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I've got two broken VCRs in my house, and I don't know what to do. One has been broken for at least a year, and another has had a tape stuck in it for about three months. For the price of fixing either of them, we could buy a new VCR. But it seems silly to buy a new one — sort of like investing in an eight-track tape player after the CD has taken over.
There are numerous other recording options either just available or on the horizon. I could make the leap to a personal video recorder, like a TiVo. I could buy a DVD recorder. Yeah, those old VCRs are looking more like dinosaurs all the time.
And yet … I just can't seem to get rid of them. We've still got lots of children's tapes that the kids might want to watch someday (though I must admit they've been doing just fine without them for three months, and they take up more than twice the space of DVDs). And there are a few classic kids' titles that we haven't yet replaced on DVD.
But is it worth the trouble? Keeping all this dead hardware reminds me of Jeff Foxworthy's “You Might Be a Redneck” gag about stacking the working TV on top of the broken one. As it is, the things are just taking up space, holding a place for their eventual replacement — I just wish I knew what it was.
Sometimes in business the best thing to do is when everyone zigs, you zag.
Call me a little crazy if you want, but you have to wonder if maybe the music retailing business hasn't hit bottom, and the acquisition of struggling music/video chains such as Musicland and, this week, Wherehouse Entertainment and CD World (see our cover story in this week's issue of Video Store Magazine) at bargain-basement prices is going to turn out to be a very prescient thing to have done. Is Tower, also fishing for a suitor, next?
For as much as the file-sharing of music seems to have undone the music industry, the combination of a variety of market forces may — just may — bring music buyers back to these music/video chains and regain at least a portion of the magic that has kept them at the center of home entertainment retailing for decades. Meanwhile, these chains and anyone else retailing home entertainment software have to be busily, and continuously, transforming themselves as digital entertainment software brings the spectrum of entertainment media eve r closer together.
I am not privy to the details of recent transactions, but Sun Capital picked up 1,100-store chain Musicland in an all-stock deal that included assumption of liabilities, and that struck a fairly resounding note that the valuation of music chains had reached epic lows. Just last week, Trans World Entertainment picked up Wherehouse Entertainment's 148 stores for a reported $41 million total consideration that includes cash and assumed liabilities. On the face of it, those look like pretty rock-bottom deals for what have been major franchises in a multibillion-dollar industry.
Musicland had been draining money from Best Buy since it acquired full ownership of the company in January 2001, and Wherehouse had assets of $228 million against $222.5 million in debts when it filed for bankruptcy at the beginning of this year. Meanwhile, Tower lost $13.8 million in its most recent quarter. So there is no arguing that the picture is not pretty for these companies. But as the old saying goes, there has to be a puppy somewhere under that large pile of bad financial news.
Recently, things have been moving in a direction that could help these chains. Most importantly, Universal Music Group will dramatically cut the price of its CDs to a range that makes it a reasonably priced entertainment product. There has been a growing chorus within the industry to bring back the single, and scuttlebutt is that its return is not far away. The music industry is recognizing the growing interest of DVD music, and embracing both DVD music and DVD-Audio, along with exploring the so-called flip-disc CD/DVD-Audio combo. Add to this the continued and growing role of music stars in movies, not to mention the various public relations and legal efforts by the RIAA to, er, encourage file-sharing abusers to stop their bad habits and buy their music, and you have the makings of a possible comeback by the music business that can only serve to help these embattled chains.
I spent much of last night up in Beverly Hills, reminding myself that underneath all the competition and one-upmanship, the home video industry does, after all, have a heart.
The occasion was the annual VIAAC Visionary Honors dinner, where our industry comes together not to sell product or cut deals, but to honor our own who have selflessly given to the cause.
VIAAC, of course, is the Video Industry AIDS Action Committee, a volunteer group of video industry professionals that was formed in 1989 to respond to the urgent need for funding for AIDS service organizations around the country.
In the ensuing years, VIAAC has delivered more than $2.8 million to 100-plus agencies in the battle to find a cure for AIDS and HIV — a battle whose biggest enemies, aside from the actual disease, is public indifference and, in some circles, intolerance stemming from a grossly misguided perception of what the disease is all about.
I'm proud to report that this year's honorees are all longtime friends of mine.
Jim Cardwell and Bob Chapek, presidents of Warner Home Video and Buena Vista Home Entertainment, are both seasoned pros who lead two of the most progressive and smart video operations around. They are dynamic and visionary leaders, and it comes as no surprise to me that they would also give as generously as they have to VIAAC. They're passionate and compassionate — two words with different meanings, but not for these two.
David Kahn has been a convention buddy of mine for nearly a decade, a leading Blockbuster franchisee who's never been afraid to have his own thoughts, his own expressions. Back home in Birmingham, Ala., he's a big philanthropist as well, serving as a board member of the local Red Cross chapter, United Cerebral Palsy of Greater Birmingham and other such groups. Here in our industry, he's been one of VIAAC's biggest retail supporters since the organization's “Penny For AIDS” days, in part because the disease has affected him personally: His first cousin has AIDS.
Steve Feldstein, the flamboyant voice of 20th Century Fox Home Entertainment, is one of the first people I ever met in home video. I'd never say so to his face, but I truly love the guy — because his heart is even bigger than his mouth. Steve is a founding member of VIAAC and has been one of the organization's biggest supporters, both in time and in raising funds. He's a true master of persuasion — just look how many times he and his executives are quoted in my stories, both in Video Store Magazine and in the consumer press — and has used that golden tongue to bring myriad talented and dedicated volunteers and donors into the organization.
Last, but certainly not least, is Kimbirly Orr, a close friend for eight years and a colleague for four. Kimbirly is group sales director for Advanstar Communications' Home Entertainment Events division, which with the VSDA puts on the annual VSDA convention and the East Coast Video Show. She works right down the hall from me — Video Store Magazine also is owned by Advanstar — and she's one of my best friends here at work.
When my kids sell Sally Foster, Kimbirly is always the first person to buy, and she also places the biggest order. Now, I know this isn't just because Kimbirly loves wrapping paper or candy; it's because my kids go to private school and, well, Kimbirly can't help but give to those who need it the most. She can't help herself; it's in her nature.
If people were colors, Kimbirly certainly wouldn't be a pastel. She's bright, vivid and bold — a deep purple, say, which not surprisingly happens to be her favorite color.
A tireless worker, Kimbirly doesn't just live in the fast lane, she is the fast lane. It's hard to imagine she finds time for charitable work, but she does. She freely commits time and energy to such noble causes as fundraising for cancer research, granting wishes to terminally ill children and, of course, VIAAC, an organization with which she's been actively and aggressively involved with for the past eight years, most recently as vice president.
In putting together the program for last night's event, Kimbirly provided me with a most telling quote that really sums up who she is, what she's all about, and just how big her heart really is.
“When I joined the home entertainment industry in 1995, I realized I had more friends who were being affected by this disease,” she told me. “It was important for me to get involved in an industry charity, but also something that was near and dear to my heart. This organization's reach extends beyond the bounds of entertainment, benefiting organizations around the county and people living with HIV or AIDS. The research spawned from VIAAC contributions to organizations like the UCLA AIDS Institute is bringing us closer to a cure, although much more research and fundraising is required, as we're nowhere near our ultimate goal of having no need for VIAAC's existence.”
Well put, my purple princess. On behalf of all our fellow workers at Advanstar — Don, Liz, Janet, January, Jennifer, the two Kurts, Stephanie, Jessica, Holly, Judith, Melinda, Meryl, Brendan, Erik, Enrique, Dave, Barbara, Kim, Renee, Susan, Julie, Jeff, Denis, Claudia, Debbie and the rest — we salute you!
By: Thomas K. Arnold
When Forrester Research released a report predicting the demise of physical media just a few weeks ago, most industry observers discounted its disc death knell as more than a little premature.
But events in the couple of weeks since make Forrester principal analyst Josh Bernoff look a lot less like Chicken Little and a lot more like an industry oracle.
Consider these examples:
- Two weeks ago, the Federal Communications Commission (FCC) adopted “plug and play” rules for digital programming. The new rules will mean consumers can, at last, run cable transmissions directly into their TV sets, with no need to pass the content through set-top boxes. They would still need descrambler cards to get premium channels like HBO and set-tops for two-way services like video-on-demand (VOD) , but at least they could get high-definition broadcasts without one.
- In the same rules, the FCC also removed subscription video-on-demand (SVOD) services from “copy never” status to “copy once,” like other subscription services. Starz Encore CEO John Sie jumped for joy at the ruling, which lets Starz customers tape or burn copies of its programming for personal use.
- Disney, which recently signed on to offer its movies on Movielink.com and launched a test of expiring DVDs, signed another Internet VOD deal to offer its movies over Cinemanow.com. The studio is also preparing to test its own proprietary VOD service, Moviebeam.
- Microsoft announced it would open the source codes for its Windows Media Player 9 to the software development community, which means they can not only improve on the code, but, if it gets accepted by the Society of Motion Picture Television Engineers, it could become the dominant platform for a variety of home entertainment devices.
Any one of these events might not be a big deal, but coming together, they could point the way toward a new entertainment future.
I'm not schlepping my DVD player out to the trash just yet, but it does look to me like convergence is converging at an increasing pace.
The last piece of the puzzle is copy protection for cable and satellite content. If the studios ever get cable and satellite to use copy protection, watch for the rental window to slam shut. You'll see, as Bernoff predicts, a rapid shift to day-and-date releases everywhere but in theaters. And maybe even there.
By: Holly J. Wagner
A pioneer in the animated direct-to-video marketplace, Buena Vista Home Entertainment, with a trademark gala at Legoland in Carlsbad, Calif., last weekend, launched Miramax's DTV Bionicle: Mask of Light, and this first 3-D, CGI-animated film based on the popular Lego action features looks to be a winner with kids.
For most adults, however, Bionicle is likely as mystifying as Pok?mon, Yu-Gi-Oh!, Transformers, Power Rangers or any of the other rages among the young set. But my 5-year-old can recount the whole movie and has been toting around the action figures instead of her Barbies. This weekend, kids in my neighborhood alternated between shuffling through Yu-Gi-Oh! cards and playing Bionicles. Talk about a generation gap! I didn't understand anything that was going on.
Like Artisan's deft handling of the Barbie movies, which dovetail nicely with Mattel's toys (I'll never forget searching stores for scarce Rapunzel toys last Christmas, and I'll no doubt be combing shelves for Barbie in Swan Lake this holiday season), Buena Vista seems to have struck a marketing chord with its Bionicle series. A second movie is already in production and is scheduled for release in September 2004.
But what's really impressive about both of theses toy-video franchises is the quality of the video product. The CGI animation is truly breathtaking, showing a commitment to the franchise, rather than slipshod cross-marketing. Buena Vista/Miramax's marriage with Lego -- like Artisan's with Barbie -- looks to be a profitable one that will be nurtured with care on video.
The melding of the movie and video game business took a dramatic step last week when it was announced that the Oct. 28 DVD release of Universal Studios Home Video's The Hulk would have a playable level of the Microsoft Xbox version of The Hulk video game produced by Vivendi Universal Games.
I believe it's the first time a DVD has had a console-playable demo (there have been PC-playable games and demos in the past), and it is the sort of common-sense win-win-win cross-promotion that I believe we will see more of in the future. The studio wins with a great added-value element to the DVD that appeals to users of a fairly large installed base game play platform (some 5.5 million Xbox players in the United States), the video game company wins by have a great second-wave promotion for its game (in the case of Hulk, the game debuted with the theatrical debut in May), and, of course, the consumer wins by having a terrific cross-media product, a movie and (part of) a video game. There will reportedly be some technological code crossover that will allow new characters and other features on the video game to be unlocked via elements within the DVD movie.
The digital media era we live in is making this sort of convergence possible, and it can only evolve into more seamless media products as we continue to see development of multiplatform boxes and home entertainment systems that include everything but the kitchen sink. It's not surprising that movies and video games are increasingly sharing each other's characters and story lines (and have done so for years) and extending an entertainment franchise's cultural impact (and financial return) in the process. (On a side note, I am surprised that Vivendi Universal Games is reportedly not part of the deal now in negotiation between Vivendi Universal and NBC.)
On the retail front, I can't think of a better environment to take maximum advantage of this growing convergence than the video store, where games and movies are rented and sold. The video game industry has long recognized the power of a Hollywood partnership in games, and the loosening of its iron grip of its code (which is the major cultural and technological stumbling block for the industry) so that it can be included on a DVD is a big step. We'll have to see if Sony's PlayStation 2 pursues such a strategy in the near future.
And we'll have to see if the video game industry also chooses to more fully embrace the concept of video game rental (and the rental store) as a significant element of its overall strategic direction.
I've always been a big defender of packaged home entertainment and an ardent dismisser of anyone who says home video's days are doomed because one day we're all going to download everything.
But after reading the new Forrester Research report “From Discs to Downloads,” I'm not so sure.
I'm not going to dismiss analyst and author Josh Bernoff as a Chicken Little bonehead, even though he predicts that ultimately not even DVD, with all its bonus features, will survive the download revolution.
I'm scratching my head, looking at my own family room — jam packed with books, LPs, CDs and DVDs — and wondering if he might be right.
I've ranted and raved before in this space that I'm running out of room — fast. I love movies, and while I'm trying hard to keep only what I like, my DVD collection is spilling out of my cabinets and shelves and even suitcases in the garage.
I've always loved software — something to have and to hold — but I must also face reality: I can't own everything, and another format change or two will almost certainly put me over the edge.
If there was such a beast as a central master computer on which I could store the thousands of movies that I absolutely, positively can't live without and readily access them for viewing on my TV as fast as I can shove a DVD in the slot, then, yes, I might be prompted to liquidate my collection and keep only those movies I consider true works of art, or at least symbols of pop culture: The Big Sleep, Casablanca, Mildred Pierce, Gunfight at OK Corral, To Kill a Mockingbird, Blue Velvet (!), and, oh, no more than 200 or 300 more. These, I would treasure and store in expensive bookcases, behind glass, right next to my library of 200 or 300 rare books and first editions by Faulkner, Hemingway, Steinbeck and Dos Passos.
I would be a lot more selective than I am now in what I bring in, and I would only add new movies to my collection very carefully, instead of the mass influx of new releases that occurs with maddening regularity these days.
Now, I'm sure this isn't going to happen overnight. For this to be possible, I would have to be certain I could still own the actual movies. I don't want them floating around cyberspace; I don't want them stored on some far off server that could crash and burn and I'd never know it. I'd want them in my house, somewhere, close at hand.
And I want to be able to add to my collection just as easily as I do now. I don't want to have to search Web sites or wait even five minutes for a download; I want it in a matter of seconds, and I want the art and liner notes and everything else as well.
I also want to be able to watch what I want, when I want — ideally, by accessing my collection on my computer and then sending it over to the TV, instantly, for viewing. I want to pause, rewind and fast forward.
In other words, I want everything DVD currently offers me, without being crowded out of my own house.
I want this, and eventually technology will advance to the point where I can get it.
And when that happens, Thomas K. Arnold, pack rat collector, movie lover and DVD's biggest cheerleader next to Warren Lieberfarb, will unceremoniously turn and run to The Other Side.
By: Thomas K. Arnold
OK, OK, enough about EZ-D for a week or two.
For today, let's turn our attention to the virtual world, which has gotten noticeably weirder over the past couple of weeks.
The latest rounds include more reams of litigation (I knew I should have gone to law school), hearings on Capitol Hill and a new trade group for the file-sharing industry called Peer-to-Peer (P2P) United.
Now the Recording Industry Association of America (RIAA) is offering file traders “amnesty.” Geez, if the INS was as anal about its documentation as the RIAA is, the population in several border states would shrink by half overnight.
I admit, the music industry has had a tough time since Napster launched the Ultimate Consumer Revolt. But in a nation built on mercenary capitalism, why should the music moguls be surprised when the singles-deprived public rises up in a computer-aided guerrilla rebellion?
But wait a minute, folks, there really are legitimate uses for P2P technology. Like instant messaging. Yeah, that little button down there on your toolbar — the one with the buddy list? That's P2P. So is a lot of software that allows project collaboration from geographically distant sites.
So while we are all waiting for the next round in the RIAA and the Motion Picture Association's lawsuit against trading services Morpheus and Grokster, which merely facilitate people trading files — many of which may be perfectly legal — I have to wonder what's up with thedownloadplace.com (not to be confused with CNET's download.com). Check that site out!
I surfed into this site the other day. This is not a company providing P2P software to a few high school kids looking for the latest single from Trapt. This site is charging users a monthly subscription fee to route them to sites where they can download "unlimited" movies and music. Check out the top of the home page, the part where it says “Movies Still In Theaters” and "Never Pay For A Movie Again!" I clicked the link, and titles on the list include Finding Nemo and The Matrix Reloaded.
I was unable to reach anyone at thedownloadplace.com before press time, but their veiled domain registration looks like folks who are spoiling for a fight (a domain server called NS1.1ST-AMENDMENT.NET is a clue).
Unless the entertainment industry is behind this site, somebody is charging money to help people download movies, music, games and software for free. So, let's get with the program and start choosing our battles better.
Instead of tilting at legal windmills and worrying about what some pimple-faced, no-neck teenager might do with a legitimate technology, the industry needs to retrain its artillery on the pros who are actively promoting copyright infringement. And leave everyone else (and their grandmothers) alone.
By: Holly J. Wagner
If there is one thing that is a constant in this business (other than retailers complaining about the studios) it's the drumbeat of a potential video-on-demand threat.
My first week at the magazine in 1993, Bell Atlantic chairman and CEO and VOD proponent Raymond Smith said in our pages that the video store model was “no longer viable.” In 2003, his multibillion-dollar merger with TCI is long dead, and the video rental market is still here.
Again last week, a Forrester Research analyst predicted VOD would begin to take a bite out of video revenue in the coming years. Josh Bernoff, principal analyst at Forrester, was a bit more cautious than Smith, but he still predicted a significant impact from VOD. He said, “We're not talking about DVDs becoming obsolete in five years, but we're talking about seeing the beginning of the end in five years.” The report went on to predict a DVD and tape revenue decline of 10 percent between 2006 and 2008 as VOD takes a bite out of the home entertainment pie.
What is it about the five-year prediction? When I got to the magazine in the early 1990s, many others were touting the five-year plan. Here I am 10 years later and VOD has yet to make a dent in the home entertainment market.
I hate to sound like an impediment to progress, but honestly, when will VOD make good on that five-year promise.
A colleague of mine likes to note that most five-year plans he's ever prepared or seen usually prove wrong in the end. Maybe VOD proponents would be better off preparing for the future rather than predicting it.
The industry is enjoying another record year, on pace to grow total revenue to some $23 billion, and last week's announcement of Buena Vista Home Entertainment's Dec. 2 bow of Pirates of the Caribbean: Curse of the Black Pearl to an already burgeoning holiday bag of home video hits means the fourth quarter closes with a huge volley of retail cannon fire.
Yet, even as packaged home entertainment continues to have stellar sales and rentals, digital technology is allowing companies to continue to explore new delivery options that may have an impact on the future of home video rentailing and retailing.
On the same cover page as our coverage of Pirates in this week's edition of Video Store Magazine is the story of the rollout this week of Buena Vista's test of the Flexplay self-destructing DVD technology in four markets. Buena Vista is going to be taking a close look at variations in packaging, pricing, genre and retail location, among other issues, to see if the so-called EZ-D can be another digital delivery platform for entertainment. I suppose you can still call it packaged home entertainment, it's just that it's temporary (once the package is open).
On this very same cover we also report on the newest version released last week of Movielink's digital delivery service. The studio-backed effort is steadily upgrading its service and title offerings to broaden its audience and will be more aggressively expanding its marketing to both the business traveler and the college student markets especially this year.
Of course, we've been hearing for years that video-on-demand would eventually lead to the demise of the video store, and while the cries of imminent doom have quieted down, the story continues to be pushed by media analysts, with Forrester Research adding to the chorus in this week's issue on page 11. “Studio executives are very rational about distribution. They are willing to support cable and VOD. I think you will see the VOD window become day-and-date with the rental window,” said Josh Bernoff, principal analyst and author of the report “From Discs to Downloads.”
While Bernoff still gives DVD five years of happy life, he predicts VOD will whittle down the packaged media business after that.
Meanwhile, the world continues to collect an ever-growing library of packaged home video.