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.
DreamWorks is the latest studio to downsize some of its hit titles – release former two-disc editions as a single, cheaper disc. The studio Aug. 19 is releasing Minority Report, Shrek and Gladiator in single disc editions at $19.99. The titles formerly sold for $26.99 or $29.99.
The cadre of online disc fans (whom I affectionately call the DVD geeks) may bristle at any attempt to sell a less-than-packed DVD of these hit titles, just as they have consistently criticized the release of full-frame instead of widescreen discs. They may be especially worried if the studio discontinues selling the packed disc.
But I have to say DreamWorks and other studios that are employing this marketing strategy, including Columbia TriStar and Fox, are onto something.
Not every DVD buyer is interested in the making-of and other special features cinephiles prize. Some of them, most notably members of the mainstream audience now shifting to DVD, merely want the movie. And if a studio can give that to them for a lower price, they will buy.
So far, this downsizing usually happens in the repricing window, but I can see a demand among mainstream buyers during the initial DVD release, with two versions of a title – a low-priced, feature-only version for the casual buyer and a higher-priced version for the rabid fan.
Let's just hope, as I'm sure the DVD geeks do, that studios don't start to abandon or discontinue extras-packed discs. While all buyers may not prize them, they are the industry's ace-in-the-hole in competing against the threat of video-on-demand and other media.
There are a number of conference sessions that look at the current and future impact of DVD at this week's DVD in 50, a conference, produced by Video Store Magazine and the DVD Entertainment Group, but none of them center on the business of online rentals, though doubtless that topic may come up. But there is little argument that without DVD, its sellthrough pricing model, it's smaller size and weight (compared to VHS) Netflix, the category leader for the moment, would probably not exist. Indeed, the whole retail category, which at our last count numbered about 40 different providers, including Wal-Mart and Filmcaddy.com, backed by Blockbuster, would not exist.
And yet, because of DVD, Netflix has attracted more than a million customers and will post a net income of about $3 million on revenue of about $62 million for the second quarter of this year, it's first quarter in the black. Certainly DVD has made life more worth living for Wal-Mart executives who, besides dominating the sellthrough business, are now ratcheting up its online rental component, looking to dominate the category trail blazed by Netflix. (See this week's cover story.)
Of course when Wal-Mart launched its online rental business last October, the rally cry from Netflix VP Ted Sarandos was “Bring it on!” Netflix chose to see Wal-Mart's entry into the business as a major credibility boost for Netflix' own business model, and indeed, there is truth to that. Now Wal-Mart is indeed bringing it on, after its initial foray into online rentals, building its library of titles quickly up to 13,000 and adding five new distribution centers to the one it started with (Netflix boasts 20, currently), and adding several new options to its rental pricing.
The quietly burgeoning online rental business is just one more major impact DVD has had on the home entertainment business and the mature home video business, which has been transformed on all levels by the digital disc. The discussions this week by the retailers and suppliers gathered for this conference will doubtless be focused on maintaining this tremendous growth, while at the same time avoiding the pitfalls hubris can bring, whether you are a dominant studio or dominant retailer.
Certainly of much interest is the looming issue of the next generation of DVD, high definition DVD, and the current face-off of competing technologies. With digital delivery still finding its way, the industry, says Ben Feingold, president of Columbia TriStar Home Entertainment in a VSM One on One dialogue this week, is on the cusp of either taking the initiative with a high-definition next generation product, or allowing another media delivery platform to take packaged media's place in the home video arena. It'll be interesting to see if the home video industry can seize the opportunity now and move forward on high definition.
Will this be the final year for the videocassette? The old VHS has truly become a second-class citizen at mass merchants like Wal-Mart and Target, while at the big rental chains like Blockbuster the cassette is virtually extinct.
Indeed, Blockbuster has adopted a dismissive air toward the few cassettes it still has in its inventory, offering kids a free VHS rental every day throughout the summer in return for a $2 charitable donation. The logic is clear: give the kids a daily freebie, while the parents who drive them will be spurred to rent or buy a DVD.
And yet the cassette still has its fans. Glenn Ross, the articulate president of Family Home Entertainment, told me recently that for preschool product DVD is still a little advanced. The really young kids, he said, can't figure out menus and remotes; they still enjoy the simplicity of the videocassette, where you simply stick it in a machine and off it goes.
Something similar struck home the other day when I attempted to toss out my 7-year-old son Justin's ragged old videocassette of the original Land Before Time movie. We have the film on DVD, and not only do we have a DVD player in the family and bed rooms, but Justin has a PlayStation 2 in his room on which he watches DVDs all the time.
But the little fellow wouldn't budge, insisting he wanted to keep “the easy one” so he could watch it right before bedtime on his TV, which still has a built-in VCR, instead of messing with his PlayStation and all the adjustments he has to make to get a DVD to play.
So back to my original question—will this be the final year for the videocassette? Maybe at retail, but not in homes. I think people will be less inclined to buy videocassettes, but they're not exactly going to beat a path to the landfill to get rid of the ones they already own, either.
By now, it has become clear that Led Zeppelin still packs a punch at the sales counter. According to the music industry trade magazine Hits, the CD set has sold 145,000 copies and the DVD more than 100,000, closing in on equaling sales of the CD.
As a consumer who has never liked Led Zeppelin (but has a husband with a large catalog of the band's albums who forces me to listen to it), I was nevertheless blown away by the Led Zeppelin DVD. No doubt, the extras are a great draw for the Zeppelin fan, but what I found most impressive was the quality of the sound and video. It is no less than captivating, and it beats listening to a CD hands-down.
Until I watched the Zeppelin music DVD, I don't think I truly appreciated the lure of this growing category. According to Recording Industry Association of America statistics, shipments in the category grew nearly 35 percent from 2001 to 2002. Now I see why the category is expanding. Not only does music DVD offer some industry insurance and a consumer incentive against file-trading with the added value of picture, it also offers crisp sound that I think rivals or even surpasses the CD. Given the choice of purchasing a CD or a DVD, I think the consumer will ultimately choose the DVD, not only for the picture, but for the sound.
Those who have dismissed the music DVD as merely an upgraded version of the music cassette should take a look at the product. If it can make me listen to Led Zeppelin, the music DVD is truly a miracle product.
Okay, I admit, I have yet to see The Matrix Reloaded. I purposefully put it off so that I would have an excuse to see it in an IMAX theater, screenings of which began last Friday.
I am buying into Warner's marketing lead and am endeavoring to extend and enhance my Matrix experiences throughout the remainder of the year so that there is not too long of a lag time between my last Matrix experience and my next.
Before Matrix Reloaded debuted May 15, I rented The Matrix original to get myself back into sync with that parallel world. I was then lucky enough to get a preview copy of The Animatrix, which hit the streets last week, and these nine beautiful animated shorts have given not only more background to The Matrix world and its reason for being, but added dimension that includes storyline extensions to Reloaded which I will now see.
I have only peered over the shoulder of those more game-savvy than I as they played the Enter the Matrix video game, so I really still have that Matrix experience to delve into as best I might, which I know will give me some new appreciation of The Matrix environment and bring back some connections with Reloaded.
So, after I have exhausted all my Matrix experiences I am probably looking at the end of July…then what? I sense a dry spell, and I am worried. There's no official word from Warner on when we might see a Reloaded DVD, but it's a good guess it'll be well timed well in advance of the November 5 theatrical bow of the trilogy's third installment The Matrix Revolutions, to build plenty of momentum for another box office rush. But that might be early October at the earliest. That leaves me with August and September and nothing new Matrix-wise.
Ah, how could I forget the documentary The Matrix Revisited? That'll hold me through those dry summer months. Barely.
Is it time to put DVDs on a diet?
Buy rates are still extremely high, even among the new DVD adopters who are now mostly families relegating the old VCR to a spare bedroom. Consumers are getting used to the fact that for $15 or less you typically can pick up any hot new movie you want, while catalog prices continue to tumble. The last time I was in Wal-Mart there was a veritable feeding frenzy around one of those $5.88 DVD bins, with eager hands grabbing a surprisingly diverse selection of recent blockbusters from most all the major studios.
If there's any chance of rain falling on this shopping parade, retailers tell me, it's the prospect of “full shelf” syndrome. A fellow buys a DVD player, finds DVDs cheap and plentiful, and opts to buy rather than rent, building a formidable collection in the process. But once the bookcase in the family room and a couple of crates in the garage are filled up — and we're talking maybe 300 to 500 discs — he's going to be forced to cut back a little, simply because there's no more room at the proverbial inn.
It's been six years since DVD was launched, and consumers are still buying more DVDs than ever. But how many of those discs are going to households that are just now coming online? There's probably no way of measuring this except for observation, and in that area the news is not good: Several retailers say their longest DVD customers, the guys who used to rush in every Tuesday to pick up the latest batch of releases, are no longer buying as much, or as often.
This probably won't be a problem for a year or two, when just about everyone has a DVD player and the number of new households coming online won't be significant enough to make a difference, to make up for the slack.
The solution — a short-term fix, granted, but one that should last long enough to tide everyone over to the much-anticipated high-definition launch a few years out — would be to make DVD cases even thinner, so that the guy whose bookcase is half filled with 300 DVDs can cram 600 discs into the other half — and thus prolong his active-buying life.
Personally, I'd hate to see that happen. I like my DVDs just fine the way they are, with spines wide enough to read the title without squinting. Then again, I am a little tight on space, particularly now that I'm collecting old Westerns, and Italian horror films from the 1970s, and film noir classics, and…
Among other trends I'm seeing as DVD matures, it looks to me like independent video dealers have been looking over the wrong shoulder – at video-on-demand (VOD) – for possible competition.
If Netflix has proved anything, it's that nobody needs VOD to pull business away from the brick-and-mortar video rental market. The physical world still holds its share of competitive cards.
Another model poised to make inroads in the next year with existing technology is the video vending machine. Sure, you can pooh-pooh this kind of business as a flash in the pan, but it just may work for some companies.
One company's presentation to potential franchisees even touts the 24/7 convenience of vending machines as a counter to video store hours, locations and the time lag from selection to play that is endemic to online rental. I have yet to experience a video emergency personally, but you never know – maybe there are tweakers out there who can't wait another minute to see The Anamatrix and will race out to rent it at 2:57 a.m.
I can see a host of potential problems with vending machines (did you see Barbershop?) but if the vending machine folks can work the bugs out, I can also see a lot of potential. Much of it from outside the video retail and rental core.
In a society that thrives on immediate gratification, it just might work.
By: Holly J. Wagner
Introducing the Los Angeles Chamber Orchestra's gala premiere of Charlie Chaplin's masterpiece City Lights May 31, gala co-chairman and Turner Entertainment Co. president and COO Roger Mayer credited the market for DVD with helping to preserve old movies such as the one being screened.
While the DVD hype can often be overblown, I can't help but take pride in the fact that our business is helping to safeguard old treasures in the studio vaults. Studio execs salivating over potential disc profits are taking the time and money to restore and preserve old celluloid. Indeed, City Lights was so pristine it almost looked as if it were shot yesterday; on disc, it will be preserved in numerous homes in wonderful condition. Add to those feature masterpieces the odds and ends of outtakes and shorts through which studios are sifting to find extras to feed the DVD market, and you've got a medium that not only satisfies consumer appetite but preservationists and historians as well.
It's not often that commerce can serve such a good cause. DVD will assist in creating a legacy that will be appreciated for years to come. Mayer marveled and took obvious delight in the fact that the cause of old movie preservation had found a friend in DVD. It's a kudo that should go to the whole industry, especially Warner Home Video, the studio releasing the Chaplin collection on disc, for providing the kind of cash flow that can help studios preserve film history.
It doesn't appear that many specialty retailers see a disposable disc product like the one being tested by Buena Vista Home Entertainment in August as something that could benefit their business. At least that's the way our most recent online poll shows it. It was a poll that drew a heavy response, which obviously indicates a strong interest and concern about the upcoming test.
When asked “Where do you think the EZ-D self destructing disc will sell well?” only 4.4 percent of respondents said specialty retail outlets. Another 34.6 percent don't seem to think the discs have much merit in any retail outlet and voted for “nowhere.”
However, 42.86 percent did say they felt that convenience stores, gas stations and grocery stores, places that get high regular traffic and offer the highest impulse purchase options, could likely do well with a disposable DVD display. Another 18.13 percent of respondents chose mass merchants as another potentially successful retail environment for disposable DVDs.
I agree that supermarkets, especially, may indeed find the disposable disc concept a very attractive way to get back into the rental market again after so many grocers abandonend that part of the business a number of years ago in the heyday of VHS and complicated, high-maintenance, rev-sharing deals. In mid-2002 supermarkets generated 4 percent of overall VHS rentals and 3 percent of DVD rentals, according to figures from Alexander & Associates. That's quite a drop from the 11 percent of the rental market supermarkets had about a decade ago.
I would not be surprised to see a number of supermarkets participating in the August test. If this product can work anywhere, grocery may be the ideal retail environment.
I think if there's one thing we can, and should, all agree on, it is that the preservation of software is essential to the continued survival of the home video business. Despite platitudes and reassurances, I don't think physical stores, video or otherwise, will ever be a place where people will go to download something — heck it's too easy to do over your own computer.
Stores are where you go to buy something, something you can see, touch and feel; this is why we need to make sure software remains the ultimate (and most popular) end destination for movies and other forms of viewable entertainment.
That said, I must applaud the folks at Artisan for releasing a high-definition version of Terminator 2 that's playable only on high-end computers that run Microsoft's Windows Media Player 9. Short of true convergence — where your home computer is the main operating console for your TV, your stereo and everything else — it is unlikely that Microsoft's entry into the increasingly crowded next-generation DVD arena will be the one to ultimately triumph. The other guys are focused on technologies for set-top players, not computers, continuing in the path of current DVD.
But the Windows route is certainly an interesting detour — and evidence, once again, of the creative ingenuity for which the home entertainment industry has long been known. The days when this business consisted of a bunch of aging refrigerator salesmen hawking used movies on cassette are already a hazy memory; home entertainment now is a seedbed of ideas, evolutions and marvels. Just look at all the special features on DVD— and the DVD format itself — to see how creative we've all become, so much so that directors and other talents are striving to jump on the bandwagon—instead of being chased by it.
The Microsoft take on high-definition DVD is a dark horse, but the mere fact that it's even running should be applauded. There's an adage that maintains, “Change or die.” If the ideas, the new concepts and strategies, stop coming, we run the risk of stagnating. And who knows—given the steady rumblings about convergence, Windows Media might just be a window into DVD's future, after all.