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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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15 Apr, 2004

The Best of Both Worlds: DVD Rentals and Sales Can Coexist

I remember years ago, shortly before DVD came to market, I sat down with Warren Lieberfarb, then president of Warner Home Video and the format's chief architect, for a rather heated one-on-one.

I had been writing a series of columns in which I expressed the opinion that DVD would and should become available for rental as well as sale, because some consumers would rather rent than own and even those likely to buy would probably want to try it first.

Warren gave me one of his famous stare-downs and challenged my wisdom as only he can do. He politely informed me that the whole concept behind DVD was to generate incremental revenue for Hollywood, and if rental became significant, we were in danger of merely having DVD become a replacement technology for VHS.

In retrospect, we were both right. DVD has become a hot sellthrough commodity generating huge wads of incremental dough for the studios — money they never would have had if DVD hadn't come along. Just yesterday I spoke with the head of a small independent supplier that specializes in obscure arthouse and performing arts videos. He was jubilant — his company had just taken its first significant order from Wal-Mart. Whereas in the VHS era a high-profile theatrical was lucky to sell 500,000 units, now the same-caliber of film can easily move 3 million units — more than enough to compensate for the price differential between a sellthrough-priced DVD and a rental cassette, particularly after studio-direct revenue-sharing came into being.

And yet I'm not quite the idiot Warren made me out to be, either. Instead of 25 percent of the movie-consuming populace buying movies and the other 75 percent renting movies through pay-per-view, as Warren had predicted, we're seeing a viable rental market coexist with a booming sales market. The rental market hasn't tanked, as many had predicted; despite the death of rental pricing — and those six-month rental windows — the rental business is still with us. Sure, consumers can buy virtually any hot movie for less than $15 the first week it comes out, but many still prefer to rent for a couple of bucks — and they prefer to rent something physical that they can handle and touch and slip into their machines whenever they wish, even though the mechanism may be electronic (Netflix).

What we've gotten, with DVD, truly is the best of both worlds — two worlds that eight years ago, when I was sitting across a table from a steely-eyed Warren Lieberfarb, neither of us would have thought could ever thrive in the same universe.


14 Apr, 2004

DVD Qualifies and Quantifies Tarantino&#39;s <I>Kill Bill: Vol. 1</I>

In one of myriad articles published recently in regards to this week's separate DVD and theatrical releases of Kill Bill: Vol. 1 and Vol. 2 — director Quentin Tarantino's two-part ode to relationships, revenge and kung fu movies, among other idiosyncrasies — it was remarked that the DVD possessed only minimal extras: a making-of featurette, a music video and trailers.

Never mind that such bonus material is de rigueur on the average DVD. More importantly, any snapshot — however minimal — into the mind of Tarantino is to stumble upon a torrent of non-stop eccentricities that are best digested in digital bits and pieces.

Spending time with the creator of such cinematic triumphs as Pulp Fiction, Reservoir Dogs and Jackie Brown was recently described by Los Angeles Times writer Rachel Abramowitz as a bit “like entering a one-man hothouse of movies and memories of movies, of imaginary characters who are more real and vivid than living ones.”

If there was ever a format best-suited to quantify, qualify — and control — Tarantino's over-the-top energy and exuberance, it is DVD.

Instead of the usual behind-the-camera banter found in most special features, the apparently maligned bonus material in Vol. 1 underscores the former Manhattan Beach, Calif., video-store-clerk-turned-cult-film-director's enthusiasm and respect for the mainland Chinese studio, crew and cast used during the grueling eight-week filming of “The Showdown of the House of Blue Leaves,” a 20-minute climactic samurai sword battle between Uma Thurman's character The Bride and the minions of killer-turned-yakuza-boss O-Ren Ishii, played by Lucy Liu.

The bonus feature displays Tarantino's equal affinity for the film's soundtrack, which at times superceded completion of the film.

For example, the Japanese female surfer trio, “The 5.6.7.8's,” whose act and music appear as window dressing in the “Blue Leaves” fight sequence, was discovered. Tarantino procured a copy with some difficulty while perusing a Japanese record store. Ditto for the ultra-obscure German neo-lounge band “Neu!”

“Once I got going, I just wrote and rewrote for a whole year,” Tarantino said. “If I hit a snag, I would just stop and go watch a martial arts movie. I basically watched at least one Hong Kong movie a day, and sometimes two or three a day. I also watched Japanese samurai movies and anime. So images from these movies just filled my head until they were second nature, and that became the raw material for Kill Bill.

Tarantino said his devotion to writing and creating the multi-chapter Kill Bill was so complete he knew absolutely nothing about any of the Hollywood movies that had been released during that time period.

“When you get to the end of Vol. 1 you're exhausted,” he said. “You're ready to take a break.”

Luckily, the DVD format allows this viewer — relatively new to Tarantino's hyperbole — to digest his “killing as a metaphor for human relationships” in metered doses.


13 Apr, 2004

DVD Swapping Makes Sense

We knew it would happen, but like much of DVD adoption, the saturation point is arriving faster than anyone predicted.

I'm not saying DVD sales will be flat from now on — or even this year — but face it, folks, there are some things you can't expand. People's budgets may get bigger, but they still only have so much time for entertainment and just so much space to store video.

Yet DVD has gotten so ubiquitous, so cheap, that people are finding more ways to share their libraries. How cheap? Wal-Mart has been offering catalog titles for $5.44 for ages. Last week, Wherehouse Music's circular offered a progressive-scan DVD player for $20 after a $20 mail-in rebate. That brings the cost of a player and a DVD well under the cost of a movie date. No wonder theatrical ticket sales are down!

Several factors have combined to push prices down. Among them: the studios themselves, pre-viewed sales, and the durability that lets people share their DVDs with reasonable certainty that they will be returned in good condition.

So it was not that surprising to see an article in Stanford University's student newspaper a week or so ago saying the student-run campus video store was shutting down. Not only because of downloads, but also because students had begun sharing their DVD libraries. Anyone who put themselves through college can recall how scarce money was during those years. Even if each person in a dorm or student community only lent one disc, it would decrease rentals and sales on that title in the group.

It's not even a small stretch to think that neighborhoods will come up with their own DVD lending and viewing clubs. Soccer moms gathering on the sidelines may lament how much of their DVD budget goes to kidvid and discover they can share and swap to meet their own needs, which unlike their kids' preferences, in most cases don't include watching a title until they have memorized every word.

Something like this must already have begun, because the Web site DVDJones.com lets users keep track of what they have lent to whom, and invite more friends to join.

Then there is the social DVD experience, dubbed “movieoke.” This mutation is a welcome addition for those of us who can't carry a tune in a bucket. Fans project a movie onto a big screen, then get up and act out parts a la Rocky Horror Picture Show. It's just one more way consumers have found to share their entertainment.

So DVD still has time on the heavy sales meter, but even that clock is ticking. The market will reach a saturation point. It might send some folks back to rentals, especially when they can rent by subscription, but in the end the sales will flatten out as people learn that sharing gives them more bang for their entertainment bucks.


12 Apr, 2004

Download Dilemma

I hate to use pay-per-view. Frankly, I'm always a little worried they'll charge me twice or the picture will cut off in the middle and I'll have to haggle with the cable company over getting a refund.

It seems to me, downloading a movie, unless it's on a subscription model of some kind, would pose similar problems. Granted, it would be more convenient than PPV, but there's still that same worry of the disconnect between the purchase and the viewing.

Admittedly, I'm not exactly a technophile. When my computer breaks down or I have to redirect the music system from the DVD player to the CD player in my own house, the frustration with technology can send me into a tizzy. I don't know how many times my husband has walked into the room and switched the settings after telling me in exasperation, “You've got the settings all wrong!”

Recently I asked Netflix CEO Reed Hastings, a knowledgeable tech industry video source, how long he thought it would be before half his business would come from downloads. He said eight years — and that was coming from a member of the tech community, which is most gung-ho about the VOD future.

I'm inclined to agree that it will take a long time for consumers to get comfortable with VOD, but no doubt it will happen. After initial trepidation, I've begun to purchase things with a credit card over the Internet.

See? You can teach an old technophobe new tricks.


11 Apr, 2004

The Catalog Response to Mass Merchants

“You can't walk into a Virgin Megastore and not know we carry a large selection of DVD,” said Vince Szydlowski, senior director of product of Virgin Entertainment Group, in a cover story in this week's edition of Video Store Magazine. The article focuses on music chains' continued expansion into home video sales.

And indeed, as I toured a Virgin store in Costa Mesa, Calif., last week, it's clear that the chain is devoting, easily, 30 percent to 40 percent of its floor space to video. A wide freestanding display of discounted DVDs of near-current titles (buy four for $40, and a range in-between) is the first thing you see when you enter the store. Once you navigate among these displays for both discount DVDs and (on the flip side) CDs, then you see another large display of the top-selling new-release DVDs, and a matching stand for CDs. The rest of the huge store is then divided just about equally between CD and DVD catalog (and Virgin has a pretty strong selection in all categories, including anime and TV), with books, magazines, and other ancillary product lines.

The article looks at a variety of music stores that are all ratcheting up their video mix, some to a 50-50 split with music.

Whereas the big-box mass merchants have not appreciably expanded their floor space for home video in the past 12 to 18 months (although VHS space has been taken over by greater selection of DVD), it appears music retailers, rocked hard by a struggling music industry, are taking up video aggressively. In fact, some are eschewing going deep on the newest hit releases and, instead, are focusing on providing a broader selection of catalog in response to what the big-box retailers generally lack.

With buy rates probably at near their peak, I would guess that mass merchants have seen the maximum turn rates they're going to see on their video departments. The idea that expanding one's selection, in response, to try to appeal to a broader spectrum of customer is not usually a merchandising option embraced by mass merchants, who move from one mass-appeal product to the next.

I think, then, it will increasing fall upon the specialty retailer to offer that broad catalog selection, such as the music chains have been doing for years in music and, now, it seems, are doing with home video. Specialty video stores have, of course, taken that same approach, largely from a rental standpoint. Now perhaps it's time they play this same role in sellthrough. Certainly we could expect to see that from the major video chains, which can leverage their ubiquitous presence as a significant competitor to music chains.

Smaller specialty video chains and single-store operators may not be able to directly enter the catalog sellthrough business on a large scale, but they can focus on niches that they find appeal to their local market, even as they continue to deliver the rental option.

The home video retail business, so dramatically transformed in the past seven years by DVD's majestic rise in consumer acceptance, will find its equilibrium as DVD penetration and buy rates slow to more normal rates in the next year or so.


8 Apr, 2004

Watching Wal-Mart

Just up the coast from our Orange County, Calif., offices, in the blue-collar Los Angeles suburb of Inglewood, voters overwhelmingly rejected plans by Wal-Mart to construct a supercenter inside the city limits.

Opponents successfully argued that not only would Wal-Mart put smaller businesses out of business and thus replace higher-paying jobs with lower-paying ones, but also that the mega-chain was demanding a free pass from city officials, with no environmental impact reports or even public hearings.

Wal-Mart certainly packs a mighty punch, but then again, I'm not telling the studios or any other retailer out there anything new. It wasn't some studio mogul's idea for Wal-Mart to begin selling recent hit theatricals in wire dump bins for just $5.88 each. Nor was it a stroke of genius from Hollywood to price thousands of great catalog films at less than $10 when DVD was just a few years old and study after study showed consumers would have just as willingly shelled out $15 or even $20 for many of those same films.

No, Wal-Mart isn't playing the low-price game to move more units — of DVDs or whatever. Wal-Mart sells for less than anyone else because it can — and the other guy can't. And if consumers, drawn in by those low prices, then shop at Wal-Mart exclusively and the other store goes out of business, then so be it. Once the competition is gone, Wal-Mart will be free to raise prices and make a bigger profit — safe and secure in the knowledge that higher prices won't deter shoppers, because there isn't any other place left.

I was looking at the recent Fortune 500 list and was struck by several things. Not only is Wal-Mart again the biggest company in the country, based on 2003, but several other big retailers are also in the Top 30. There's Home Depot at No. 13, Kroger at No. 19, Target at No. 23 and Costco Wholesale at No. 29.

Only one studio — or, rather, studio parent—is in the same vaulted company: Time Warner, at No. 27. The rest are all trailing behind: The Walt Disney Co. at No. 60, Viacom at No. 64, and so on.

That's scary, knowing that most of your top customers are bigger than you and thus in a position to throw their weight around.

I'm sure there are some studio executives who long for the old days when videos were primarily channeled to the public through a network of independent video stores and it was the studios that were in the driver's seat. And yet I remember that back then the push to consolidation was embraced — and even propelled — by the studios and their actions, first by bypassing distribution and selling direct to the big mass merchants and then by catering to Blockbuster's 1997 plea for cheaper product by moving to revenue-sharing.

I guess if there's a moral to this story, it would be this: Be careful what you wish for.

But far be it for me to tell anyone, “I told you so.”


8 Apr, 2004

VHS Gets Left Behind on Moving Day

I recently moved and lost a lot of storage space. At first I was very careful and selective about what I threw away, lovingly going over every scrap of memorabilia stashed in my garage. As moving day drew closer, I began just tossing everything or throwing it in my Salvation Army pile.

I highly recommend this process. It's liberating to free yourself of stuff.

However, for my DVD stash, the process was a little different. Sure I went through it all and gave away anything I told myself I could live without. But my selectivity remained high. I kept a ton of movies, some still shrink-wrapped, that who knows when or if I will ever watch. I just never got to that point with DVD that I got to with clothing, books, piles and piles of purses, bags and shoes — that point where I just wanted it out of my sight.

I think, for DVD, most people are still like me, rather selective about their collections. They may need to hone down the stash for spring cleaning or what have you, but they select carefully the items they plan to discard, knowing there's a chance they could make a few bucks or get something else in a used trade.

Hopefully this cycle of high perceived value for DVD keeps up for a few years so it will be a long time before the little disc meets the fate much of my VHS collection did in the past month — dumped in a box at a yard sale with a sign “free, please take.”


6 Apr, 2004

When DVD Is A Lifesaver

A lot of people are probably still mad at me for not returning some phone calls or e-mails from last week. Let me apologize for anyone I've not gotten back to yet. I had the first serious back problem of my life, and – under doctor's orders – I was flat on my back for a few days.

So it's not an accident that I started to muse idly on DVD's resemblance to a life preserver. Different situations to be sure. OK, my sore back felt like life and death to me – an accompanying pinched nerve had my leg in so much pain I briefly considered chewing it off and leaving it behind like a wounded coyote.

Instead I went to the doctor, got X-rays and physical therapy, then swallowed my hyperactive nature to follow instructions and lay down for a few days. To a lot of people that would sound like a welcome break, but when it's enforced you just think of all the things you could be doing instead of laying around.

Then there's DVD. Thank heaven, because I went through quite a few to take my mind off the pain and boredom. It didn't even matter that Ross McElwee's Sherman's March, a 1986 documentary that streeted on DVD for the first time this week (from First Run Features), was overlong. I had time to absorb the wry humor and social commentary of jilted McElwee's search for love in the 1986 South. But with a couple of days on my hands it was not enough. I watched plenty.

I also had time to think on how this is the perfect case for Netflix or, even better, EZ-D. The very worst thing for that evil pinched nerve was standing, so I was in no mood or condition to stand around a video store looking for a title, then stand in line to check it out. If I was an online subscriber I might have had a couple of titles waiting by coincidence, but Netflix also assures us that most orders are filled in a day, so in theory I could have requested new online rental discs one day and had them in hand the next.

That's where a product like EZ-D could come in. Rather than stand around a video store, I would have chosen the slightly higher-than-rental cost to just get a disc at a mini mart in a few minutes and be on my way. I can also see the drive-up pharmacy window as a great EZ-D location: customers pulling up to fill prescriptions for cold or flu medicines might appreciate the convenience of grabbing a movie at the same counter so they could get home fast to suffer in privacy and salve their aches with a DVD distraction.

I assure those of you who called or e-mailed that I will get caught up on the business of DVD, now that I caught up on the pleasure of it and my back is feeling better.


5 Apr, 2004

Horror Not Only a Hit in Theaters

I've been a big horror fan over the years, but for the most part, I've watched the classics on video. Recently, I saw Night of the Living Dead on DVD for the first time — I'd seen the original Dawn of the Dead the week before — and since then I've been obsessed with zombie movies.

Nothing quite matches the creepiness of watching a scary movie at home. After all, Halloween, Nightmare on Elm Street, Scream, The Ring, The Exorcist and numerous other scary movies happen in the familiar environs of home sweet home.

It's also a lot easier to get chills in a room alone or with a few friends than in a movie theater filled with patrons. Watching The Blair Witch Project at my house was particularly scary as it borders a creek with nature sounds you rarely hear in the city — or in a movie theater.

While moviegoers streamed into theaters to watch The Texas Chainsaw Massacre and Dawn of the Dead remakes, I've been rediscovering the genre in my DVD collection. No doubt video retailers are finding their customers are doing the same thing.


4 Apr, 2004

The iGroup a Hopeful First Step for IVRs

Last week's announcement by the VSDA of the creation of a new, separate organization for independent video retailers will no doubt be met with a wide range of reaction from retailers. But from what I have heard so far, I think it's fair to say, anecdotally, the consensus is “hopeful” that the new iGroup will do for IVRs what they have long hoped the VSDA would do: refocus on the needs of the IVR in an ever-changing, more competitive marketplace.

Whether or not you believe that the VSDA Board of Directors and staff, over the years, had slowly lost sight of the association's original mandate and had become more heavily influenced by large chains, this decision, which was unanimously approved by the VSDA board, should end that argument.

IVRs will now have an organization that is run by IVRs for IVRs, using a majority of the dues they pay for IVR programs and services delivered by iGroup. The iGroup basically splits the VSDA revenue base and controls that half of the funds for its own agenda as set by its own board of trustees made up of IVRs. Having already had a chance to talk to many of the iGroup trustees in Las Vegas, where they made their announcement, I can tell you they are excited to be in a position to truly help re-invigorate the IVR base in this industry, and they're committed to reaching out to the chapters and membership at large in the coming months for input on what they want from the iGroup. And, of course, there is hope that the creation of the iGroup will attract new and lapsed IVRs as members.

It's a clean slate, and all current IVR-related programs and services offered by the VSDA are on the table for discussion. It'll be interesting to see what comes of the formative efforts in the next couple of months.

Meanwhile, the breakout of the iGroup eliminates the conflict in time and resources that was inherent in running one organization that was attempting to serve major rental and sellthrough chains and the smaller retailers who basically saw them as the enemy. Now the VSDA board (which will still have three members from the iGroup as board members) will be free to spend the majority of its time on such issues as legislative and legal industry advocacy and conducting research that the association's members can use to move the industry, and their own businesses, forward. These efforts benefit IVRs as well, which is why 25 percent of their dues will be used to help fund VSDA programs. (Conversely, 25 percent of associate dues from studios, distributors, etc., will be directed to the iGroup budget.)

The formation of the iGroup is an exciting and positive first step for the IVR community and one that can contribute to a more level playing field in the retail landscape, adding to the significant competitive benefits in ROI DVD has already delivered for small retailers.