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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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18 Mar, 2003

A Day (or Week or Month) In the Life of A DVD

A few years back there was a film called Twenty Bucks that followed the path of a $20 bill from the time a cash machine spit it out to the time it was returned, torn and tattered, to the bank.

I think it's time for a movie following the coin of our realm. We could call it $20 Disc and follow the path of a DVD, from its first sale for $14.95 at Wal-mart on release Tuesday to the day it falls apart from disc rot or a toddler teething on it.

With VHS the story would have been boring. The tape gets bought, maybe rented a bunch of times and then sold at the end of its rental life cycle.

But DVD has added so many new destinations to that cycle. Discs travel several paths from the suppliers. The first fork in the road is whether it goes to rental or sellthrough. After that, the possibilities begin to look like a New York subway map.

A disc can get sold to a rentailer, rented several times (four times, according to the Video Buying Group's recent test), sold to a consumer. Then if it's in good enough condition, the consumer can sell or trade it off to an online used disc dealer (like skinnyguy.com) or put it on eBay for sale to another consumer.

Or maybe a consumer buys the disc at a mass merchant, watches it a few times. Probably has a friend over to watch it. Loans it to a neighbor or two – of course, in a swap arrangement in which each person gets to watch the other's new disc. After the owner tires of the disc, he trades it off at a local music retailer, where another consumer buys it.

That cycle can repeat as long as the disc is in good condition. Ditto if the consumer owner sells a disc to an online dealer who uses the disc to beef up a by-mail rental business.

I can think of plenty of other variations on this and I'm sure there are more than a few I haven't even heard or thought of yet. But what they all have in common is that, unlike VHS, DVD has several life stages. That means more profit-yielding stops and more profit-blocking stops – the times a disc in the hand pre-empts other programming choices, including a rental, cable or satellite or buying another disc.

Perhaps the only thing that is clear is that DVD has created so many new revenue possibilities that the industry will have to find new strategies to make money. You can rest assured that as long as the format facilitates it, consumers will come up with new ways to get the most entertainment for the least money they can.


17 Mar, 2003

With DVD, Theatrical and Home Video Play Well Together

I've been in the business long enough to remember a time when video releases were carefully kept secrets, when Web sites didn't freely speculate about home video release dates and covert distributor leaks were the only way to get a jump on a particular film's closely held home video release date, which often occurred six months after the film's release. Indeed, many times home video departments were wary of upsetting the theatrical apple cart with a premature announcement about the video release. What a difference today.

It seems I hear about a video release date just a few weeks after a theatrical bow. Theatrical-to-video windows are shrinking, as noted in last week's article, with certain video releases coming out only a little more than three months after the film's bow. The shorter windows allow video releases to piggyback on awareness generated by a particular film's theatrical campaign. Heck, certain DVDs even include tickets to theatrical films and DVD advertisements appear before features.

Why has video transformed from a redheaded stepchild to a bona fide member of the film family? It's all about the disc.

Unlike VHS, those who run studios as well as the talent that make them consider DVD a sexy product, not just a poor copy of a film. Whereas cassettes were mere ancillary consumer items, like stuffed animals and numerous other types of licensed merchandise, DVD is truly considered another release of the film – indeed, for many filmmakers, it is the definitive statement on the film.< BR>
Another plus for DVD. It's marketed directly to the consumer for purchase. Studios can get a bigger cut of the pie when a consumer buys the DVD outright, and studios don't have to give up any revenue to rental dealers, who can take all of the profit after the First Sale.

It's nice to finally be more fully recognized at the movie revenue table. Maybe DVD doesn't sit at the head of the table, but it certainly contributes to the film revenue feast.


16 Mar, 2003

Readying for War

We may be about to get more than we really want to see of “reality TV.”

I am, of course, referring to what seems to be the inexorable march toward war with Iraq. This week may see a climax to the weeks and weeks of U.N. debate and drama over the U.S. demand for a second resolution from the international body approving the use of force to get Iraq to disarm. Whatever the end result of that wrangling is, the likelihood is we will have war, and sooner rather than later. The troop buildup on the scale we have seen has only rarely not resulted in military action being taken.

In this week's issue of Video Store Magazine we talk with some retailers and analysts about the impact a war might have on the home video business. I am sure most of us share the same feelings to the effect that, there are other more important things to be concerned about in the event of war than how the home video business fares. And while that may be true, still, it is what we do and how we make our living, and we must prepare as best we can.

Home video, it is agreed, will in fact play a role helping those of us at home manage our intake of what will doubtless be constant (for the first few weeks) non-stop war reportage that includes disturbing images of death and destruction…real reality TV. At first we will all feel compelled to watch, out of concern for family and friends that may be in the conflict, or out of sheer compulsion to witness one of man's most powerful and gruesome attributes; the ability to wage organized violence against our own species for whatever reasons we deem appropriate.

We can expect a lull, then, in people coming to the video store looking for something to watch on TV. And then, as the war wears on, we can anticipate a strong desire for people to “watch something else” as a relief from the war, and to that end the ability to use home video to counter-program their TVs will be very attractive, and business may be brisk. That seems to have been the upshot of our last major war in 1991 with the very same fellow we're rattling our sabers at now.

I would encourage anyone managing a home video rental or retail business to keep this role in mind. People (customers, your employee, yourself) will be unsettled, weary, looking for something to momentarily relieve the tension they cannot really be avoided for long, until the conflict is over. They're walking into your store literally for relief. So make sure you do what you can to deliver that. Be mindful of what new releases you may be screening on your in-store monitors…I would guess we would probably like to see anything other than some actioner with a lot of shooting and things blowing up. Maybe create a special display of new or previously viewed video that's features a selection of comedies and family product that people can watch together.

Above all, you and your employees can have a positive impact in the way you serve customers, distracted as we all may seem. A friendly face and conversation about anything other than the war will make their experience in your store a better one and keep them coming back during what will be difficult times for all.


13 Mar, 2003

A Case For Collecting

Remember the good old clear plastic jewel case? Back in the early days of DVD, the square box was a leading contender to house DVDs as well as CDs. Two major studios, Columbia TriStar Home Entertainment and Universal Studios Home Video, released their initial batches of DVDs in jewel cases, as did a host of independent suppliers. Their reasoning was that consumers were already accustomed to buying music on five-inch discs and this familiarity would extend to the packaging.

But before long, the little jewel case fell from grace, in large part because the Video Software Dealers Association successfully argued for a bigger box to give DVDs their own identity. And thus we are where we are today, with those ubiquitous rectangles, all pretty much the same dimensions.

But there's writing on the wall, still faint and barely visible to all but the most knowing eyes, that seems to indicate smaller may, in fact, be better. Consumers still have a voracious appetite for buying DVDs, but some retailers are privately wondering whether there is a saturation point — the “full shelf” phenomenon, they call it — when consumers simply don't have room for any more DVDs and all of a sudden become significantly more selective in what they buy.

I know for a fact that at least one studio is conducting high-level talks about ways to extend the lifespan of the active DVD buyer. One option being considered is shrinking the box. Already, some screeners are arriving in flat cardboard wrappers and you can store about five of them in the same amount of space one regular Keepcase'd or Snapper'd DVD takes.

The problem — and the reason I don't think we're ever going to see studios take that route for consumer product — is that the flat wrappers are literally spineless. There's no room for any writing on the side, so you have to pull it out to see what it is like old vinyl records — hardly good merchandising.

But there are two other options. One is a flatter plastic case, maybe half as thick as a Keepcase or Snapper, so there's still room for writing on the side. Already, there's one such model available.

The other is to bring back the little jewel case — which may actually be the best option, when all the smoke clears. It's not only thinner, it's also shorter — which means you can put many more pieces in the drawer, or in the bookcase, even if it means adjusting the shelves a little.

And given the sad state of the music business, I'm sure there are plenty of jewel case makers out there who would be more than happy to cut the studios a deal.


11 Mar, 2003

Why Technology Isn't the Problem

There's a lot of brouhaha surrounding personal video recorders (PVRs) like TiVo and Replay TV. They are probably the closest thing to true video-on-demand (VOD) because they store your favorite shows automatically and let you play them whenever you want, with all the control features of a DVD like fast forward, pause and rewind. Plus you can skip commercials. It's no accident that TiVo users are very loyal.

This terrifies broadcast television executives, who are watching their revenue base erode before their eyes as people figure out how to skip past ads. The TV minds are doing their best to thwart this, with tactics ranging from lawsuits to a technology that digitally changes brand labels on items in existing shows to a pending variety show that hearkens back to the age of sponsored shows like Texaco Star Theater.

Advertainment is nothing new, although we are seeing some of its earliest manifestations return to the market. Strawberry Shortcake was a creation of American Greetings, conceived in the Reagan era of deregulated broadcasting to sell a line of greeting cards, figurines and manufacturered collectibles. In fact, Saturday mornings in the 1980s were a time slot given over almost entirely to advertainment. The airwaves were populated with cartoons promoting everything from Rainbow Brite and the Care Bears to their antithesis, G.I. Joe.

Movies are next, with a unit of Peter Guber's Mandalay Pictures called Mandalay Branded Entertainment actively shopping industrialists to finance advertiser-supported features for TV and theatrical release. From a branding standpoint, I guess that kind of melds ball park/event sponsorship with filmmaking. But it's going to have to be seamless, or most people will tune out.

And even with all this technology, people will find ways -- sometimes decidedly low-tech -- to filter out what they don't want.

A while back at Broadband Plus I remember chuckling when one of the cable executive panelists talked about the lengths to which people will go to get rid of crawlers and icons on their TV screens. She described people who put sticky notes on their TV screens to cover the translucent digital channel ID icons or duct tape across the bottom to eliminate crawlers.

While that seems a bit goofy, it illustrates a point that major studios and TV networks have yet to grasp: no matter how cool you think your advertising technology is, people who don't want to see it will always find ways not to watch.


10 Mar, 2003

With DVD In the Fast Lane, Consumers Are Passing on VHS

In talking to DVD-only retailers for a recent article, it became clear to me that previously viewed DVD sales are an important part of the new format's market.

As this week's online poll (over there, on the right) shows, retailers are garnering a good part of revenue from sales of previously viewed discs. My bet is that previously viewed DVDs are fueling a rise in revenue for rentailers, even as rentals may be taking a hit from sales. Consumers perceive pre-viewed DVDs to be more valuable than their VHS counterparts; indeed, many consider pre-viewed discs more valuable than a brand new cassette.

Consider this exchange, which I observed during a visit to Blockbuster over the holidays.

A woman asked the clerk if the store had National Lampoon's Christmas Vacation on DVD. She'd seen it on TV and wanted to add it to her collection. The clerk said they had some brand new copies.

“Do you have it previously viewed?” she asked, evidently looking for a better price.

“No,” he said. “It's too old.” (It wasn't a new release that had migrated to the pre-viewed bin.)

The clerk then showed her the new VHS copy, which cost about $2 less than the new DVD – a seemingly good option for a cost-conscious consumer.

Though she admitted her household had only one DVD player to its three VCRs, the customer did not buy the cassette. She opted for a new DVD. But her first choice obviously was a previously viewed disc.

I'm sure this scenario plays itself out continually in the rentail store. Customers look at a used disc as if it were a high-end car with only a couple thousand miles on it – in short, they see it as a really great deal. Whereas pre-viewed VHS is the old Pinto of video, DVD is the nearly new BMW. With DVD, rentailers have a really hot sellthrough product that puts them on a more level playing field with Wal-Mart.


9 Mar, 2003

Studios Look to Veterans to Keep Home Video at Top Speed

The final open spot in home video unit leadership positions at the major studios has been filled with the appointment last week of Mike Dunn as president at 20th Century Fox Home Entertainment.

He replaces Pat Wyatt, who had departed in December as head of consumer products (which included home video as well as licensing and merchandising of Fox Filmed Entertainment) to pursue the launch of a new production company specializing in anime product.

Dunn, with Fox for some 16 years, is the latest industry veteran to assume the wheel of a home video unit. Jim Cardwell, after 20 years with Warner Home Video (26 years with Warner Bros.), recently took the reins of the studio's home video business. Tom Lesinski, a mere pup in this group with 10 years at WHV, including running its domestic video business, moved to Paramount Home Entertainment for the chance to head its global video business. Lesinski just last week also wisely tapped Meagan Burrows as head of Paramount's domes-tic video business. Burrows spent 17 years climbing through the Paramount video ranks.

It is often the case that companies look elsewhere for “fresh” talent — even outside their own industries — for executives untainted and unencumbered by the internal politics and tired ideas of the company or industry they are entering to lead.

But it's not surprising, and I think its encouraging, that these home video companies all chose to either promote from within or hire industry veterans from other companies.

These home video units are responsible for significant revenue and cash flow for studios, and the very dynamic business climate and shifting operational challenges facing home video companies right now means that, more than ever, it's important that one has experienced hands on the wheel. It's the sort of position that requires a lot of institutional and industry memory. There is little time for new people trying to reinvent the wheel or getting up to speed.

That's not to say it will be business as usual with this new group of studio leaders, as if business as usual were possible in the home video industry right now.

Indeed, these executives, with their years of experience, have ingrained knowledge that will only serve to make whatever changes they bring to the business that much more targeted. (Whether you agree with them is, of course, another matter.) They know what the hot buttons are.

As Tom Rothman, co-chairman of Fox Filmed Entertainment, said, he looks for Dunn to approach this dynamic business “creatively, and not be bound by conventions or tradition.” I expect the same could well be said for all of the new, and existing, video unit leaders.


6 Mar, 2003

Leaving one family to care for another

The good guys just keep leaving. The latest veteran player in the home video industry to jump ship and either pursue other opportunities (as they say) or retire is John Thrasher, the longtime VP of video purchasing at the troubled Tower Records and Video chain.

I don't think there's anyone out there who doesn't know John and who hasn't felt John is remarkably in tune with this business and where it's headed. Back in the late 1980s, when I first started writing about video, John was one of the big believers in sellthrough; I remember an early interview in which he told me Tower's policy was to merchandise videos for sale and for rent right next to each in the chain's dedicated video departments because that way consumers had a choice. Tower's goal was to become a movie store, regardless of the business model.

John was so respected a buyer that in the fall of 1991, when Video Store Magazine was developing a prototype for its transition from a monthly to a weekly, John was our first cover boy — and our first “Handicapper,” whose weekly buys would be positioned as a model for other retailers to follow.

As sellthrough flourished, John was one of the first home entertainment retail guys to rail, loudly and angrily, against the deep discounting of product, first at the mass merchants and later by the online sellers. I remember John being particularly ticked at Reel.com for selling Titanic for less than 10 bucks. He felt the loss-leader strategy would devalue video and was unfair to other retailers who maybe couldn't afford to take it in the shorts just to build market share.

When DVD came around, John was in his element. While Tower patriarch Russ Solomon was in the limelight as one of Warner Home Video president Warren Lieberfarb's hand-picked poster boys for the new format, it was John Thrasher who was making things work, busily working behind the scenes on product mix, merchandising and other key elements in Tower's enormously successful DVD strategy.

Now, John's dad needs him, and he's moving to Bakersfield to take care of him. That's John — a good guy. We're going to miss him.


4 Mar, 2003

For Your Consideration&hellip;

With the Motion Picture Association of America (MPAA) getting limited results chasing down every potential file trader from college students to Internet service providers and corporations and notifying them of crackdowns, 20th Century Fox is set to take a new tack: anti-file-trading ads in movie theaters.

A Los Angeles Times article from ShoWest in Las Vegas says Fox will raise the curtain on a two-minute trailer that is supposed to “put a human face on the victims of piracy”.

I suppose Fox is choosing the appropriate arena, since a copy of Attack of the Clones that showed up on a file trading service while the movie was still in theatrical release was reportedly traced to a video camera at the back of a screening room at George Lucas' Skywalker Ranch. Clearly some folks like to tape the show with a handy cam. But I suspect anyone in most theaters who actually engages in movie piracy will take special delight in reproducing the trailer as well.

I can hardly wait to see what these ads will look like. I'm expecting something like the national office of drug policy's TV spots about how popping one pill or smoking one joint funds assassinations in other countries. Not that I'm personally endorsing those activities, either, but the ads are so heavy-handed they just make you want to go out and defy authority. Or at least eat an extra dessert. You have to love Ariana Huffington's parody version jibing SUVs.

Considering Monday's Wall Street Journal article on how many pirated DVD copies have been ripped from Academy screeners this year alone, creating “a pirate product that is superior to typical bootlegs,” the theatrical trailer seems like a lot of window dressing. Really, how serious can the studios be if they are passing out digital copies before their commercial release?

Only Disney refused to send its Oscar screeners on DVD this year. Then again, all Disney had was the box office pooch Treasure Planet and Spike Lee's 25th Hour, so the studio had less to lose than others. Corporate sister Miramax sent out hundreds of copies of Gangs of New York and Chicago on disc. Six copies of Chicago are available for sale on eBay as I write this column.

I guess the studios have a right to try any avenue they can to discourage piracy. But until they control their own pre-release digital copies, I hope they don't expect anyone to take them seriously.


3 Mar, 2003

Kmart Says Savings Are Here to Stay; I Say What Savings?

Kmart just launched its new “Savings Are Here to Stay” promotion designed to entice customers from closing stores to ones that will remain open, but if the closeout sales are any indication, the “savings” may be in the eye of the promotions department only.

I happen to live near one of the shuttering Kmarts, and we stopped by this weekend in the hope of picking up a few bargains. Big signs touting “30 Percent Off” and the like were posted throughout the store, and constant “Blue Light Special”-reminiscent announcements rang over the PA system. Fighting through the crowds of bargain hunters, I noticed people weren't buying much, and neither were we. And it was no wonder. The prices – when you could find them and calculate the savings – were no better than those at competing stores like Target and Wal-Mart — stores that weren't closing. Despite the “everything must go” come-ons, it seemed as if Kmart wasn't offering bargains, but instead was selling us bill of goods.

Many of the items offered at percentage discounts looked like they had been marked up to offset the cut. The upshot was often a price that was no bargain at all. “I've seen it cheaper at Target,” my husband commented about one item. And forget about Wal-Mart; that chain's everyday low prices beat many of the “closeout” prices in the Kmart store. In the end, the trip wasn't really worth the time it took to peruse the aisles and wait in the understaffed checkout line where these mysterious sale calculations cost time and caused much exasperation.

Now, I'm not the only one who has noticed this faux sale; at least one of my neighbors noticed the same thing. If the new management at Kmart is hoping to bring back lost customers, they certainly got off on the wrong foot with at least a few shoppers. I left with the impression that Kmart offered the same not-so-low prices and the same bad service, but at a louder, more annoying promotional pitch.

This “sale” strategy may work to boost the bottom line for a while. I'm sure many shoppers bought a few things just to keep from making the trip for nothing. But I wonder if they'll be back for more closeout merchandise or for the “Savings Are Here to Stay” offers at the remaining Kmart stores.

If Kmart managers hope to turn the chain around, they need to drastically change things on the customer level. They've got to offer good prices, not faux sales; they've got to beef up the number of clerks; and they've got to stop alienating shoppers with an unpleasant shopping experience.

Speaking of annoying customers, our theatrical brethren recently got in a bit of legal hot water over those commercials they are showing before the feature. Seems moviegoers got miffed enough at the reams of ads running past the appointed feature start time to file lawsuits charging fraud. Chalk up another advantage for DVD; you can skip the commercials and the popcorn's a lot cheaper.