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 big sellers of DVD are experiencing a problem that hitherto affected primarily rental dealers: shorter legs on hit titles.
Any rental retailer will tell you the flood of hit product triggered by widespread studio-direct revenue-sharing killed the shelf life of videos. It used to be that demand for a new release lasted two or three months; now, the big chains are selling off previously viewed copies of new releases within two or three weeks of street date.
As consumer habits, fueled by infatuation with DVD, have shifted to buying – a record 1.1 billion sellthrough units were shipped into the market last year, an all-time record, analyst Tom Adams recently told me – the shelf life of hit product at the big sellthrough stores is also growing shorter. Every Tuesday, a flood of people comes in to buy the latest hot property; then demand quickly dies down until The Next Big Thing comes out the following Tuesday, and so on.
Now, you'd think for sellthrough dealers this wouldn't be a bad thing. After all, what dealer wouldn't want to turn most of his or her inventory immediately, rather than waiting a few weeks or even months? Bring it in, move it out and then on to the next big seller.
But wait. It's not that simple. In the old days, retailers frequently reordered product, something I'm told hardly ever happens these days. Because such a high percentage of sales occurs in the first few days, retailers have to be dead-on in their ordering unless they want to be stuck with a huge overage that doesn't sell after the first week.
Oh, sure, studios accept returns, but think of all the time and money spent in processing, packaging and shipping product back. And then there's the question of how much to send back. More and more DVD households are coming online every month, every week – shouldn't you keep some copies of the big hits around to take care of future demand? But how much is enough, and how much is too much? Will buy rates remain the same when DVD penetration hits 40 percent, which it is expected to do by the end of the year? What's more, when penetration hits 40 percent, expect studios to crank out a lot more catalog product they have been holding back until the DVD player base bulks up.
As a result, buyers for the big DVD retail sellers readily concede there's no real strategy, going forward, other than trial and error, wait and see, live and learn.
Some retailers who bought loads of DVDs of Harry Potter and the Sorcerer's Stone say they're already stuck with excess inventory, but Warner Home Video won't accept returns until the end of September, 120 days after street date. By that time, will demand for the title have been rekindled, with the holiday gift-buying season getting under way and a new Harry about to break theatrically? Or will the title get lost in the shuffle among all the high-profile new stuff coming out around that time, like Disney's Monsters, Inc.?
And rental dealers thought they had it hard!
Well, here it comes: the next bill designed to protect digital copyright holders from peer-to-peer (P2P) piracy.
A California legislator, Howard Berman (D), proposed a bill last week that would let media companies hack into our computers and drop cyberbombs on those they believe are stealing their digital materials.
Like every other recent “anti-piracy” proposal, this bill neglects a couple of key points. For one thing it singles out distributed networks – decentralized networks of computers that aggregate computing power to keep the whole enterprise humming – but does nothing to prevent file trading on instant messaging systems.
Is this an accident? Not likely. It's just another way of handing control of file sharing to the media conglomerates that claim it ruins them. I'm sure sagging AOL/Time Warner is hot to quell the P2P tide. With stocks worth less than a quarter of their pre-merger prices, it would be quite a coup for AOL to herd as many file traders as possible onto its network at $20 or more per month, thereby boosting the subscriptions it's losing at an alarming rate.
Even this could backfire, though, if there is anything to rumors that Microsoft will try to buy Yahoo! in November. Wouldn't it be funny if Hollywood tried to wrest P2P systems out of the techies' grip, only to get trumped after the congressional break?
This not only illustrates the futility of the war on file trading; it's not even good subterfuge for Hollywood's brazen power grabs.
It also doesn't address a problem I've noted before (and now Bill Gates is on board) – that fact that studio moguls continue to blame faceless digital pirates without policing their own ranks.
Gates and a number of his ilk – notably Microsoft CEO Steve Ballmer, Intel CEO Craig Barrett, Dell CEO Michael Dell and HP CEO Carly Fiorina – sent the studio heads a letter a couple of weeks ago criticizing Hollywood's finger-pointing.
“Any approach to the issue of peer-to-peer file sharing must address the core nature of this emerging technology,” they wrote. “Peer-to-peer technologies constitute a basic functionality of the computing environment today and one that is critical to further advances in productivity in our economy. Any solutions to the problem of piracy must not compromise the innovations this functionality has to offer and, more importantly, must first address the means by which unprotected content finds its way onto these systems in the first instance.”
The tech moguls suggest consumer education, enforcement of existing laws and, perhaps most importantly, that studios get off their fannies and bring their IP content delivery services up instead of whining that consumers are using whatever means available to get video online and on demand.
The studios don't want to deal with pesky Justice Department investigations of potential trade restraints, so they lean on legislators (political contributions are a big stick) to advance their causes in Congress.
But make no mistake: the Hollywood robber barons are no different from the railroad robber barons of California's past. This isn't merely about protecting their businesses and employees. Their goal is to scoop up all the rights of way (Internet protocols as train tracks) and hardware (train cars and media players) to control what moves where, when and at what price.
Anyone who thinks it's a good idea to let the robber barons run the railroad should take a good, hard look at California's public transportation. It's a pretty good indication we are on the wrong track – again.
Directors' commentaries have come under fire – often from directors themselves -- for their often rambling, pointless, self-serving nature. But this weekend I had a lazy afternoon to peruse Cameron Crowe's commentary for the Vanilla Sky disc and was reminded of the DVD feature's possibilities.
The Crowe commentary (with wife and music composer Nancy Wilson) is indeed casual (his kids come into the room during the recording and he calls cast members, including Tom Cruise, on the phone), but it manages to be interesting as well. It helps that Crowe is a writer, articulate and adept at analyzing his subject, and that the film itself is a puzzle (one of my colleagues, who shall remain nameless, confessed he didn't fully understand the ending).
Crowe walks viewers through the film, letting them in on clues that show what is real and what is not in his dreamlike movie – yet he doesn't spoil the viewer's own interpretation. And, no doubt in deference to viewers like my esteemed colleague, he explains the varied interpretations of the ending, settling on the one he intended, but not knocking other views. Contrary to the fears of many directors, Crowe's commentary doesn't demystify his subject. Like a college professor, he offers possible interpretations, not pat answers. I don't know if Crowe worked off notes or merely used stream of consciousness, but he kept this jaded movie viewer interested.
My hope is that directors hone their commentaries further, to make them truly valuable to future filmmakers and viewers. One wonders what a commentary by Alfred Hitchcock, Howard Hawks or Orson Welles would have added to their masterpieces. This particular DVD feature may not be for everyone -- many don't have the patience to sit through a film twice – but it will no doubt help directors polish their legacy for future generations.
By: Stephanie Prange
It has been a dramatic several weeks for the stock market with huge swings (mostly down) that have caused a general sense of uncertainty as to what lays on everyone's financial horizon.
The recent positive quarterly reports from several of the home video industry's major chains notwithstanding and the general ability of the home entertainment industry to withstand difficult financial times, retail stocks in our category have also taken a bit of a pasting, with a notable exception. Although today it appears many of these same stocks are enjoying a substantial boost upward.
Since July 8, or for about three weeks, the Dow Jones average has dropped about 8.5 percent. Similarly, retail stocks in the home entertainment industry (or those playing a significant role in selling home video software) have also taken a hit. Movie Gallery's stock is down about 11 percent; Hollywood Entertainment's about 12 percent; Best Buy also 11 percent; Target down about 9 percent and even Wal-Mart (the single largest seller of home video) is down almost 12 percent.
The one exception is Blockbuster, whose share value has dropped less than one percent.
Last week both Blockbuster and Hollywood issued fairly positive results from their most recent fiscal quarters. Blockbuster's second quarter revenues grew by 3.6 percent over the same period of a year ago, while Hollywood's jumped 6 percent.
Meanwhile both chains have aggressive plans to continue to expand their business models beyond video rental. Blockbuster is pushing hard to grow its sellthrough business and compete head on with the mass merchant chains, while Hollywood is hot on video games (both sales and rental) and plans on expanding its Game Crazy store-within-a-store concept to another 100 locations this year to test the initiative before, perhaps, rolling it out chain wide.
Newcomer to the securities scene, Netflix, meanwhile, is taking a bit harder pummeling from the market, its stock being down a little more than 25 percent from its July 8 share price of $16.46. It may have the additional burden of being an online business that, while Netflix had been bucking that downward trend, may have added to its decline over the last several weeks.
But the issue with the American investing public is not with the Internet business. We've been there and done that. The uncertainty continues to be what other “generally acceptable” and not so acceptable accounting practices will rear up to bite the next Fortune 500 company as they continue to come clean about some of the accounting shenanigans of the ‘90s that have been used to paint, perhaps, a little rosier financial picture of themselves for investors and analysts (who were playing along, knowingly, with the game) than truly existed.
By: Kurt Indvik
One of the most interesting things to come out of DVD producers panels at DVD at 5 and the VSDA convention is that we're going to see not more special features on DVD, but better special features.
Since the format was launched in 1997, we've seen a steady acceleration in the amount of extra material on DVDs. Documentaries, commentaries, deleted scenes, alternate endings, interactive games for the kids, interactive “flyarounds” of movie sets and more – it's a far cry from the theatrical trailers that too often were the only addition to early DVDs.
Special features are a prime selling point for consumers – although it's debatable whether the public actually watches all this extra stuff or just likes knowing that they can – and also brings the home video community closer to Hollywood's creative community, because of the involvement of directors and other creative types in the production of a DVD. Indeed, my colleague Bruce Apar went so far as to call DVD producers the “D.W. Griffiths” of our generation, pioneers in the transmogrification of video from used movies to original entertainment.
I'm as big a fan of extras as anyone – I love the cast bios, particularly on older films, and deleted scenes are right up my alley as well. My kids are also infatuated with the interactive games companies like Disney put on their children's product – to the point where they don't even want to watch videocassettes anymore.
And yet I can't help but wonder, what's next? How many documentaries on every aspect of production can you cram on a DVD before it's overkill? And while I appreciate the value of directors commentaries, do we really need commentaries by the cast, crew and key grip? To tell you the truth, I've never watched a single commentary the entire way through, preferring to pick and choose parts of the film where I maybe have a question or two (such as The Usual Suspects, which took me awhile to figure out – okay, call me stupid!).
I think we're reached our state of the art in today's extras, and I, for one, am eager to know what's on the horizon. I'm glad the panelists said better, not more—there's already far too much stuff on the typical new-release DVD than I can handle.
I know Hollywood's best minds are thinking hard on where they can go next, and I know for a fact that interactivity and Web-access are involved.
But can't some of this stuff make it to disc now, instead of yet another commentary or documentary?
One of my favorite extras of all time was the interactive map on L.A. Confidential, in which the camera took you to places in Los Angeles that were featured in the movie. That's something I'd like to see more of.
I also like the historical footage on New Line's Thirteen Days – the Kennedy speeches, the missile shots, etc. That's something I'd like to see more of.
And I really enjoyed the interviews with cast members on Universal's Creature from the Black Lagoon, to see how well (or how poorly) they aged. That's something I'd like to see more of.
Oh well. I guess I'm just going to have to wait and see.
I was talking to one of the hardware guys the other day at DVD At 5. We got to talking about personal video recorders (PVRs) and other high-density storage media, things like MP3 that hold a lot of content in a small space and make it so portable.
We agreed that Hollywood is foolish to fight or seek to control these technologies, partly because Hollywood doesn't understand the practical realities that drive a lot of consumers' consuming.
Here's a driver I think Hollywood is missing altogether: it's called "Trading Spaces." Or the British version, called "Changing Rooms." If you haven't heard of it, quick, ask nearest woman over 20 years old.
She'll tell you she's hooked on a show about two sets of partners trading their homes over a weekend and redoing a room in each other's houses for under $1,000 with the help of a professional designer and carpenter. It's inspired more than one of us to do room makeovers.
Leow's and Home Depot must be ga-ga over these shows, which drive a lot of formerly less than handy women through their doors. I've always been handy but just last weekend the guy at OSH looked at me like I was daft for telling him I needed 26, 1/2-inch, funnel-headed pointy screws. They never understand quite what I want but they do their best to help me. I did get my screws and the project looks great.
The thing I bet Hollywood is missing is that on virtually every episode, the designers redo or build some type of armoire or cabinetry to hide the TV and other home electronics. They're accepted lifestyle components but universally viewed as a disruption to the aesthetic elements of room decor.
As a result of this reinforcement, women are becoming much more assertive about how the family home entertainment center looks and, as they speak up more, I think the demand for invisible media will grow. The more you can store and hide in less space, the better. We don't want to deprive our partners of their media smorgasbords, we just don't want to see all of it all the time.
Imagine DVD content on storage media the size of digital camera memory sticks. Your whole DVD collection down to one drawer. It would become a special feature to have a large print edition package.
Imagine SonicBlue's 3,000 hours of programming in one hard drive. Pick and choose and store or delete what you wish at the touch of a button. Hide one box.
The more women have to say about it, I believe the more single-box solutions will get popular. Hollywood can fight all it wants, but the more difficult and multidevice it is to consume entertainment, the less demand there will be for those home formats.
If, as Thomas K. Arnold sometimes asserts, "he who dies with the most toys wins," then she who lives with the least clutter also wins. And we all know that means everybody wins.
I now am certain DVD has arrived as a mainstream product. It isn't the most recent quotes of market penetration or sales of the latest DVD release or the lauding of the product in the news media that has solidified this opinion. What, you ask, is my measure of the mainstream adoption of this new technology?
My mother is planning to buy a DVD player.
Coming from a woman who only recently got a cell phone, that's big news. Females in my family have traditionally been suspicious of new technology. (My grandmother never was comfortable with the microwave oven. She kept it in the laundry room, where its mysterious rays could not penetrate the kitchen.) Thus, when my mom tells me she is looking into purchasing a DVD player, it signals a sea change in the buying public. Heck, if my mom is willing to buy one, the technology has really arrived.
No doubt the “mom” factor will change the character of the DVD market. Our 2002 Consumer Survey shows the next wave of DVD households will be a decidedly different bunch from the early adopters. Those households considering buying a DVD player in the next year already purchase a high percentage of VHS tapes for the kids – no doubt many of these purchases by moms picking up entertainment for the little ones. Almost 40 percent of their home video purchases were for children under 12. If their habits translate to DVD, that could mean a new explosion in the family and kids DVD market.
This new crop of DVD households also promises avid purchasers and renters of video entertainment, boding well for the whole business. Sixty-three percent of that group had purchased a video in the past year, and 34 percent said they purchased at least once a month. Eighty percent of these households had rented a tape in the last year, and 57 percent said they go to the video store at least once a week.
Like my mom, these households may be coming later to the DVD party, but they look ready to hit the buffet.
By: Stephanie Prange
The VSDA's Home Entertainment 2002 annual convention ended last Thursday evening with a several VSDA showgoers coming onstage with Penn & Teller to handle various weapons fired and thrown at each other and the dynamic duo. It was a great show that, like all great magic, had some elements of danger and truly dumbfounding moments of sleight of hand.
In many ways it was a fitting end to a show, now in its 21st year, whose organizers, the VSDA, are attempting a little magic of their own to keep current and meaningful for its industry. Not an easy feat, and one, if not done correctly, fraught with danger. If this doesn't work, then what?
I'd have to say, based purely on anecdotal evidence, the new business-meeting format of the show has been received well and will give the VSDA show a new, contemporary format on which to build the annual convention's future. There was still an expo hall, albeit it significantly smaller than in years past and featuring mostly retail services and equipment, with some specialized video suppliers. There was a significant conference program and there were a couple of terrific parties and an awards celebration. But the bottom line comments from both retailers and exhibitors were that business got done, meetings were more productive and the format gave an opportunity to build closer business relationships.
Sure there were snafus and problems and confusion early on. Some of the meeting suites floors were open to all attendees (and those were very busy pretty much every hour of each day), and several floors housed suites in which one could enter only with an appointment. There were times puzzled retailers were turned away from these floors. There were times appointments were missed because retailers didn't know which elevator to take to which floor (the show had exclusive use of certain elevators to some of the floors.) And there no doubt were plenty of tired feet by the end of the event as one had to travel some distance from the conference area to the suites towers (and some distance even between towers). Although, the distance between the conference and exhibits of past shows was probably greater.
The key element was preparation. Those exhibitors who made an effort prior to the show to make contact with key customers and set meetings had full agendas from Day One through Day Three and reported great success. Those retailers who came with specific deals in mind with specific agendas would certainly have been much more successful than the retailer who came just expecting to cruise and pick up giveaways from the major studios. That's business as done in the past. The new paradigm is both more serious and personal and both exhibitor and retailer have to be willing to make the effort to make the show work and, to a large extent, they seemed to be doing just that.
I think next year's event – and I am betting the VSDA opts to continue with this format though no word yet on a date or place – will be much more successful for all concerned, since we all know what to expect and how to “work the show.”
By: Kurt Indvik
Reports going into Home Entertainment 2002 that it was going to be a toned-down, more businesslike affair weren't entirely accurate.
To be sure, the new format lends itself to business deals and meetings, but the party circuit was as hectic as ever, with all sorts of private, quasi-private and “come one, come all” shindigs all over the Rio and nearby Palms.
On the top floor of the Rio's Masquerade Tower, Playboy brought back the sizzling 1960s, with bunnies galore and bartenders pouring cosmopolitans and martinis.
VPD's party at the Palms had the best food, with the sushi particularly drawing rave reviews, while upstairs in the Ghost Bar, Anchor Bay entertained guests with such celebrities as Linda Blair, Lou “The Incredible Hulk” Ferrigno and director Wim Wenders.
The pool party, part of the convention proper, was packed solid with people, although there were far fewer retailers in bathing suits than at the Playboy Wet 'n' Wild parties of the early 1990s VSDA conventions (not that I'm complaining). Rio staffers also pulled the plug right before midnight, sending hordes of partiers to the craps and blackjack tables....
Another familiar face was in the crowd: Ray Jewell, the feisty Texas retailer who was one of the VSDA's leading activists in the late 1990s. After selling his five stores, Jewell left the business, but he's recently jumped back in when he moved to Athens, Tenn., and bought the town's Movie Directory video rental store. “I found the best store, in the best location, and decided to have fun again,” Jewell said. “It's not a bad business to invest in, if you're willing to work.”…
Also spotted on the third floor of the Rio, “doing the suites,” as many conventioneers are calling their daily routines, was Gord Lacey, who operates an interesting Web site called TVshowsonDVD.com. As its name implies, the Web site lists all TV shows available on DVD. Lacey, whose site is well known in DVD circles, said he came to the show to meet suppliers and hopefully familiarize them with his site. He could use the publicity: He said he recently tried to get on the HBO screener list, but was told the list was full. Incidentally, Lacey said at last count, there were more than 1,300 DVDs with TV shows on them, from compilation and “best of” discs to complete season packages....
The hottest attraction on the show floor: actress Jenna Jameson, whom the VSDA will honor tonight as “Adult Star of the Year.” Jameson was on the show floor yesterday, signing autographs. The lines resembled those at an airport check-in counter.
So there we all were at Home Entertainment 2002 in Las Vegas, vexed and speculating about what will happen next in the home video industry. I came home early to shepherd some production, but I'm still with y'all in spirit.
We're looking forward, yet at the edge of the show I met a fellow who's still trying to figure out what to do with his video past.
This guy is a security guard at the Rio. We were both waiting around in the same space one evening and struck up a conversation. Occupations being an ordinary get-acquainted topic, after he learned what I do he was quick to confess his own history in the publishing profession and video collecting.
He still has half of a vinyl video collection (the ancient RCA disc format) on which he spent $15,000. Only half because his wife got half in the divorce. Still, estimates he has between 300 and 350 of these discs and has no idea what to do with them.
Aside from the fact that this guy must be the unluckiest in entertainment format history -- he also lamented a large collection of 8-track tapes -- I was struck by his interest in what happens next. I probably don't have to explain he hasn't got a DVD player. The poor guy got burned on new technology twice (that I know about) and he's still gunshy 20 years later. Who can blame him for waiting for the shakeout?
I think Disney was on the right track with an offer to refund $5 to anybody who bought selected titles on DVD when they turned in the UPC code from the same title on VHS. It's rewarding loyalty and lowering the risk threshold for reluctant consumers.
My cab driver to the airport was also a nice gentleman. Making typical cabbie conversation he asked if I was in town for a trade event (was the albatross show badge still dangling from my neck a dead giveaway or what?). When I told him which one he pelted me with questions about the politics and technology of video. He, too, seemed hesitant to get into DVD, though for different reasons than the guard.
I guess I'm jaded. I'm genuinely astonished at how many people's interest in DVD looks like mankind's first encounter with fire. I covered a terrific panel discussion on DVD extras earlier yesterday and this was a sharp juxtaposition. The panelists were concerned with the next step in DVD extras, but in conversations I suddenly realized the technology still intimidates a lot of people.
Albert Einstein once said "the single most important thing in anything is the point of view of the viewer." Unlike a lot of us, I guess his theories keep working out.
I'm glad I got two days of fascinating and diverse viewpoints at this show, even if they didn't all come from the floor.