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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.

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16 Aug, 2004

VHS — It's Still Around

Walking through a local Target yesterday, I was surprised to find a good amount of space devoted to VHS inventory. I would say that at least 20 percent of the video shelving featured VHS, especially the kids and Spanish-language sections.

Being in the industry, it's easy for us to get preoccupied with the newer, dominant format of DVD. Certainly there will be times when VHS will go the way of the 8-track tape or beta. But, if you look at Target shelves, the complete move to DVD-only is certainly not in the offing right now.

As DVD players again hit rock-bottom prices this holiday season, the shelves may shift more significantly away from VHS, but currently, it looks as if the VHS cassette market isn't yet gone.

It's interesting that the cassette has hung on as long as it has, while DVD players can be had for $40 or less. Certainly, the confusion over DVD recorder technology hasn't helped (plus, minus — it's very confusing). Consumers have likely held onto that VCR to record TV or play home movies.

In my case, both of our VCRs simply broke, and we decided not to replace them. But, judging by the shelves at Target, there are plenty of working machines still out there and many consumers willing to pay to buy pre-recorded programming for them.

12 Aug, 2004

A Bad Taste Left By Late Fees

I drove by a Blockbuster Video store the other day and noticed that the chain's new subscription service is really pumped. Huge ads are posted in virtually every window, extolling this virtue and that virtue: “Unlimited rentals” … “No extended rental fees.”

That got me to thinking back when I first started renting videos in the 1980s. A long-haired rocker, I wasn't exactly your early riser. Nor was I the most responsible person in the world. I'll never forget bringing back Blue Velvet two weeks later and having to pay “late fees” of $32.

I felt like a crumb, sort of like I did one day not too many years before that when I parked my car in a tow-away zone, got towed and had to schlep over to the impound yard and pay some ungodly figure for every day my car had been there. Lesson learned — I never parked in a tow-away zone again. And after my Blue Velvet experience, I went to great pains to return videos after one, two, maybe three days. I still got slapped with a late fee every now and then, but while I realized I had only myself to blame it still made my blood boil.

“How dare these miscreants penalize me for bringing one of their damn movies back a day later, when they've probably already made their money back many times over?” I thought to myself, shaking my head at the shabby, somewhat faded, clearly well-used box of Swedish Erotica Vol. 23.

Looking back at those carefree days of my (relative) youth, I can't help but think how differently I would have felt had Blockbuster simply imposed a daily rental rate rather than implementing an ominous-sounding “late fee.” Even the current euphemism — “extended rental fee” — sounds punitive, like I overextended myself, couldn't bring the video back on time and now, guess what? They're going to make me pay.

I think about all the troubles Blockbuster is now facing, and how the overall rental business is down by double digits and the only way some retailers are paying the bills is by relying more and more on used-DVD sales and trades.

I'm not saying that late fees stopped me from renting, but they certainly left me with a bad taste. And as soon as there was an alternative — which to me was the advent of sellthrough — I bought what I could and watched what I bought. I still remember buying an old boxing biopic for $9.98. There were tons of movies I would have rather watched, but by then I was sick and tired of running against the clock and having to face some pimply clerk who would sneeringly me inform me I owed $3 or $6 or $9 in late fees.

I know rental dealers in general, and Blockbuster in particular, have committed many blunders. But as far as I'm concerned, the whole “late fee” concept was one of the worst.

11 Aug, 2004

Video and Juries: A Bad Mix

An Alaska jury acquitted a 29-year-old man of two counts of second-degree murder and two counts of vehicular manslaughter Tuesday despite evidence that his viewing of a DVD while driving caused his pickup to collide with another vehicle, killing both occupants.

Last month, three Orange County, Calif., teenage boys were acquitted in the videotaped gang rape of an unconscious underage girl passed out from alcohol and marijuana.

In the late 1980s, Washington D.C. mayor Marion Barry was caught on video smoking crack cocaine during a FBI sting operation.

During his trial, Barry's lawyer admitted the mayor used cocaine occasionally and the juror subsequently found him guilty of a misdemeanor charge of possession and remained deadlocked on 12 other more serious charges.

The common denominator throughout the aforementioned cases is not that of a video's apparent worthlessness to criminal cases, but rather, an indictment of societies' callousness toward reality and a jury system in need of a complete makeover.

10 Aug, 2004

Search For Pirating Can Infringe on Freedom

There were no weapons of mass destruction in Iraq. The intelligence that led us into war was bad. The connection between Saddam Hussein and Osama bin Laden was tenuous at best. But we plunged ahead, and now we're sinking in a very expensive quagmire of our own making.

That doesn't have much to do with video, unless you see the parallel in the content industries' tack with content pirates real and imagined. The Iraq war is, inadvertently I suspect, the policy template for the copyright war.

No sane American supports terrorism or child abuse. But it's getting pretty tiresome that everyone from the U.S. Department of Defense to the content industries are seeing terrorists behind every curtain and Web page.

We hear that peer-to-peer networks are bustling hubs of child pornography (and, oh yeah, they induce innocent kids to steal music) and that piracy at offshore replicators is rampant and funding terrorism.

I don't dispute the content industries' right to pursue their copyrights — it's an important part of the national economy and our creativity. But I do object to using abused children and terrorists as a shield to sell the real goal, which these days is usually expanding copyrights and media ownership.

The Recording Industry Association of America (RIAA) has been on a litigation tear, suing everybody and their grandmother (really) in fishing expeditions looking for copyright violations. It sounds suspiciously like invading a foreign country looking for nonexistent weapons: Once you're in the country, you might as well shoot someone.

The Motion Picture Association of America (MPAA) has, so far, taken a publicly less hawkish approach, opting to enforce license agreement contracts against equipment manufacturers who provide licensed decryption technology to unlicensed subcontractors. Some in the industry say that's because MPAA president Jack Valenti, this industry's Colin Powell, sees the down side of coming out with guns blazing. As with international politics, a change of administration may signal a change of policy direction.

On the other hand, industry lobbyists have been busy, getting a bill, the INDUCE Act, introduced in the legislature. That bill is so broad and vague that it could lead to criminal penalties for anyone from actual content pirates to hardware manufacturers to journalists who write reviews of gadgets capable of copying copyrighted content.

It's interesting — and Orwellian — that an industry built on the exchange of often controversial ideas is so eager to squelch any ideas but its own. The same way cultural imperialists declare that their actions are designed to keep the world safe and advance democracy, the technological imperialists swear their actions are to protect and foster creative exchange.

Terrorism and piracy are legitimate political and economic concerns, but the people who make the rules get even scarier than the people they pursue when the mere mention of terrorism becomes a license to destroy our own freedoms.

9 Aug, 2004

Kiosks May Finally Have Come of Age

At the recent VSDA convention, I had a chance to kick the tires on the kiosk system DVD Play, currently being used at McDonald's.

Now, I'm no techno geek, and I was able to figure it out with no trouble. It reminded me of using an ATM. The innards looked much like a jukebox, with an arm that selected the correct disc. What really made the system work was the Web connection, which may have been the missing link that killed kiosks in the VHS era.

Through the Web, retailers can track the performance of the machine, see which titles need to be refilled and which ones jettisoned and generally do everything that a clerk would do, remotely, without hiring or managing the clerk. The machine never sleeps or gets sick. It will work all hours. It's the perfect video store employee.

While video store owners may be reluctant to try the newfangled device, I think kiosks would be an ideal after hours or remote location experiment. I'd be interested to hear our readers' thoughts?

8 Aug, 2004

Some Holiday Scenarios

Ah, what a difference a few years makes.

A recent Jupiter Research consumer survey shows that only 8 percent of respondents plan on purchasing a DVD player, or an upgraded version (I am assuming this might include a 2nd player? but that's open for debate as to how one would perceive the question) over the next 12 months.

As DVD players reach near the 70 percent U.S. household penetration mark, the number of DVD newbies begins to dramatically decline. And the huge leap in DVD installed base that occurred with every holiday season in years past becomes more like a little hop.

This may explain why the studios this year are opting to cram most of their big hits into the holiday gift giving season and not, it appears, save much for the post holiday “Fifth Quarter” season in January when, historically, you could count on a lot of new DVD player owners coming into stores looking for movies to play on their shiny new machines.

But there are some other interesting dynamics that we might see this holiday and post holiday season as DVDs become a staple gift in just about every American household.

--DVD gift givers will be looking for alternative choices. The fact is that as sellthrough has become the norm for many consumers when it comes to the big hits, chances are your intended gift recipient will already own Shrek 2 by the time Christmas rolls around (or won't be willing to wait for Christmas to have you give it to him or her). So if DVD is still your gift of choice, you're going to have to find something new and different to give, and that means getting some help picking a nifty catalogue titles that will be a success Christmas morning. It will be interesting to see what catalogue titles do well this year.

--Returns will be interesting. As more and more people get DVDs during the holidays that they already have (for those gift givers that didn't think), chances are a good many of them may find themselves with a DVD and no receipt. That means they will have to exchange these things somewhere. If you're an indie retailer, you might consider how you could absorb some of this unopened, excess product and gain a customer. If you're in the trade-in business now, you might consider some sort of holiday exchange. If you're not, this might be a good time to try something in this vein, even if for a limited amount of time.

--As previously viewed sales continue to climb to be a multi-billion dollar business this year, don't forget that a lot of kids get some serious cash during the holidays and will be looking for a place to spend it on December 26. You might consider appealing to their sense of value by promoting the fact that they can get a lot more bang for their buck with previously viewed movies and previously played games. I'd make sure they had that at the top of their minds the day after Christmas as that money started burning a hole in their pockets.

There are plenty of ways the full spectrum of home entertainment retailers can participate in this year's holiday season. It's just a little different every year.

5 Aug, 2004

Slimming Down With T.K.

Remember the big issues our industry once grappled with? Lower rental pricing for secondary titles, pay-per-view windows, revenue-sharing and supposedly sweetheart deals given to Blockbuster by the studios, to name just a few. All of them irrelevant in today's sellthrough-driven, DVD universe.

The hot-button issues of today include how long the DVD growth curve can continue to soar before flattening, explosive first-week sales driven by loss-leadering mass merchants, competition for shelf space now that everything's for sale out of the gate, the used-DVD trade and the significant decline in consumer rental spending reported for the first part of the year.

Oh yeah, and there's one other one I expect to see hog more and more of the limelight in the coming years: space in consumer homes.

We've certainly become a nation of movie collectors. DVD has made it feasible for anyone to build a home video library that's both affordable and archival. But the question remains, how many movies will the average consumer buy before he runs out of room? Space has become an issue in the Arnold household; I know I'm a lot more selective now than I was even a year ago in deciding what to keep and what to toss. At what number of DVDs will the buying habit begin to flatten out, not necessarily because of a lack of interest, but, rather, a lack of space? 300? 500? 1,000? More? Less?

Regardless of the specific number, there is widespread concern on the studio side that eventually buy rates, which have held up remarkably well as DVD has moved into the mainstream, will begin to peter out. Consumers will still buy movies; it's just that at a certain point, they're bound to become more selective, simply because there isn't enough room in their home.

That's why some of the sharpest studio minds are revisiting the Amaray-style “keep case” that has become ubiquitous now that Warner has finally discarded the dreaded Snapper. It's the perfect vessel for a DVD, and yet it's half an inch thick. Thus, the question: Would a thinner case keep buy rates steady a little while longer? Let's say the average consumer keeps his DVDs in a family room bookcase, three feet wide and five feet high, that can hold about 300 discs in keep cases. If capacity, due to a thinner case, becomes 500, would he keep buying voraciously until the bookcase is filled up?

If the answer is yes — and I know at least in my case that it would be — then the studios stand to reap a substantial gain by switching to a thinner package. Indeed, one high-level studio boss recently told me he envisions an industrywide move to a slimmer box sometime over the next two years, depending on how soon current buy rates start to fall off.

The only drawback, he said, is that in a thinner case it will be more difficult to print the movie title on the spine. But I really don't think that's much of an obstacle. If there's a will, there's a way, as they say. And if buy rates drop off, you can bet your collection of banged-up Snappers that we're in for a major packaging revolution.

4 Aug, 2004

DVD Is Safe in the Hands of the Geeks

Call them geeks if you want to. I do, though not to their faces.

Tens and tens of thousands of them rolled out two weekends ago to San Diego, Calif., far too many of them dressed as their favorite superhero or anime character.

I went to several DVD-centric events at Comic-Con, and the vibe I got just reiterated to me how important these geeks are to our business.

They vote with their dollars. They will loyally spend their money on product if you deliver what they want.

They're really the backbone of the reason DVD has been so successful, and just because most of the rest of the world has caught on to fill out the frame, make no mistake — they're still holding up their end.

I listened to horror fans cheer at a director who told them to expect more gore on his upcoming DVDs. I watched Lord of the Rings fans shriek and almost faint at the glimpse of New Line's upcoming Return of the King Extended Edition DVD.

I heard from another attendee (though I wasn't there) that when George Lucas unveiled the title of Star Wars: Episode III “it was like heads were exploding” in the packed audience nearly 10,000 strong who stampeded when they learned T-shirts with the new name “Revenge of the Sith” were on sale in the exhibit hall nearby.

They spend their money on what entertainment content providers dish out for the properties that mean the most to them.

And if you treat them with respect, like New Line has since day one with their “Lord of the Rings” DVD release strategy, they will keep coming back for more.

I find it kind of comforting to know that the geeks are still at the epicenter of the DVD world, at least when it comes to discernment.

Sure bargain-basement pricing has brought Wal-Mart shoppers to the forefront in the past few years. But I, for one, am glad to know and was glad to see such a strong studio presence at the comic book convention. It shows that what the geeks think still matters.

And what matters to the geeks is DVD quality. As long as studios are still paying heed to that, we should be seeing some really terrific product for some time to come.

3 Aug, 2004

First … Define Your Terms

I think it's great that Blockbuster has figured out that rental revenue is hemorrhaging and is turning its business around. The chain is owning up to trends we have seen for a couple of years, most notably getting into used trading in a big way.

But I had to bristle a couple of weeks ago when, in the company's second-quarter financial call, CEO John Antioco claimed he was after “first-mover advantage” in the used trading field.

I know it sounds good, but Blockbuster was very late to this game. TransWorld stores have been trading in used DVDs for years (and buying up other chains that did, including Second Spin and Wherehouse). Movie Gallery has been trading in used games and movies — not just rental selloff — for some time. Djangos, which until recently only sold new and used goods online and got its used stock from its network of independent retailers (who bought from consumers), also started buying from consumers online a bit over a month ago. The music industry pioneered the model well more than a decade ago with CDs, and most of the retailers from the music side of the industry have been trading used product for decades. Movies crept into their mix nearly as soon as DVD caught on.

Blockbuster's first big step into used-disc trading started with its purchase of the Movie Trading Company — a small Dallas-based chain started by the founder of CD Warehouse — in late 2002 to study and ultimately start the national rollout we are seeing this year. Meanwhile, some other music industry alums got busy in the Northeast and created the small but growing chain PrePlayed.

It's a constant frustration that financial analysts who cover this industry seem minimally aware of how it works and how it's different from other forms of retailing.

So it's not all that surprising that Antioco would claim the chain will snap up the “first-mover advantage” in used-disc trading. Heck, it sounds great. It's just not exactly true.

I have little doubt that Blockbuster can become the biggest chain in used movie and game trading. I even think it won't take the chain all that long to do it. But following others (by years) into a business segment is a long way from my definition of a “first mover.” Call me cynical, but it makes me wonder what else on those calls might be more hype than fact.

2 Aug, 2004

Proving I'm Right About the Home-Theater Experience

A few weeks back, I wrote a column about how the home-theater experience approached the big screen in overall enjoyment. Now, Philips Electronics (admittedly a not-disinterested party) has commissioned a study backing that view.

In the global study conducted by Harris Interactive, the most popular reason to watch movies at home is the comfort of the couch (30 percent of all respondents), followed closely by saving money (27 percent). Americans (29 percent) were among the most likely group to consider the cost.

This weekend, two friends and I spent a total of $21 to see The Village in a theater without THX sound (we missed the showing at the better theater). Evidently, we weren't the only ones who were interested in the movie over the weekend, as it made more than $50 million despite mixed reviews, beating industry projections. No offense to the filmmaker, but after seeing the film, I feel certain I would have enjoyed it just as much at home.

No doubt, the Sci-Fi Channel's faux documentary on M. Night Shyamalan and other teases increased our interest in the film. Regal Cinemas even charged an admission for a live interview with the director in the weeks preceding the film. I can't help but expect that interview or something like it to appear on the DVD.

Theater owners' attempts to beef up the experience with events such as the Shyamalan interview only strengthen my view of the home experience.