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.
The headline on our initial reporting of last Thursday's federal court ruling dismissing the antitrust lawsuit in California brought by a group of independent retailers against Blockbuster and a host of studios stated "Strike Two for the Indies." Strike three would, presumably, be a ruling against the appeal pending on the dismissal of the similar lawsuit in San Antonio last June. I am not hearing a lot of expectation that the San Antonio plaintiffs are going to hit that one out of the park and, if preliminary returns on our online poll about the Los Angeles ruling are any indication, most people in the business pretty much see this latest decision as "the final nail in the coffin" of the indie retailers' efforts.
As these cases have come to a crescendo over the past months, I have heard it said on several occasions that whatever the outcome for the parties involved in the litigation, the overall future impact of these decisions was largely moot. The reason being that the whole concept of revenue-sharing, something that had radical implications five or more years ago, applied as it was to VHS for the most part, was already becoming anachronistic in the era of sellthrough-priced DVD. Six months or so ago I think that may have been a point well taken. But now I am not so sure.
The fact is that revenue-sharing involving DVD separately or in combination with VHS is becoming more prevalent. And as I have recently said in this space, I will not be surprised to see rental windows and rental pricing programs for select titles on DVD begin to emerge from studios, which could involve new revenue-sharing arrangements.
I am not suggesting that the court decisions on these past two cases will have any direct bearing on the specific structure of any future revenue-sharing deals, but I have heard from several industry observers that - and this is not a reflection on the merits of either side of the case - if nothing else, studios are going to continue to be careful to ensure that they find ways to involve the full spectrum of specialty retailers in revenue-sharing options.
It's to their advantage, certainly. Studio execs are the first to point out that the last thing they want is to help create one 800-pound retail gorilla (a Big Blue one) that can muscle bigger and bigger concessions as it gobbles market share. In fairness to Blockbuster, John Antioco has said that's completely understandable and pretty much proves why any conspiracy theory between Blockbuster and the studios doesn't make sense.
While "volume discounts" can't be denied, they can be reasonably scaled for every size retailer and that should be the expectation of all in the business. And to that end, perhaps the coalition of retailers called the Fairness Alliance of Independent Retailers (FAIR) can take some satisfaction in their efforts over the years.
I know the VHS cassette is on its way out, with several studios either blowing out catalog titles at dump-bin prices or trimming back the availability of certain titles on cassette once they hit DVD.
But I had no idea how drastic the exodus was until I walked by the lunchroom trash can at our posh offices in Santa Ana and spied something that caught my eye.
There, on the back of editor Kurt Indvik's frozen Stouffer's entr?e box — Salisbury steak in gravy with grilled onions and macaroni and cheese, if you're interested in a journalist's eating habits — is a giant ad for free MGM movies.
Buy six Stouffer's products and, for just $1.99 shipping and handling, you can “have one of these MGM classics delivered to your door,” the ad proclaims. Consumers can choose from Fiddler on the Roof, West Side Story, The Magnificent Seven, The Graduate and When Harry Met Sally.
We're not talking crap here — this is top-quality, first-class catalog stuff, titles that still fetch full price on DVD.
But the videocassettes, well, clearly, they're no longer worth beans (although maybe they are; I'll have to watch Kurt's future lunch picks before I can reach a final verdict on that).
This makes me wonder how long the videocassette will be around. The vinyl LP disappeared virtually overnight, although many electronics dealers still carry turntables and needles and some small labels still release music on the notorious 12-inch “licorice pizza,” as one record chain popular in the 1970s was called.
With sales of new releases increasingly tilted in DVD's favor — most big releases now sell 75 percent or more of their total units on disc — the videocassette's days are clearly numbered. And with DVD players selling for as little as $39 and the proliferation of computers with DVD drives, and the sweeping success of Sony's DVD-playing PlayStation 2, the proverbial writing's on the wall.
I have recently cleared my house of virtually every videocassette I own, with the exception of 1) Disney's infamous Little Mermaid cassette with the castle tower that looks strangely phallic, an artist's trick the company has steadfastly denied; 2) Mondo Cane, a bizarre video of oddities from around the world; and 3) a handful of schlock movies like Undercover Angel that I keep around to sate my desire for all things cheesy.
Even my 7-year-old, Justin, handed over his entire videocassette collection to younger brother Conner — who uses them as building blocks.
Mark my words — by the end of this year, at least one major studio will no longer be releasing anything on videocassette.
If I'm wrong — and you can hold me to this — I'll buy Kurt some real lunch.
When I stopped into a grocery store on the way home from work Friday night, I got into line just in time to hear the cashier telling the customer at the front, "I never go to the movies any more. I just wait until it comes out on DVD."
I suspect that sums it up for a lot of people. Movie theaters force us to depend on time blocks and pricey tickets so, most of the time, it's more convenient to wait for the home video release.
But it goes beyond that, to broadcast TV shows coming out on disc as well. And it appears the time from broadcast to disc is getting ever shorter -- witness NBC's releasing the first six episodes of "Kingpin" on a three-disc set before the last of the episodes even airs (although ShopNBC.com does note buyers won't receive the set for eight to 10 weeks after ordering).
The show is a great example of why I'm a broadcast executive's worst nightmare. I kissed off cable after the idiots at Time Warner came out to cut off a deadbeat neighbor and cut off my service at the same time. (The make-good was a coupon for a free InDemand pay-per-view movie. Big whoop.) Bye-bye Time Warner, hello DirecTV!
But, since DirecTV charges an extra $5.99 per month for a slate of local broadcast channels, I don't buy them. Broadcast programming is generally so much less than compelling that I seldom watch it. I have an aerial antenna I can hook up for any local programming I really need to see -- which is next to nothing.
DirecTV recently gave subscribers three free months of local broadcast content, as a sort of loyalty reward but also an effort to get us hooked on the convenience. The promotion ran through Feb. 2, the night "Kingpin" debuted. So I did watch the first episode on KNBC. But by the following Friday I had learned I could watch the show Friday nights on Bravo (and I've only just learned it's a spicier version than the one that airs on NBC).
I'm enjoying the show, although it's not as good as HBO's "The Sopranos," which it was meant to challenge (same theme and time slot). Cable networks have already figured out they can offset production costs by putting shows like all of HBO's series, Fox's "24" and "The Shield" and Sci-Fi Channel's "Taken" on disc as soon as the first season ends. NBC seems to be trying to follow that lead, but I'm not sure it will work for a broadcast show.
For one thing, "The Sopranos" became a "water cooler show" -- one people talk about around the office water cooler Monday mornings -- almost immediately. "Kingpin" is cutting its chances of that happening in half by reaching half its viewers Friday nights. By the time Monday morning rolls around, we have a whole weekend's worth of other stuff to talk about.
I'm also getting increasingly spoiled to not having commercial interruptions. So I can't really say I cried yesterday when AOLTW announced that subsidiary Turner Broadcasting System's CEO, Jamie Kellner, is a lame duck. After all, he's the guy who told Cable World magazine that consumers who go to the bathroom or kitchen during commercials are stealing.
Well, Jamie, you caught me, but I've gone straight. My bathroom and snack breaks are guilt-free because I no longer watch broadcast television. Over the long weekend I spent my viewing time catching up on "The Shield" -- on DVD.
By: Holly J. Wagner
One of my original reservations about kids and DVD was I thought they'd have a hard time navigating the menu. In fact, I noted in this column DVDs that automatically start are a good idea for children's and family titles.
But recently I've found that kids are more savvy about using the remote control than we give them credit for. As my 4-year-old hits 5, she's become much more adept at navigating the menu on DVDs. In fact, she enjoys it; it's sort of like a simpler version of a video game.
She's so fascinated with the remote control that she will navigate the simple comprehension games on the discs over and over again. The games are almost as repeatable as the movies.
The industry was wary at first about DVD adoption in the family market. Of concern to parents: what if kids decided to polish the floor with a DVD (a neighbor of mine did in fact have that happen)? But also of concern was the menu. Many kids can load a videotape, but loading a DVD is somewhat more complicated.
What we may have missed is that the remote control generation has no problem clicking the right buttons. While, to be sure, very young children need assistance with DVD, it doesn't take them long to get the hang of it.
By: Stephanie Prange
As we recover from the post-holiday sellthrough hangover, there is renewed supplier interest and focus on the rental market. This has manifested itself in a couple of new revenue-sharing programs combining DVD and VHS announced by Fox through Rentrak last week and by Warner the week prior. I think it's only the beginning of a series of maneuvers by suppliers to hedge their bets on the rental side of the market to maintain as much margin as they can.
Studios are getting less and less of the rental pie even as they stoke the sellthrough furnace which has, to date, more than made up for the slip in rental revenues. The cost of DVDs has been a terrific boon to rentailers whose margins have improved as DVD rentals increase, even as, perhaps, their overall gross revenues were dented by a burgeoning sellthrough business.
In the early stages of DVD's emergence, there was still plenty of higher-margin VHS business for studios, but as DVD penetration continues, naturally, rentailers are taking less and less VHS. And, to the likely chagrin to studios, DVDs are also turning out to be a successful used product, another very positive aspect of the business for rentailers that studios get no share of.
Meanwhile, while selthrough enjoyed a stupendous rise in unit and dollar volume in 2002, there is that lingering question for suppliers that won't go away: When do buy rates per DVD household start to fall (as many have expected they should have already begun to do), and how far will the fall be? What pricing levels are going to be necessary to keep sellthrough viable and how does all this dovetail with a lower margin rental business.
Because what isn't in much doubt is that DVD player penetration will continue and, eventually, VHS inventory requirements will be small. The DVD/VHS rev-share deals may be a temporary opportunity for some rentailers to lessen their overall cost of goods and provide studios with a better cut of the rental business. But I won't be surprised this year to see a test of some rental window and rental-priced DVD program (on select titles). That has the potential to be a longer term solution for studios as they try to figure out a business model as rental and sellthrough seek to find their equilibrium.
Are studios getting chintzy on their DVDs? As prices decline, particularly on the catalog end, we're seeing a conspicuous lack of the increasingly interesting and complex special features to which we've grown accustomed.
I just picked up a classic from a studio I won't name. It cost less than $10. The box promises “special features,” but I didn't bother to read the description — I figured there would surely be a little “making of” documentary and maybe an interview with some of the film's surviving cast and crewmembers.
Wrong-o. I watched the movie — brilliant — and then clicked on the special features button. All I got was a list of the cast (no bios or links) and the theatrical trailer.
Big whoop. That's the same sort of stuff I got in the early days of DVD, before Warner's The Wild Bunch came out with a ton of extras and the rush to not just spruce up, but also spice up, catalog titles began in earnest.
Now, I realize the economics in play here. Prices have dropped faster and more dramatically than anyone could have envisioned — anyone except maybe Warren Lieberfarb, who has never shied away from his desire to have everything priced at about $10 and available anywhere and everywhere things are sold. And it's hard to imagine a studio spending hundreds of thousands of dollars to film and produce a “making of” documentary when the finished product is going straight to Wal-Mart's new $5.88 DVD dump bin.
But for catalog titles, there's so much canned stuff in the vaults that surely some enterprising DVD producer can come up with something interesting and compelling without bursting the purse. And I think DVD is hardly as price-sensitive as some studios (and Wal-Mart) seem to think. I would have happily spent $12 or even $15 on this same title, maybe even $20 if it had that coveted “special edition” label across the top.
And that brings me to another point — why dump bare-bones editions of classic movies into the market at all? Wouldn't it be better to be a little more selective and come out with a handful of quality products each month? I would bet that overall revenue and profits back to the studios would be about the same. What you lose on volume, higher margins would make up.
I can see the logic in releasing vast amounts of products at impulse prices in the early days of the format, but not now, when there's already so much stuff out there. I can understand $15 or even $10, but $5?
Forget it. At five bucks, the message you're sending to the consumer is that this disc isn't really worth owning, or putting in your collection. And, sadly, that perception is only reinforced when the consumer slips this disc into his machine and finds the movie and not much else.
So, Oscar season has officially arrived with yesterday's announcements of Academy Award nominees for the year.
Most people had to see those films on the big screen, but the Academy management knows that not every member gets to every film, so they make sure to send out DVD screeners to voting members to be sure they can watch the movies.
A number of those screeners – ranging from About Schmidt and The Hours to Lord of the Rings: The Two Towers and Catch Me If You Can are available on eBay right now. Most of them at starting prices that would make Wal-Mart blush.
For today I'm just going to abbreviate my harangue on how the Hollywood antipiracy folks are looking for solutions in all the wrong places and skip to the constructive suggestion.
Like Movielink, the online video-on-download (VOD that's still not quite on-demand) service that five of the major studios launched late last year.
While not all consumers live in wired homes and with broadband connections and kabillion-gigabyte computers, I suspect most Academy members do.
So Academy screeners seem like the logical place to start for seeding the service and building a base of evangelists.
What if, instead of sending those DVD screeners that apparently are so hard to contain and control, the studios opened a password-protected section of Movielink for just the industry and let voting Academy members download their screeners – free copies that would self-destruct in 24 hours?
Another option would be Flexplay Technologies' expiring DVD. The MTV Latin America music video awards used the discs as party favors to offer guests a taste of the nominees' work.
I suspect that would prevent a fair amount of piracy. Surely it would help keep the still-theatrical titles from showing up on eBay (not to mention the plethora of lesser-known auction sites).
It's tough to say how well Movielink is catching on with ordinary consumers. Using it as in industry intranet could squeeze enough benefit out of the R&D to make the site worthwhile in the short term, while the industry waits for consumers to embrace downloading entertainment on a wide scale.
By: Holly J. Wagner
As we embark on the road to more mainstream adoption of DVD, two questions seem to weigh on the minds of many in the industry: Will consumers continue to purchase videos at the same rate and, if they buy numerous videos, will they continue to rent enough to bolster that side of the business?
In this new era of universally sellthrough-priced video, the old models are under attack. If consumers can buy any hit at Wal-Mart for $14.95, will a significant number still decide to rent it for a couple of bucks at the local video store? Blockbuster's full fourth-quarter numbers, due today, should shed some light on this trend. The No. 1 domestic rental chain's late December announcement it would cut profit estimates for 2002 due to an unanticipated drop in rentals sent its stock plummeting 30 percent. Today, we may get a more complete story of the chains's fourth quarter, which executives have characterized as somewhat of an anomaly.
Despite the recent vicissitudes of the rental market, the sense is that many titles are better rentals than purchases. This theory will be tested as a mainstream audience, one that has traditionally supported rental, buys into and buys more DVD. The CD business survived without rental. Could DVD do the same thing? Will a harried mother just as soon pick up a $10 kidvid at Wal-mart while gathering other necessities as make a special trip to the rental store for a $3 rental?
After the heady days of both an exploding sellthrough business and a solid rental market, one can't help but wonder if another shoe is left to drop.
By: Stephanie Prange
The recent glitzy kick-off event at Warner Bros. Studios to the integrated media event that will be The Matrix this year — in all its permutations — heralds yet another step in the evolution of creatively managed multimedia properties focusing on one entertainment franchise.
What will make The Matrix suite of film, video and video game products so interesting to see will be the impact of their connected world that the creators have crafted.
The Matrix special edition two-disc DVD set, coming out April 29, offers a full load of samples from the upcoming movie The Matrix Reloaded (May 15); the Enter the Matrix video game (also May 15); The Animatrix DVD, featuring nine CG-animated/anime shorts based on “The Matrix” story line (June 3), and three hours of techno music from Matrix properties. A CD soundtrack from The Animatrix is also planned for June 3.
The coordinated effort on the part of Warner Bros. to leverage the talent and content of The Matrix is truly impressive as these products seemingly came to fruition almost simultaneously.
It helps that the studio chose to compress the final two segments of film trilogy — The Matrix Reloaded and The Matrix Revolutions (November) — into one year. That gave the various creative partners in home video, video game and music plenty of material to work with and provided Warner Bros. with a unique opportunity to fuse some of the content together and extend the Matrix experience from one entertainment platform to another.
Thus, you have some story lines and themes from The Animatrix DVD that extend to the movies. You have a significantly greater degree of movie footage and character involvement showing up in the video game. And Warner has developed a strong music component that can stand alone on a CD.
Entertainment companies have been moving down this road during the past several years. Universal managed to stretch the The Fast and the Furious franchise from its initial movie success to hit DVD, to DVD special edition, to a planned video game this year ... and to the next movie in the franchise — 2Fast 2Furious — which comes to theaters in June.
Warner's Harry Potter is an ongoing franchise behemoth of books, movies, videos and games. And, of course, New Line's Lord of the Rings set a new standard, with an extended version DVD that transcended the typical DVD approach and offered a whole new enhanced experience for fans of the trilogy.
The exciting part is that the DVD video medium's multimedia capabilities put it at the center of this evolution.
Consumer habits are puzzling. And this uncertainty certainly contributes to — nay, is primarily responsible for — the sinking feeling deep down in many studio executives' stomachs that while DVD sales continue to soar and everyone's making their numbers and then some, sorry, Charlie, it ain't gonna last forever.
My point is this: Right now, consumers are avidly collecting movies, something they never did in the VHS era. But for how long will this trend continue, and even if it does, is there a saturation point? How big is the optimum home movie library? A hundred DVDs? A thousand?
Take a look at what's happened on the music side — and I should point out that prior to my joining Video Store Magazine more than a decade ago, I was a rock critic, writing for Billboard, The Los Angeles Times and San Diego Magazine.
In the heyday of vinyl, everyone collected records. My parents had a cabinet filled with about 200 LPs, while my friends and I bought fruit crates and filled them with vinyl — with some of our collections topping out at 1,200, 1,500 or even more.
When CDs came along in the middle 1980s, the joys of collecting were diminished. Part of the thrill of record collecting was those big, flat covers, so eye-fetching and yet easy to store. With CDs, the size shrunk — and while many music fans did, in fact, rebuy their libraries, many others, me included, only selectively bought CDs. Even today, I still have about 800 vinyl LPs, but no more than 300 CDs.
The transiency of pop music that began manifesting itself in the late 1980s — the lack of any sustained superstar — further squashed the collector spirit. And with the advent of digital downloading, coinciding with the stupid refusal of the record companies to drop CD prices (for which they are paying out a class action settlement to pretty much anyone who visits musiccdsettlement.com), it was all of a sudden over. I don't know anyone who avidly, passionately, collects music anymore.
Home video is a different story. For starters, in the VHS era very few people collected movies— rental was it. You had favorite directors or actors, but there was a certain affinity between pop star and consumer that was never quite duplicated on the film front. Plus, music is inherently repeatable — I've been known to play the same song a dozen times, if not more, on the way up to work — while movies are geared toward one-shot viewing.
That's why no one, with the possible exception of Warren Lieberfarb, ever thought people would actually collect movies, at least not to the extent they are now.
With DVD, the improbable has happened. People are avidly, passionately collecting movies — and music videos, and TV shows and all the other cool stuff that comes out on DVD. The studios have gone out of their way to make DVDs collectable, chiefly through attractive pricing and the gobs of special features that make it virtually impossible to digest a disc in a single evening.
I've got about 1,400 discs and storage is beginning to be a problem. I'm continually weeding through my collection and I'm becoming a lot more selective in what I bring home.
I expect others will do the same and begin setting parameters. We've got nearly 100 years of movies in the vaults; eventually, everything that can be released will be released, and at some point consumers will have bought every old movie they want to own — or have room for. They will limit their purchases to new releases, and buy very selectively, simply because they will have run out of room. You're likely to see a resurgence in rental — and even if the studios have killed it off by then, there's always the specter of digital downloading.
At the same time, fewer new DVD households will come online, as the format becomes ubiquitous.
Therefore, logic would dictate that at some point, buy rates will drop dramatically.
That's the future — I think we can all agree on that. The uncertainty is in the time frame, which in my opinion rests chiefly on the ceiling for your typical home movie library. How big will home collections get? That's the key question everyone in this business should be asking.