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In the volatile entertainment business, our audio brethren often show the video industry the way. They were first to transition their business from analog to digital packaged media with the CD. The video industry later followed with its own CD-sized digital medium -- the DVD. As the CD falls in sales, hurt by illegal downloading and consumers dissatisfied with music labels they perceive as greedy, the video business may be able to draw yet another lesson.
During the recent “DVD in 50” conference, sponsored by Video Store Magazine and the DVD Entertainment Group, industry pundit and “father of DVD” Warren Lieberfarb cautioned the video business about becoming too complacent. Likening the music industry to a frog stuck in increasingly hotter water, he noted that music execs didn't have the sense to jump out before the water got too hot. By holding onto the CD, the audio business could be cooked.
I recently listened to the top-selling Led Zeppelin DVD and noted in this column that the sound was actually better than a CD. While it was a surprise to me -- and probably would be to most consumers -- I recently learned that audio execs are aware of, but not too interested in, promoting DVD's superior sound. Could they be fearful of criticizing the CD, which has served them well for so long and through so many wildly profitable years?
The music industry's downfall has been its unwillingness to move beyond the present, to evolve with technology and its consumers. When downloading came along, they fiercely held onto the CD album and its (many say) ridiculously high price. Fortunately, the video business didn't make that same mistake, launching DVD at a value price that offered much more bang for the buck than the VHS cassette -- as well as the CD. The industry didn't deny DVD's superiority; video execs, for the most part, broadcast it.
Conversely, as the DVD rises in popularity, the music business is only tentatively entering these new waters, often launching DVD discs day-and-date with the CD and offering DVD extras discs packaged with the tried-and-true CD. Had the video business held onto the VHS cassette with such tenacity, DVD would have had a much harder time gaining acceptance. Maybe the CD's time has come -- but you'll have a heck of a time convincing the music business to abandon that life raft.
The lesson in this for the video industry is to look for a bigger and better boat. As DVD peaks and new technologies encroach, the industry will need to keep its eye on offering value to the consumer, staunchly resisting the urge to hold on to the DVD. Perhaps high-def discs will be the answer. Perhaps the long-awaited movie download technology will finally take over. What's clear is, unlike the music industry, the video business can't wait until its goose is cooked.
The word coming from VSDA executives last week as the association wrapped up its 22nd annual convention was that the event has “turned a corner.”
They're referring to the show's transition from a traditional expo hall format to a meeting suites format, which they initiated last year with a combination of the two formats and fully implemented this year.
Whether retailers and suppliers met by appointment or just in walk-in meetings, the clear consensus from both attendees and exhibitors was that the format was more effective and constructive than the old show-floor booth business dealings.
The exhibitors and retailers I talked to said they had very full schedules of face-to-face meetings, and that these sit-down meetings tended to be more formal and businesslike but also more intimate and useful.
Gone are the days where retailers roamed the expo hall looking for the giveaways. Now they come to develop relationships and improve their businesses; the format demands that they try to make as many pre-show arrangements as they can.
Still, the buzz and fun of a show wasn't lost in the hallways of the Venetian. Many suppliers hosted cocktail receptions in the late afternoon, brought in talent who signed autographs, and had giveaways and drawings.
This year the exhibitor suites were all in the same tower of the Venetian on consecutive floors, which was a vast improvement from last year when suites were housed in several towers of The Rio. Still, the bugaboo of jammed elevators caused no small amount of frustration for attendees again this year trying to get from floor to floor and unable to easily access the stairwells at the end of the football field-length hotel corridors. I'm not sure what the solution is to this problem other than just more elevators.
Despite this one snafu, the event buzzed with plenty of high energy in the hallways outside the suites and seminar rooms, at the many show parties and supplier receptions. Several ad hoc groups of retailers also reportedly got together, including a group of active VSDA discussion board participants who met to discuss industry issues. The $20 billion home video business is becoming more complicated as it matures and is transformed by DVD. Ray Jewell, the VSDA conference chair this year, noted before the show that things are moving fast on many fronts in this business, and the Home Entertainment 2003 event was, for him, an opportunity to try to get a comprehensive view of the business going into the second half of 2003.
The show's new setup seems to be able to deliver just that.
By: Kurt Indvik
There was one complaint, and one complaint only, about this year's VSDA convention. It was that the elevator lines to the top floors, where all the suites were located, were too long.
After 15 years of video conventions, that ain't bad. The grumbling that has accompanied VSDA conventions since I began covering them in 1989 was conspicuously absent at this year's show, and despite the absence of a show floor this year's convention appeared busier and more colorful than it's been in years.
The parade of suites was a glutton's paradise, with gobs of free munchies and, in Wellspring Media's case, iced vodka (for Russian Ark, an upcoming release). The studios whose suites last year had been shuttered to the masses this time around took out additional space for hospitality suites, while independent suppliers who actually wanted independent retailers to come in and chat went all out with free screeners and other giveaways.
The net effect of the all-suites approach was that everyone was equal. In the old days, the studios outdid themselves with lavish booths and the little guys got lost in the proverbial shuffle. With suites, Ardustry Entertainment's product is presented on an equal footing as Columbia TriStar or Paramount's, and retailers with whom I spoke in the hallways and doorways of the Venetian invariably made the same observation: They had no idea there was so much good product out there, and so many cool little suppliers.
Going into the show, there was some concern about the lack of networking space that the show floor used to provide. But truth be told, I think people talked more business than in the old days. The parties and cocktail gatherings were confined to a much more central location than at the big VSDA shows of the 1990s, and overall they were better attended, as well, perhaps because most events were open to everyone and not just a hand-picked gaggle of “invited guests.”
At this point, I must note that Video Store Magazine and the show have common ties in Advanstar Communications, and that the kind folks at Advanstar write my check. But I've never been known to keep quiet about things that bug me, and those of you who have read me over the years know that in years past I have often been quite critical of the VSDA convention.
I'd almost like to find some bones to pick this time around, as well. The problem is, I can't think of any.
T. K. Arnold is at the VSDA show this week. He'll be back next week with plenty to talk about!
Holly Wagner is at the VSDA show this week. She'll be back next week with plenty to talk about!
By: Holly J. Wagner
Stephanie Prange is at the VSDA show this week. She'll be back next week with plenty to talk about!
The home video industry continues to run at full steam going into this week's Home Entertainment 2003 in Las Vegas. The tremendous growth studios and retailers are experiencing will lend not only a celebratory air to the event, but a heightened sense of significance to the issues the industry faces as it continues in its evolution.
Revenue from rental and sales of home video at the midyear point are up a resounding 15.7 percent from last year at this time, according to Video Store Magazine market research. VSM's research team presents a comprehensive mid-year report on the industry in this week's issue, and all signs are pointing to a tremendous year.
It is particularly exciting to see that the rental business is up 6.5 percent to date from last year, even as video sales have soared 23.6 percent.
It's all about DVD, and the disc has generated not only tremendous sales and revenue gains, but has spawned several new revenue streams for the industry, which have contributed to its overall growth.
Consider, for instance, that through the first half of this year, rentailers have sold nearly $500 million in previously-viewed video product, according to VSM market research. The used market is on its way to being a $1 billion business by the end of the year. That's a major hunk of change and one that rentailers are going to continue to seek ways of expanding.
Also consider that the online rental business generated about $100 million in revenue, according to VSM market research estimates. Clearly, Netflix has the lion's share here, but the model has been proven to be an attractive option for consumers that has also prompted such heavyweights as Blockbuster and Wal-Mart to enter the game.
No doubt these two revenue streams, which would not have existed were it not for DVD, have contributed to the growth of the business even as VHS continues its natural decline.
The exciting growth in both new and established business lines notwithstanding, retailers and studio execs meeting in the sold-out suites at the Venetian and enjoying themselves during a maxed-out schedule of parties, know that there is a lot at stake for everyone as they negotiate deals going forward. Some of the pre-show buzz issues like emerging rev-share programs, high-definition DVD and others can also lend an air of healthy tension to what is continuing to be a dynamic and resurgent business that has great things in store.
If you're headed for Vegas, enjoy the celebration and get ready for an exciting second half of 2003.
By: Kurt Indvik
Once again, the fourth quarter selling season will get its preseason kickoff in September, the same time the kids head back to school and the fall TV season debuts. And with every video release now a sellthrough product, you can bet your all-in-one universal remote that the studios are going to up the marketing ante to the point where no one can hide or escape from the mighty “D” word (as in DVD).
Even Detroit will be involved, with several integrated TV commercials on the way. Disney is promising a hookup with Dodge Caravan to promote the Oct. 7 DVD debut of The Lion King, probably along the same lines as the s Chrysler Town & Country minivan spots that are scheduled to start running next month in support of New Line's Lord of the Rings: The Two Towers. A brother and a sister are sitting in the back of the car; the girl is fantasizing about Orlando Bloom. Suddenly she's in the middle of the movie, surrounded by elves; then, just as suddenly, she's shaken awake and you see her brother asking her for the remote. The pitch is that Chrysler minivans now come equipped with optional DVD players, and if you buy the Lord of the Rings DVD you get $500 off the sticker price.
Spots this elaborate, this clever, this expensive never would have happened in the old VHS days—and not just because DVD is so much sexier, but also because home video was never really a consumer product. With a handful of exceptions, movies were released to the rental channel first, and since studios didn't get a cut they pretty much washed their hands, offering little or no marketing support.
Now, it's a whole new ballgame, and with a fourth-quarter lineup in which virtually every week brings a hot new hit to DVD, the studios are going to outdo themselves to make sure they are heard—and their product is not only seen, but bought.
Rental isn't going away—in fact, the amount of money consumers are spending to rent videos is up so far this year, according to Video Store Magazine market research. But despite continued talk about revenue-sharing, the studios care less about the rental market, regardless of how big it is, than ever. They're putting virtually all their marketing money and muscle into getting consumers to buy their DVDs. And if rental dealers buy a few copies to rent, that's fine. The studios will do what they can to share the spoils, but don't expect them to kick in even a few cents to encourage the rental habit.
Nearly a quarter of a century after First Sale, they're still doing what they can to make that segment of the business go away.
I know the old saw that if you want something done, ask a busy person.
The saying is premised on the idea that busy people always find a way to squeeze in one more task or event.
This week we are getting ready for the VSDA show and, I must say, we are busier than ever with all the exhibitors and anticipated industry announcements.
That's great news for the show, which is shaping up (still!) to be the best in years. I have so many events and appointments that I might not make it to a lot of the parties.
Instead I'll be dashing from VSDA president Bo Andersen's opening remarks to lunch meetings, seminars and hastily organized news-sharing trysts, then off to write about them so you can all keep up in the show daily every day.
Not that I won't have fun or learn new things -- the seminar lineup looks like the most interesting and progressive slate in years. Sessions on digital technology, intellectual property and other legal issues and emerging business trends should draw great crowds.
I also hope to see the suites of a few new exhibitors to find out what else is coming up this year.
Is Bollywood going mainstream? Possibly -- Turner Classic Movies appears to have given over one night a week to the Bollywood format, so apparently there must be a demand for Indian Cinema. I expect to find out by visiting the folks at Eros Entertainment.
Who would want to miss Genius Products' “Get Down With the Clown” event -- if only to tell their friends they met a real Bozo at the show? This looks like the happiest happy hour on tap.
I'll apologize in advance to GoodTimes, for alas, I doubt I will have time to exercise at the crack of dawn and still get to my assignmetns. But y'all have fun and I'll resume my exercise regimen with their discs when I get home.
There's a new player on the vending machine field, Direct Vending; new product suppliers and a company offering interactive anime DVDs, all of whose exciting products I hope to see.
I'm hoping I'll get to spend some time with all the friends and contacts I work with all year long, often by long distance.
But if you can't seem to find me at the show this year, don't take it personally. Just look for the vapor trail and follow it until you catch up.
By: Holly J. Wagner
While many have long said that the VSDA show isn't what it used to be, the fact that exhibit suites are sold out this year may be a sign that next week's event will mark its rebirth.
It's an endorsement for the suite concept that show organizers have forwarded this year. And the show won't just be about suite meetings.
“We will have more parties at Home Entertainment 2003 than we have had in years,” said Don Rosenberg, group video director, Home Entertainment Events. Home Entertainment Events is a division of Advanstar Communications, publisher of Video Store Magazine.
Such luminaries as director Kevin Smith, who has long championed the video business, will be showing up, not to mention the Smothers Brothers, Peter Fonda and, as announced yesterday, renowned jazz keyboardist Freddie Ravel.
There may be no exhibit floor, but the pizzazz is likely to return to the show this year.
All indices for the event are up, with show preregistration ahead 5 percent to 10 percent from last year.
Here's hoping it's a great success.