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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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13 Sep, 2004

Why Won't Indies Swallow Subs?

Now that Hollywood has followed Blockbuster, officially jumping on the subscription bandwagon by quietly launching its Movie Value Pass, and Movie Gallery is talking about its 70-store test of the same model, you'd think independent retailers would be poised to join their bigger counterparts.

But a recent Video Store Magazine online poll found most (72 percent) of respondents had decided not to install a subscription model in their stores. Frankly, I find that astounding.

Many say the economics of the subscription model are not as profitable as the traditional a la carte model, but if the big guys are doing it, how can other video stores fail to follow suit?

Independents have been riding the wave of lower-then-ever-priced cost of goods with DVD as well as the previously viewed disc juggernaut (one retailer I know said it was like printing money). Can the good times last? Or will indies find they are behind the times by not looking to subscriptions to satisfy their customers? Few businesses can survive by resting on their laurels.

I'd be interested to see what readers, especially indies, think about the growing subscription model. Drop me a line at my e-mail address above.


12 Sep, 2004

The Latest on ‘Double Dipping'

It comes as no surprise to you, I am sure, that a growing percentage of home video titles are coming out in multiple versions. According to the DVD Release Report, to date some 23 percent of releases this year have been offered in multiple versions.

You'd have to agree that home video, as a form of packaged entertainment, is unique in this regard.

Outside of reference books, I'm not sure book retailers have to prepare themselves for a new, “extended edition” (with more chapters and an expanded biography of the author) of the latest hot novel or nonfiction best seller coming down the pike in six months. Most readers would say, “What, you forgot something the first time around?”

Not counting compilations and other “best of” efforts, or “live” albums, I don't think music retailers have to set aside room for artists who come out with “special editions” of their most recent albums. Buyers would be wondering which work the artist truly wants you to hear.

When it comes to movies on DVD, no doubt there are those who argue that a director ought to stand behind the film as it appeared in the theaters and are suspect of “extended versions” or “unrated” editions (the originals edited to avoid ratings issues, usually). And, of course, there has always been the ongoing argument over widescreen vs. full-screen versions.

But, by and large, these naysayers are few and far between, and the American public has been eagerly buying up all manner of new editions of movies as they appear on DVD, many of which keep the movie intact, but do add numerous bonus features that were not available on the first edition.

In this week's issue of Video Store Magazine Judith McCourt, market research director, and Thomas K. Arnold, group editor, team up to tackle the issues and questions surrounding the topic of “double dipping.” The fact is, studios are going to the well more than ever before with multiple versions and consumers are buying into the idea.

And while studios are busily cranking out these special editions, a space crunch is beginning to be felt at the retail level as shelves sag under the weight of a continuing deluge of new home video product. It's getting to be a challenge for retailers to make buying decisions in the face of this onslaught, even as they attempt to find more space for all these new (and new edition) DVDs.

It just so happens we have an article looking at this challenge in this week's issue as well. And we managed to find space for both on the cover. We may consider extended versions of these articles at a later date.


10 Sep, 2004

DVD's Many Sub-Businesses Keep Growing

DVD is becoming not so much one big business as a confederation of smaller businesses, many of which did not exist in the VHS era. TV DVD and music DVD are two examples, but they are hardly the only ones.

In the VHS era, for example, used-tape sales never amounted to much, even in the days when revenue-sharing picked up and there were lots of surplus cassettes floating around. Only with DVD did the market really begin to thrive, and now some rental dealers are reporting that what's euphemistically known as “previously viewed” sales have replaced late fees as their second-biggest source of revenue behind rental. At Movie Gallery, for example, the used trade brings in 10 percent of all consumer dollars.

There's also money to be made in niche markets such as documentaries and art films. Both categories are becoming bigger, thanks in large part to the emergence of online vendors — both rental (Netflix) and sales (Amazon) — whose cyberstorefronts are open to everyone the world over. Again, DVD gets at least some of the credit, because the inclusion of special features makes these titles more collectable and discs cost a lot less to ship than those clunky cassettes.

DVD also helped grow the home theater business, not so much because of the format's superior picture as its superior sound. With VHS, home theater would have been a waste of money; with DVD, it's become virtually essential.

Another of DVD's many sub-businesses is the market for mobile DVD players. Again, the trend toward putting video in minivans and SUVs began some years back, but as anyone who's driven cross-country with a bag of cassettes can tell you, it wasn't really practical until DVD. I remember road trips with cassettes flying all over the place; these days I can pack two dozen movies into a little album no bigger, or thicker, than a paperback.

This is why I feel certain DVD will go down in the history books as a lot more than just another successful consumer product launch. It's a pop-culture phenomenon, with a legacy that's likely to grow richer with time.


8 Sep, 2004

Subscription Redux

Blockbuster, Hollywood Video and Movie Gallery have all unveiled variations of in-store and Web–based subscription rental programs aimed at undermining the success of online pioneer Netflix.

These initiatives are not limited to the national chains.

DVD Trading Co., in Chandler, Ariz., has operated an in-store subscription service for three years, according to owner Don Desmarchais. He welcomed the competition from Hollywood since it isn't offering new releases as part of the promotion.

“It was kind of interesting that they had the option to match Blockbuster's deal and they chose not to,” said Desmarchais.

What about the other 1,200 video rentailers large and small?

Write to me at the e-mail address at the top of the screen and let me know what your store is doing regarding subscription programs.


7 Sep, 2004

Used-Disc Trade Blurs Traditional Retail, Pricing Lines

It's become apparent that DVD trading is the model of choice for a lot of consumers. It offers a very attractive entry point for people who want to start or build collections.

Blockbuster is making good on its promise to bring trades into its stores. In advance of the Labor Day weekend, several stores in my neighborhood were getting flash makeovers that include more shelf space devoted to used discs and huge banners advertising that the chain offers a minimum of $5 in store credit for any DVD it buys from a consumer and a maximum of $35 for games.

Trans World hasn't made nearly as much noise about it, but that chain, with nearly 900 stores under a half-dozen brands, has been doing consumer trades for a long time. And it has the added allure of letting the consumer choose to sell for cash or slightly more in store credit. Both chains promote the used trade with lists indicating which titles have the highest bounty.

Game chains EB Games and GameSpot have been trading games with consumers for quite a while and both recently got into DVD trading, especially in areas that have a lot of appeal for their customers — anime and sci-fi, notably.

It's a smart way for chains to bulk up on catalog and other product. Although Trans World has exited the rental arena, Blockbuster is expanding online. The used-disc trade in stores offers several benefits. For one, the chain is likely to bring in titles that might be hard to find and almost certainly would cost more to stock from studios or distributors. After all, aren't all discs used after the first time you play them?

The Movie Gallery e-newsletter that arrived in my e-mail box today is already promoting the availability of pre-viewed The Passion of the Christ Sept. 13.

It has become pretty standard that PVT are available within a week or two of the same titles' street dates. Chains can use their amassed data to gauge when a title will fall out of rental favor or just how soon they can afford to start selling off titles as PVT.

The used-disc trade has so far been a boon to retailers large and small. But as it takes hold, it may have a couple of downsides that have not yet been factored into the equation. Chains that have enjoyed near icon status among consumers will have to compete not only among themselves, but against savvy consumers.

Used discs have opened up a layer of trade that is completely outside of traditional retail. Consumers are figuring out that they can get more for their used titles by selling them on eBay (alongside some studios and Movie Gallery) for more than a video or music store will pay, especially for TV DVD.

Then there are the new upstarts like peerflix.com, barterbee.com and filmtrader.com, that seem to be springing up faster than weeds in an herb garden to let consumers trade among themselves. One-for-one trades are about as close as you get to full value.

Finally, consumers are training themselves that anything more than $10 is too much to pay for most movies. Even when a high-def format makes it to market, it will not be easy to convince consumers to pay $10, $20 or $30 more for it.


5 Sep, 2004

Shelf-Space Squeeze An Opportunity for Specialty Retailers

The volume of home video releases into the market is staggering, and suppliers appear to be capable of keeping the pace up for the foreseeable future. The question on the minds and lips of both suppliers and retailers is how to cram all of this into that finite realm we know as shelf space.

Obviously, the answer is that they can't, at least when it concerns major retail shelf space. There will be “winners” and “losers” this holiday season as suppliers of all sorts do everything they can to get their hit movie, their catalog release, their special-edition collection or special-interest title on as many retailers' shelves as possible.

Major nonspeciality retailers, especially big-box retailers, for the most part now appear to be holding firm on their total allocation of space for home video, though certainly they have adjusted product mix to accommodate the huge success of DVD (goodbye VHS) and certain hot genres (hello TV DVD), and extended their sections with end caps and dump bins in other parts of the stores, among other efforts.

Virgin Megastores, for example, is beginning to move certain DVD genres, such as music and fitness, out of traditional DVD sections and into themed areas where these products can be cross-merchandised with related CDs, books, etc. In this week's issue of Video Store Magazine, senior reporter Jessica Wolf writes about this issue as it came up in several panels during last week's Entertainment Media Expo in Hollywood. Part of the issue is of the mass merchants' own making: That is, they have created the first-week loss-leader phenomenon for new-release hits that have made the margins for at least that portion of their video business (and it's their most significant portion, at least in units) unattractive to such an extent that home video doesn't warrant greater allocation of space.

Meanwhile, as DVD households continue to grow — albeit at a quieter pace — consumers seem as ready and willing to buy now as when the format was in its formative stages.This is where the specialty retailers and rental chains, including online models such as Netflix, have the opportunity to capture a growing share of the sellthrough market. Because not only does the volume of new product present an opportunity, the ever-increasing fickle nature of mass merchants' buying models will pass up an increasing number of mid-tier (less than $25 million box office) theatrical titles and any amount of other great product that just doesn't fit their ROI scheme.

Major rentail chains continue to reconfigure their stores, continue to jettison VHS and move aggressively toward sellthrough in all variations, from new and previously-viewed to trade-ins, not just in the hits, but in the wide range of terrific mid-tier theatrical and non-theatrical product mass merchants just aren't going to carry.

The opportunity for specialty stores in sellthrough will continue over the next several years.


3 Sep, 2004

DVD's Going Down the Tube

The size and escalating popularity of the TV DVD category is mind-boggling. Here at Video Store Magazine, we're in the midst of producing the first-ever TV DVD Awards and have received more than 150 entries from suppliers, in 12 categories. A lot of the stuff that's come in I've never even heard of, and yet judging from the elaborate boxes and special features custom-made for the DVD release, there's a ready and willing audience out there for even the most obscure TV shows.

As we head into the fourth quarter, one of the biggest issues is the crunch for shelf space. Several of my colleagues have already addressed this issue, so I won't go there (at least not until my next “big picture” story in VSM).

But I will clue you in on one new development: Retailers are jumping all over TV DVD, to the point of allocating more space in their stores for television product. Best Buy, Target, Wal-Mart and virtually all the other big sellthrough drivers are committing more space to TV DVD this fourth quarter — a fact that was communicated early in the year to the folks at Universal Studios Home Video, who responded by finally jumping into TV DVD in a big way this summer after two years of sitting on their TV library.

TV DVD isn't just turning heads at sellthrough. At a recent panel discussion I led at the EMX conference in Hollywood earlier this week, Ted Sarandos, chief content officer of Netflix, revealed that TV DVD accounts for 12 percent of the subscription rental service's overall revenue and is the fastest-growing segment of the company's business. Movie Gallery's Ted Innes added that his rental chain has added a dedicated TV DVD section to its new-release wall.

Will this bubble burst? Our market research department predicts consumers will spend more than $2 billion on TV DVD product this year, up from less than $1.5 billion in 2003.

Based on my own collection at home — and the gobs of shows and series submitted for our awards — we've only scratched the surface. I'm not just collecting the stuff, I'm watching it at the expense of hot new movies.

I'm currently on episode three of “American Dreams,” a show I had never even heard of — I'm not an avid broadcast TV watcher — until it came to be on DVD.


2 Sep, 2004

Time is Ripe for DVD Storage Solutions

It's going to be a huge fourth quarter. With so many theatrical hits coming out on DVD and anticipated boxed sets like the Star Wars Trilogy, other collectors' items and a plethora of TV DVD content, the top-of-mind question for retailers and suppliers, understandably, is, “Where are we going to put it?,” followed by, “At whose expense?”

At home, most of us in this business, I would guess, have multiple shelves, racks and drawerfuls of DVDs, not to mention the piles and stacks that snake around every corner of the house.

But then, I've noticed, gladly, that plenty of just-plain DVD consumers I know have similar collections — and similar issues with home shelf space. Soon we're all going to run out of space.

So, at what expense will DVD collections continue to grow and buy rates hold? What other products in the home will have to shift to make room for more DVD? Sure, there's used trading — that whittles it down some — but many people sell off DVD in order to buy more DVD or other media products, which doesn't necessarily solve the space issue.

This is something we talk about nearly every year, wondering when buy rates will drop.

According to research presented yesterday at the Entertainment Media Expo from Understanding & Solutions, after 2005 the expectation is that DVD acquisition rates will slow and drop from 18.5 DVDs per household in 2003 to 17.5 in 2008. Well, that's not much of a drop, which is good news for the business, but could also be great news for anyone out there with a truly innovative idea for DVD storage.


31 Aug, 2004

Notes from the Urban Guerilla Network

Many of you may not care, and that may be a problem.

I'm talking about urban film. And I am coming to understand why you don't seem to care, and that's a problem, too.

First of all, urban film is fundamentally misdefined as black and hip-hop. I'm a white girl (see that picture up there?), and I'm not much on hip-hop. My favorite bands these days are Train, Bad Religion and Sister Hazel.

But lately I have been watching a lot of what is defined as urban movies and a lot of what is not.

Let me point out that my colleague and northbound driver Erik Gruenwedel and I have recently traded gigs — really subgigs. For at least the near future, he will cover foreign and arthouse product, and I will cover the urban genre.

So I set out to learn about this stuff, and did I get an education! There is so much more to the urban film genre than it gets credit for.

Let's go back to that misdefinition. Urban film is not all about black people. It is about underclasses and, yes, African-Americans are often among them. But in this country any group — not necessarily individuals — that is not white and male is still an underclass, economically and socially — even by this presidential administration's statistics. It's one of the reasons Dave Chappelle is such a hit: His comedy is black, but the situations are so much more.

All the way back to Melvin Van Peebles, urban film is about underclasses going to the window, like in Paddy Chayevsky's Network, and yelling, on film, “I'm mad as hell, and I'm not going to take it anymore!” It's fundamentally about bucking the power structure and making something different that expresses an otherwise overlooked — or shunned — point of view.

And therein lies the rub: Urban film at its best makes us uncomfortable. Not with gangstas and drug dealers and terrorist cadres and things that are so far from many of our lives, but with the gritty reality of “There but for the grace of God ...”

There's a new person on the beat, so expect me to keep exploring the definition of what is urban. I'll look at the stuff that PR people pass off for urban film — the gangstas and watermelon comedy. But don't expect that to be the end of it.

No wonder you don't care. I'm out to change that.


29 Aug, 2004

VSDA and NARM? Maybe. DVD and Music? Definitely.

Video is becoming an integral part of the music experience and music retail business — a trend made clearer during the recent annual convention of the National Association of Recording Merchandisers (NARM) in San Diego.

The core business may still be about music, but the media is now as much video as it is audio.

As our coverage of the event in this week's issue of Video Store Magazine shows, music retailers pounded by four straight years of sagging CD sales are excited about a number of trends, not the least of which is the DualDisc format (CD on one side, DVD on the other) and a burgeoning interest in music DVDs. To top it all off, CD sales are on the upswing for the first time since 1999, recording a 9 percent increase year-to-date over last year.

It's very exciting to hear that music DVD sales are running at about double the rate of last year, cresting 15 million units to date so far this year. One music DVD supplier with whom I spoke recently thinks this holiday season will see record numbers of music DVD releases. And as more and more households install home theater and surround sound systems, it could very well be that the demand for music DVDs, which fits so perfectly with the growing home theater trend, will see a breakthrough this season and into 2005. Certainly, NARM attendees are poised to catch this wave, and traditional home video retailers should also be planning to aggressively pursue music DVDs as a growth business.

Another interesting line of discussion at NARM was the development of CD-burning stations in retail outlets. That's a natural service for retailers who want to capture a portion of the legal downloading business that is expected to grow into the billions of dollars in the next several years. Perhaps several years from now, if the legal digital downloading of movies grows to a critical mass, there might be some opportunity for video retailers to offer a similar service to customers who do not have broadband access in their homes — for a fee, of course.

As the Video Software Dealers Association and NARM continue their merger discussions, it will be an interesting exercise for retailers from both industries to explore the commonalities they share and ways each can learn from the other as their businesses continue to meld together as one entertainment software retail industry.

* * *

It's hard to imagine what the disc-based entertainment industry would be like today without the incredible influence of Emiel Petrone, whose sudden passing recently came as a shock to many in the industry.

You can read about his contributions to our industry in this week's issue, but it's safe to say that Petrone's legacy in the development of the CD format, his trailblazing in interactive media with CD-Interactive (which is where I first met him) and his leadership role in DVD as founding chairman of DEG: The Digital Entertainment Group will last for many years to come. He will be greatly missed.