accounts, DVD sales never stopped soaring with the end of the holidays. And you can bet that the release slate for January 2005 is already taking shape — and it will have a lot more heavy hitters than this year's list.
One thing about our industry — we're fast learners.
By: Thomas K. Arnold
Piracy is again the hot topic in Hollywood with the news of an Academy Awards screener of Something's Gotta Give getting ripped to the Internet despite a short-lived Motion Picture Association of America (MPAA) screener ban and supposedly tighter controls on who gets access to screeners.
Not that discussion has ever died down, but it looked -- for a minute -- like the heat was off at least until after the Oscars. But the screener leak re-ignited the debate when Sony found a digital copy of the film, ripped from a tagged analog screener, on the Internet.
The more cynical among us might look at the movie's $55.9 million box office over a month and assume it was a publicity stunt. Box office like that on a movie with Jack Nicholson/Diane Keaton star power is not exactly earth-shattering. Maybe leaking the screener was the only way to get anyone talking about this film.
The Academy's Web site carries a list of screeners available to Oscar voters who agree to terms of receipt that are just short of house arrest or tagging the tape with a GPS transponder. I'm not a file trader, but if I was going to steal a movie to share it with a few thousand of my closest cyberfriends, I would be going for the prestige of a 21 Grams, Lost in Translation or House of Sand and Fog, not a film that's losing steam.
The leak comes shortly after McKinsey Research came out with a warning for the content industry that movies could suffer the same fate online as music. I still think that's a bit of a stretch, at least for a year or two, but the McKinsey analyst makes the valid point that illegal downloading will ramp up to fill the content void if the movie, computer and broadband industries can't stave off a the virtual equivalent of a format war and give the people what they want -- and soon.
That means there are at least two format wars looming on the horizon, and mark my words they will overlap. Battle lines are still being drawn over high-def DVD. Internet consumers are tech savvy, they are early adopters who want the latest thing, so they will want high-def, too.
This industry has done so much right with DVD –- content, availability, pricing, marketing –- that the format has taken off like nothing before it. But Hollywood is littered with victims of their own success, and DVD could be just the next casualty if the studios can't play nice with each other and the other two increasingly important sectors in this equation.
Which brings us back to the irony of this particular title getting ripped to the Web. What a metaphor: Something's Gotta Give.
By: Holly J. Wagner
As I trekked through the enormous Consumer Electronics Show (CES) this weekend, I was somewhat overwhelmed and mystified by the numerous entities trying to bring about the digital delivery of entertainment to the home.
The industry and its detractors have been talking video on demand since I got here a decade ago, and I honestly have yet to see anything that beats traditionally packaged delivery of movies, even at this year's CES.
Many of these new technologies seem to hinge on home networking, i.e., getting a digital program from one room to another via wire or wireless. I actually sat in on an educational seminar on digital media servers, and let me tell you this stuff is complicated. There's centralized or networked systems costing anywhere from $350 to more than $5,000. The Kaleidescape system starts at $27,000.
You'll need a wired house (wireless systems are a problem for various reasons), and, from the looks of things, you'll need an on-call techie to administer and problem shoot the thing. You'll also need backup drives with your movies, songs, etc., loaded. If not, you're out of luck if your drives go bad — as they often do.
All of this makes the shiny little DVD look pretty good. Even if I had all the money in the world, I'd opt for a DVD collection rather than the much-ballyhooed network. If you're really in a crunch for space, you can ditch the packaging and just store the DVDs. You can store lots of those slim little things in the space it takes to house your server and backup drives.
The rental business may find a strong competitor in video on demand, but, as far as I can tell, DVDs will be the way to go for the movie collector for a long time to come.
One of the clear themes of this recently concluded Consumer Electronics Show is that hardware manufacturers are preparing for the day when consumers look to some device, probably more PC-like than CE-like, to manage and distribute the various digital media they consume, not only at home but while mobile.
Walking the aisles of the vast expo halls, sitting in on some of the sessions focusing on content and content management, it's funny how few times I heard or saw the acronym DVD. It's not that suppliers or retailers here necessarily believe DVD is a technology on the wane. Indeed, the headline in one show daily proclaimed 2004 as the year of DVD recorders.
I write this even as the home video industry celebrates a record year for packaged DVD and its overwhelming dominance as the entertainment medium choice of the planet at large. And I think 2004 will continue to see DVD make major strides toward a 70 percent-plus household penetration in the United States and far outpace other entertainment media in growth and consumer dollars spent.
But I do think that digital technology is making suppliers of hardware markedly more agnostic as to the delivery of the content. That is, the CE/PC media business is developing products that meld consumers' interest in consuming media from a variety of entry points: be that packaged media (DVD, CD); hybrid packaged media (think how many games are now being developed with online components, how many DVDs have ROM extras, how many music publishers are combining CD/DVD); Internet-based streaming/download services (sticking just to movies we can cite Movielink and CinemaNow as starters and brand specific services like Disney's own Movie Beam); and the plethora of cable VOD, and telco and satellite delivery services that are, by the way, quickly jumping on HDTV.
Now take these delivery options now available and then add on the impact of the PVR/DVR (digital/personal video recorder, i.e., Tivo and ReplayTV) where you can control how you view nonpackaged media and throw in software that lets you organize this variety of content from all of the sources mentioned in the previous paragraph and distribute and manage that content from as many different platforms as you can imagine both inside and outside the house, and you have an idea of what the future looked like at this year's CES.
That's certainly the vision Bill Gates outlined during his keynote at this year's CES, and Microsoft's Media Center technology is at the nexus of this trend.
What does all of this mean for the packaged home entertainment software retailer? First of all, I believe that the current generation will continue to gravitate to packaged media from a “collectors” mentality, and also that packaged media will be the higher-quality and better-selection choice (over pure digital online/VOD delivery) for home entertainment in the next several years, even if it is copied and stored on some sort of server. But it also means that you need to continue to seek ways to make your services more convenient and, where possible, integrated into the digital lifestyle the growing majority of your customers live today.
It was bound to happen, but I saw it for myself for the first time as I was driving home from work and heading for vacation for the Christmas holidays: Some numbskull had recorded the early-morning Golden Globe nomination announcements and was playing the show back on their minivan’s DVD player on the drive home. I know because I was behind this neck-craning idiot, and it was clear there was nobody in the car except the driver. And this was not inching along the freeway, it was stop-and-go around the South Coast Plaza mall in pre-Christmas shopping frenzy traffic. Watch for Natural Selection to kick in as this becomes more common. But at least that idiot is ticket bait now, at least here. A law banning front-seat video displays in cars just took effect in California.
Even before I left for the holidays, I knew that DVD would figure big into my family’s festivities. Besides the fact that my niece and nephew give me lists of the DVDs they want for Christmas, I had turned them into lab rats over the Thanksgiving weekend, sitting them down to play the Scene It? game. One evening of that was enough to convince my niece that she wants one, so that made it onto her list as well. My nephew, 15, struggled with it a bit, though. He got a DVD question that listed five character names and he was supposed to name the actor who played them. Not only was he unable to answer the question, but when the disc put up the answer, he looked quizzically at the rest of us and asked, “Who’s Warren Beatty?”
Nothing spreads a little holiday cheer like discs of holiday cartoons. I love the traditional favorites we waited all year for as kids, but now it’s more fun to bake cookies or hang with the family while watching SpongeBob SquarePants Christmas or Christmas With the Simpsons.
Finally, I expect this is the last holiday season any of us will write much about VHS. This is based partly on things I have said before and also on a couple of family members’ Christmas lists, in which they requested specific titles on DVD to replace the same title on a tape they couldn’t wait to get rid of. I don’t care what the whiners and ostriches say, VHS is dead. Over. Done. Fini. Or, as John Cleese once said of a Norwegian Blue Parrot, “It’s bleedin’ demised!”
On that note, I wish you all a Happy New Year.
By: Holly J. Wagner
I've taken some heat for last month's prediction that rentals will drop off in 2004 as sellthrough begins to impact the market. I've made the point in this space before that rentals compete for consumers' time. There are only 24 hours in a day. Consumers are buying more and more DVDs — for gifts and for themselves — and it looks as if they are renting less, according to the big rental chain's reports.
It's not just that consumers may be buying titles instead of renting them. That's not the whole picture. There are more viewing opportunities in the home, many directly resulting from the growing sellthrough DVD market. Consumers can watch DVDs they already own again, those they borrow from neighbors or the hours of extras on those DVDs. Just think about the hours of free time a TV series on DVD can swallow. A rental isn't just competing for viewers' time with a single sellthrough title viewing, pay-per-view or video-on-demand, it competes with all the other entertainment pastimes viewers can pursue to fill up that 24-hour day, including added viewing of DVDs they or their neighbors already own.
In my own neighborhood, kids move from house to house watching DVDs in each other's libraries. I don't know how many times my daughter saw Pirates of the Caribbean over the holidays, but it wasn't our copy she was always watching. My neighbor came to a gathering humming “Just Keep Swimming, Just Keep Swimming…” from Finding Nemo because it was running in a continuous loop at his house.
I know this has been a phenomenon with kids for some time, but it happens among the adults in the neighborhood, too.
Now, this doesn't mean the death knell for rentailers. They can join the sellthrough juggernaut, too — and they have through sales of previously viewed DVDs. One retailer wrote me that pre-viewed title sales have more than made up for any drop-off in rentals at independent video rentailers — and that market, like rentals, is uniquely theirs.
If “re-gifting” was all the rage this holiday season, (and I wonder how many DVDs got passed around in this process) I got a kick out of a couple of other observations that played against the whole holiday gift churn that doubtless home video retailers may see some of this post holiday season.
You had to laugh at the report about the Sam Goody store promotion at the Mall of America in Bloomington, Minn. In this “Sam Goody Bad-Gift Boycott” the store offered to exchange gift cards valued up to $500 for any unwanted gifts shoppers brought down to the store. Legions arrived with their bad gifts and created a mountain of merchandise in return for a gift card for new music or video.
For kids not living in Bloomington who couldn’t join the rush to return the days after Christmas, I noticed an odd little phenomenon going on in my own neighborhood that I bet was being played out around the country. On two different occasions, kids attempted to flag me down to buy a cup of lemonade (for a small fee) as I drove past. (The “winter” weather in Southern California accommodates the notion of a roadside lemonade stand in December.) And on another day, I saw kids waving a “Car Wash” sign ($5) even as rain clouds gathered. Meanwhile, even my youngest daughter was busy working for a neighbor real estate agent stuffing envelopes to earn money for a scooter she saw one of her friends get for Christmas. (Hey, we bought her a nifty little stereo for her room, and the family got a PS2 and she got plenty of games, so don’t blame me.)
Yes, indeed, if you can’t re-gift and you can’t return, then just get out there and earn enough money to buy your own present if you are suffering from some form of Christmas gift envy.
Chances are there will be plenty of action on the DVD front this post-holiday returns season as one of the most popular gifts of the season will likely mean that a sizeable number of people got DVDs they either owned already or don’t care to see (but would gladly exchange for another title).
Meanwhile, doubtless few of us would exchange 2003 for some other year in the home entertainment business. It was a stellar year overall for home video. Let’s hope 2004 can achieve similar heights.
Happy New Year.
The past year gave the video industry much to cheer. We saw the DVD business pass the 50 million household mark and DVD households continue to buy at the much the same rate as early adopters. The sellthrough DVD juggernaut didn't slow as many had predicted. Rentals hit a few snags, but continued to hold fairly strong despite a sea change in the business.
DVD player prices hit a new low -- some priced less than the very DVDs they were designed to play. Low-priced DVD players were everywhere during the holidays, loss leaders for such discounters as Wal-Mart, much as DVD software titles had been the whole year.
“This was the single biggest growth year in DVD households we've ever had and ever will have,” said Craig Kornblau, president of Universal Studios Home Video to Video Store Magazine recently.
Indeed, it's hard to believe there will be growth that can top this year. But when I look back over the past few years, we've consistently been surprised by the success of DVD. Could the little disc pull off another corker?
Here are my humble predictions.
* 2004 will again surprise retailers with households' continued interest in buying DVDs. The household buy rate will slow very little.
* Rentals will finally take a visible hit this year, as consumers prefer to buy rather than rent. But the rental falloff will be overblown by Wall Street, and retailers will be able to recoup much of the loss with previously viewed title sales.
* Used DVD trading will grow as retailers and consumers catch on that an old DVD is almost as good as new -- and it's a lot cheaper.
* Software and hardware that helps consumers transfer home movie cassettes to DVD will grow like never before.
Those are my top trends for 2004. I'd love to hear from others about their predictions for the New Year. Readers?