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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, 2003

Promise her anything...

If there is anything besides equipment cost standing between me and a full-on home theater system, it is the device created to make our entertainment more convenient: the remote control.

Last week the Wall Street Journal's technology columnist, Walter Mossberg, had a column comparing two high-end multi-device remotes. These little controllers can operate a host of devices. They do pretty much everything but tuck you in and kiss you goodnight.

Of course, either one also costs more than both of my DVD players put together. And, no joke, Mossberg also recommended paying a professional to come to the home and program the remote. Apparently journalists in Manhattan make a lot more than they do in Santa Ana.

Now, video rentailers have had a longstanding joke about the Joe Sixpacks of the world, who could never figure out how to program the VCR. (Kinda funny, in a perverse way, that some people will figure that out just as tape gasps its last.) But that was different. Those machines did what they were supposed to, once you figured it out.

This is just another in a long line of technological red herrings, the kind of oversophistication that makes terms like “cable ready” and “universal remote” oxymorons.

I remember the hope of a better world to come. I have a TV that I bought cable ready, for 108 channels. Eighteen years ago.

Cable ready? File that one along with “the check is in the mail.” The equipment manufacturers and programming vendors could never get together on that. The manufacturers and cable companies make too much money selling and renting set-top receivers and now personal video recorders to ever let “cable ready” happen.

The new big lie in home entertainment is the Universal Remote. I have three of them and they are anything but universal. The only one that can operate my satellite system is the one that came with it. The convenient program guide sensor in the TV only works for broadcast and cable systems, so I had to disable it. (Note to R&D at RCA: You would think a company that makes satellite receivers would also make their TV programming guides compatible with them.) The remote that came with my Samsung DVD player has more switches and buttons than a 747 cockpit – just forget about operating any of those features with anything that purports to be universal.

Don't get me wrong, I love my DVDs. I just wish it was easier to operate the little daisy chain of devices involved in watching them. Some days, it's enough to make you (shudder) get up and change channels manually. Or even read a book.


14 Apr, 2003

‘Chamber of Secrets' a True World Premiere

Warner Home Video's DVD premiere gala for Harry Potter and the Chamber of Secrets kicked off not in Hollywood, but in London last week and the event, attended by journalists from around the world, is indicative of the growing importance of the international market to the studio and of a coordinated worldwide launch.

I met journalists reporting in Brazil and Japan, among other countries. During an interesting conversation between journalists and Warner EVP of worldwide marketing Mark Horak, it became clear that Warner hopes to spread the studio's sellthrough DVD philosophy around the world. Japan is a most difficult nut to crack, he said, as the Japanese are trained to rent because the country's hardware and software prices are high. Chamber is priced about half as much as other major studio releases in that country, Horak noted.

Coordinated international launches are of interest to Warner because the practice cuts down on piracy, but also because the international business has “enormous” growth potential, Horak said.

DVD penetration in the United States is heading to the halfway mark and it won't be too long before the sellthrough market for DVD reaches maturity domestically. But penetration across the globe offers a new area of growth for studios interested in turning movie fans into DVD collectors. As the Chamber premiere attests, Warner in particular is eyeing business beyond our borders, and journalists from around the world are hungry for entertainment news from the home video realm.


13 Apr, 2003

The VOD Puzzle and Retailers Piece

The announcement last week at NAB of Disney CEO Michael Eisner's new video-on-demand venture, Videobeam (see cover story), comes close to finishing, at least for now, the VOD puzzle.

Besides Disney, other studio pieces of that puzzle include Sony/Columbia TriStar, Warner Bros., Paramount, Universal and MGM, which have joined to launch Movielink, and Fox, which is looking to CinemaNow to distribute its movies. Mini-major Lions Gate has a financial stake in CinemaNow.

No one is yet setting the world on fire with VOD, and most studio execs and analysts agree that VOD is years away from any potential of mirroring the rental market. But certainly, as public companies, the studios have to be seen as taking steps forward to the future of the business, even if it's arguable just how big a role VOD will play in the future.

So while studios search for other more short-term solutions to improving their return on the rental business, nevertheless the digital download option must be pursued.

There is another piece of the puzzle yet to be placed, however, and that's the retail element. One option that strikes me as intriguing would be to, er, echo the Echo consortium of major music retailers who have banded together to offer digital music downloads. There was a lot of excitement generated going into this year's NARM that the major music chains were going to join the digital download business and give the music publishers and their online ventures a run for their money. The thinking here is that who knows the customer better than retailers? Who has a better brand to develop an online retailing business?

The same could be argued for the video retailers. That Netflix attracted the competitive attention of Wal-Mart and Blockbuster, no less, in pursuing the online rental business, seems to me the same sort of statement. There are all sorts of competitive, legal, financial and technical issues that make a comparable VOD service run by home video retail chains a challenge, I am sure.

But, why not? I'd be interested in your thoughts.


10 Apr, 2003

Secondary product is a primary lifeline

As the home video business goes increasingly to sellthrough, the fate of secondary titles is becoming the $64,000 question. With the nation's consumers focused on the hits and now able to buy them as well as rent them, many analysts and observers have written off direct-to-video titles as a victim of the times. And yet ‘B' movies are showing remarkable resiliency, even as independent suppliers like Xenon Entertainment, York Entertainment and Ground Zero Entertainment say their business, was almost exclusively rental, is joining the transformation to sellthrough.

Tony Perez of Ground Zero summed it up neatly: Hip young men who put all their discretionary dollars into their cars are snapping up his low-budget urban flicks. Souped-up Hondas and Toyotas are being equipped with $2,500 DVD players, and those little shiny discs have become as much a part of bling-bling as thick gold rings and chains.

The big studios are also bent on keeping secondary titles alive, albeit in a different way. If the indies are playing to their target audience with increasingly narrow niche fare, the big boys are busy cobbling together revenue-sharing deals whose primary focus is no longer to increase copy depth on the hits, but to move units of ‘B' movies. Ironically, that's how the revenue-sharing game began in the first place, with Rentrak Corp. founder Ron Berger proposing the idea of sharing revenue on rental titles as a way to increase breadth rather than depth.

It's been nearly 10 years since Bill Mechanic, then head of the Walt Disney Co.'s home video division, said that without home video 85 percent of what Hollywood made would be snuff.

Obviously his words still ring true today. A decade later, you can still get loads of entertainment on both free and pay TV, but virtually all of it is big-box office stuff — some of it new, most of it old, but all of it with a successful theatrical track record.

The secondary stuff, well, that belongs to home video. And hopefully that won't change, because otherwise we will be in a cultural morass. As one pundit recently observed, “There's not that much difference between a ‘B' movie and a so-called art film. It all comes down to whether the critics have seen it on the festival circuit.”

That may be an oversimplification, but there's a fair amount of truth in what he says. If the secondary-title market goes away, I'm afraid we'd be throwing out an awful lot of wheat with the chaff.


8 Apr, 2003

VSDA's Problems Start At the Top

Last week Video Software Dealers Association (VSDA) board chairman and candidate Tom Warren posted on the VSDA discussion board a call for the membership's collective gray matter, seeking solutions to the organization's cash burn.

That was Warren's top priority from a list of three items he made in 2000. The other two were protecting the rental industry and expanding communication among members.

I'm sure his statement that “Goal I has proved most illusive” was just a Freudian spelling slip, even if it's true. He went on to say that “I have appointed committees, task forces and consulted numerous retailers but no new vigorous and viable revenue source has emerged. We have substantially reduced the burn rate by eliminating staff and cutting underutilized programs. However, cost reduction is not enough!…We have some of the best minds in retailing here. Let's look at your ideas.”

Tom, I have a few truths for you that may not solve VSDA's budget problems but could help facilitate the process. (Not coincidentally, a few VSDA members are calling for many of the same actions.)


    1) Drag the VSDA board's meetings out into the sunlight. Secret board meetings are antithetical to the American notion of open government – and elitist besides. Shame on you for calling on members to be more involved when you and your colleagues steadfastly insist upon slamming the boardroom doors in their faces, reporting out only what you choose. That practice has been common among corporate entities that, like VSDA, are bleeding red ink: Enron, Worldcom, AOL Time Warner, the list goes on and on. If you folks want to act like they do, don't come whining to the stakeholders when you meet the same fate. Maybe we could call a few Marines back from Iraq to open the meetings. That's a large part of what we sent them to defend.

    2) Just forget the idea of consumer shows. On its face the plan shows a bias toward suppliers – many of whom, it's worth noting, would just as soon see your members go belly up. This was a misbegotten idea to begin with. What consumer would go downtown to a hotel or convention center for information about the video store around the corner? What could VSDA possibly offer to consumers that would support member businesses better than they do themselves? Maybe if the boardroom had been open when this idea came up some of those “best minds in retailing” you mentioned would have pointed that out and saved you all the embarrassment of demonstrating to members how completely out of touch their board is.

    3) Perk up the VSDA show schedule with new seminars that offer some hope of helping your members do better, smarter business. Seminars about crime and loss prevention, store layout, release date strategies to compete with sellthrough, used disc trade, subscription models and anything big chains are testing.

    4) Start campaigning for your next board seat by soliciting members' opinions the day after you win an election, not two months before the next election.

    5) Look to the future. No matter how many times you click your heels together, it will never be 1984 again.



7 Apr, 2003

What Happens When It's a Wal-Mart World?

Electronics retailers Circuit City and Best Buy reported financial woes last week and each blamed the war, the economy and various restructuring problems, namely Circuit City's exit of the appliance business and Best Buy's “discontinued operation” albatross Musicland, which it is trying to sell.

The problem for both wasn't revenue, but profit. Basically, the chains sold a lot but didn't make much on the sales. Why?

It's increasingly a Wal-Mart world.

David Campbell, retail analyst for Davenport & Co. in Richmond, Va., said pressure on gross margins has contributed to bringing down the chains' bottom line. Circuit City's CEO Alan McCollough said as much. That pressure is coming from discounters like Wal-Mart, who sell DVDs and hardware at below-cost prices to sell other stuff, like tires and lawn furniture.

This trend is disturbing for these DVD players. Having entered the disc business early on, Best Buy got a jump on the competition and reaped rewards for it; now it may have seen its best days in the business. Circuit City was a little late to the party, and may be suffering for it. Wal-Mart was also late to the DVD party, but the mass merchant jumped in with both feet — and with one simple message — low price.

No other retailer has such a simple message and that is why many have lost in competing with Wal-Mart. Bankrupt Kmart with its murky mission and not-so-low pricing is an example of what can happen to chains that don't pay heed to the Wal-Mart world.

Best Buy and Circuit City sell electronics in addition to DVD and other software — but so does Wal-Mart. The question is what do they have to offer the buying public that Wal-Mart doesn't? Selection, service and a more pleasant shopping atmosphere may give the chains a leg up. But can they really compete in an increasingly Wal-Mart world?


6 Apr, 2003

Elevating the Craft of DVD Production

The crafting of a top tier DVD these days shows just how far the disc has propelled the home video industry into the mainstream Hollywood filmmaking community.

Just five years ago, movies were slapped onto VHS with, perhaps, some trailers for other upcoming videos and, maybe, some contest or other promotion. Now the process of crafting a DVD can begin even before the first day of shooting the movie itself. The fact that DVDs are a new form of entertainment, not just a new platform to deliver a movie, is something I think retailers need to convey both to their employees and, in turn, to their customers. Studios, too, need to make more of an effort, I think, to highlight the elements of this new form of entertainment in their marketing.

Video Store Magazine has embarked on a regular series of articles focusing on the DVD producer; what he or she does and how they are developing this craft. This week's issue features Mark Rowen, DreamWorks head of DVD production. For Rowen the work often begins the minute the studio gives the greenlight to a project. That meant, in the case of Catch Me If You Can (streeting May 6), going through the script even before shooting starts to learn the story and plan DVD content. From there he deploys a variety of talented people, like documentarian Laurent Bouzereau and others, to create the content that enhances the film's impact and fits the director's artistic vision.

More and more, DVD producers are being brought in before a film begins production because the director and the studio understand that the DVD is a creative extension of the film itself and can add value to the overall “brand” extension of the film. It's not just that home video has become a major financial element in a film's success — often outperforming the theatrical take — that's pretty much a given. But that financial reality, combined with the technological capabilities of DVD, have propelled the DVD producer and the resulting home video product to a new stature in the Hollywood community.

I think one area where studios could do more to educate consumers as to the extra value of DVD is to use some of their marketing efforts to highlight DVD extras. For instance, one of the great things about the Spirit: Stallion of the Cimarron DVD was the very cool “Learn to Draw” feature, and the make-your-own-movie application. These were terrific and unique extras that, I think, were great selling points, but I don't recall DreamWorks highlighting these in their advertising. There is no arguing that home video is still all about the movie, but the skill and effort going into many DVDs these days needs to be given some extra exposure so that consumers place a greater value on the extras one finds on DVDs.

This will only serve to keep the perceived value of DVDs high in consumers' minds even as they see prices falling on catalog product.


3 Apr, 2003

Grocers Are Biting Into DVD Sales

Pundits traditionally say the Canadian video market is virtually identical to the U.S. video market, just slightly behind.

But the order may be changing. In Canada, mass merchants — specifically, Wal-Mart — are in the lead when it comes to DVD sellthrough, just as they are here in the United States. Grocers, however, are a strong No. 2, led by chains like Loblaw and Safeway.

Here in the United States, grocers never really got into video as a primary product line. Sales were limited to small merchandisers for select hit new releases, positioned at endcaps or at the front of the store. Rental was big at some chains, nonexistent at others — and when revenue-sharing came into play, even some of the more aggressive supermarket players in video dropped the ball, figuring it simply wasn't worth the hassle.

But DVD may be changing the equation. Grocers live and breathe by impulse buys, and while in the VHS-only days grocers could only count on a handful of sellthrough-priced new releases, chiefly children's product, nowadays every new release is priced for sellthrough and that makes the concept of a regular video sales section all the more viable.

Meanwhile, on the catalog end, the fact that DVDs take up so much less space than videocassettes is also an enticing proposition to establishing a regular DVD section — particularly since studios are putting out more and better catalog product, much of it surprisingly current, than they did with VHS.

Already, the Vons near my house has a row of low-priced catalog titles in the front, under the photo counter, just like the nearby Target and Wal-Mart. And down by the liquor section is a cabinet with hot new releases. In the past, there were no videos to speak of in the store, aside from an occasional Disney title for the kids.

The change is no accident, as a recent grocery industry survey pointed out: mass merchants are grabbing grocers' traditional turf with food sales, so grocers are looking for ways to make up the difference.

Grocers may also be driven, at least in part, by the vulture mentality. It's no secret that music stores are suffering, with many big chains, including Wherehouse, shuttering a good chunk of their stores. And savvy supermarkets with outlets near these closed music stores may have a natural audience, as long as they get the word out.

It's funny — home video observers have frequently said the end goal of DVD is to become a commodity business. And getting copies of Spy Kids 2 and Road to Perdition inches away from the milk cooler and the Spam rack certainly brings that concept one giant step closer to reality.


1 Apr, 2003

Boys Are From Mars, Girls Are From Venus and This Information is From Jupiter

Games are a revenue stream that's picking up steam in the home video industry. Game sales figures already best the annual box office revenue that Hollywood movies take in.

For a long time game prices were prohibitive, making margins low and putting off a lot of rentailers. But now more of the game publishers seem open to revenue-sharing or other deals that make games a more viable rental option.

This morning Jupiter Research released a study that found video games are more popular among low income households than more affluent homes.

That may make sense of why games like Vice City, which tend to offend some folks' sensibilities (including mine), do so well: parents of a 12-year-old in the suburbs are more likely to find the game offensive, but in some low income neighborhoods -– at least in the Los Angeles market – what's going on outside the house makes Vice City look tame. If you ask me, that's a sad way for kids to grow up whether it's a real or CG world.

But the draw for games is that, unlike movies and even most DVDs, they have so many possible outcomes. It's cheap, repeatable entertainment that takes a lot longer than a movie to get stale because even though it's the same game, player behavior changes it each time.

Teen girls were also identified as an “underserved” game market. Jupiter's analyst found that girls play more video games than anyone suspected, and would play still more if the content was geared more to their tastes.

I'm a little afraid of what the game publishers will get out of that, although I take hope from a summit for female game developers held last year. I think the name of it was even “Beyond Breasts” or something like that, and the core topic was how female game developers are influencing the industry by creating things that appeal to more than pubescent male fantasies.

But I digress. The message for rentailers is to take a good look at your store's demographics and reevaluate whether it's time to get into game rentals or even sales. Come up with creative approaches to renting multiple titles so customers can try them out before buying.

I know from experience that most people with low incomes watch their pennies more closely than most folks who have plenty of money. The opportunity to try before buying is a good lure for the demographic that's most likely to spend a lot of time playing video games, if you believe the Jupiter study.


31 Mar, 2003

DVD Lends Television Feature-Like Permanence

This weekend, I watched several episodes of HBO's hit “Six Feet Under” and without DVD, I probably never would have seen this excellent series. It would have come and gone without my ever having sampled its quirky pleasures.

Why?

First of all, I don't subscribe to HBO. Second of all, even if I did, there would be little chance that I would catch all the episodes in this serial, which requires a viewer to know what happened in previous episodes to fully understand subsequent installments. Likely, I never would have tried. I just don't have the patience or the fortitude to follow through on the type of ongoing stories television writers produce these days. I can follow one or two storylines (“Buffy the Vampire Slayer” is a favorite), but I can't keep up with the plots in numerous series on a weekly basis. I turn on something like “Alias” and am immediately lost.

But on DVD, these series are laid out nicely in sequence, and when I get a large block of time, I can watch a large chunk of the series without commercials. A time-strapped viewer can catch up with or discover the series at any time, even years after the show disappears from the television lineup. I look forward to perusing “The Sopranos” at some future date, and “Alias” as well. Television is producing a legacy of classics that will last on DVD for years and will continually find new audiences never tapped on cable or the airwaves.

These are not mere reruns, sliced and diced by syndicated stations. They are better than the original viewing, in pristine condition, uninterrupted. I've heard one colleague say the older “Star Trek” episodes look better on DVD than they have ever looked -- even in their original 1960s airing. They've never been crisper, she said.

DVD offers a permanent home for television content. It's a medium that allows series to age gracefully, waiting for new audiences to discover them in their own time -- not tied to a television schedule – and in excellent condition. Like classic films, many will be discovered by viewers long after their prime time days are over.