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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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26 Oct, 2003

The Wave of TV DVD Will Get Bigger

The wave of TV programming appearing on DVD this year (it’s the fastest-growing genre in DVD units sold by far) was certainly the impetus behind last week’s TV DVD Conference sponsored by Video Store Magazine, and by most accounts, this is a business that still has tremendous growth opportunity.

VSM market research estimates that sales of TV DVD product will reach $1.46 billion this year. According to the DVD Release Report, some 416 TV DVD titles have been released this year, up from 278 last year. There are more than 40 TV DVD boxed sets coming out between now and the end of the year alone, spanning everything from “Battlestar Galactica” and “Buffy the Vampire Slayer” to “Friends,” “The Monkees,” “The Dick Van Dyke Show” and everything in between.

This renewable source of programming is truly a goldmine for DVD because it comes with a loyal (sometimes rabidly loyal) fan base, and, in the case of current hit shows or shows in syndication, regular exposure of the “brand” on a weekly or daily basis on broadcast and cable TV. But it goes beyond current shows, and we’re seeing such historical hits like “Taxi” and “Charlie’s Angels” come back to life in DVD as well as such shorter lived series like “The Hitchhiker” and “Wiseguy,” to name, obviously, but a few.

Executives speaking at the conference last week didn’t have empirical data to support exactly what people do with these multidisc sets, priced at $35 and above on average (some more than $100) containing hours and hours of shows, but the anecdotal evidence shows that it includes new series fans who want to catch up to the current episodes, loyal fans who want to re-watch their favorite episodes (and relive their childhoods in some case),to people using these discs as historical reference for characters and plot lines of series they are currently watching.

But there are challenges to be faced, not the least of which is trying to gauge just how much of a market potential each of these series has. No hard and fast formulas exist, but instead it can be a combination of such things as Nielsen ratings, Web site activity around a particular brand, and consumer polling to see just how much of a demand there is for, say “Car 54” (a particular favorite of VSM publisher Don Rosenberg’s.

A major issue that VSM brought to the fore only last week, was the great difficulty, and sometimes onerous expense, in securing the music rights for the DVD publication of TV shows. It is an issue that causes producers to sometimes change music on the DVD entirely or simply put aside a projected releases. One solution will be for a more proactive DVD rights clearances effort by TV producers when a show is first put together.

The possible short-term impact of DVD recording machines and personal video recorders generated only moderate concern from presenters, who generally saw this as a three- to five-year issue. But these issues far outweigh the rosy future of TV DVD.


24 Oct, 2003

T.K.'s catching up on his TV DVDs

T.K. Arnold is still recovering from the TV DVD Conference. His column will resume next week.


20 Oct, 2003

Will the Holiday Sellthrough Season Bring a Rental Surprise?

As we enter the all-important holiday selling season, executives at the rental chains may be understandably nervous. Last year, Blockbuster sent a shock through the rental industry when it slashed its fourth-quarter earnings forecast and revealed that rentals had fallen short of expectations. Blockbuster's stock fell 30 percent Dec. 18, 2002, after the surprising announcement, pulling the other rental chains' stocks down with it.

“The strong rental transaction growth we experienced in the early fall slowed significantly beginning Thanksgiving, causing shortfalls in both revenues and gross-profit dollars,” Blockbuster chairman and CEO John Antioco said during the forecast report last December. “We believe this is largely due to a number of factors unique to this holiday season, including the unprecedented number of movie titles available for sale at deeply discounted prices, this year's DVD gift-giving phenomenon and a compressed holiday season which has limited consumers' leisure time.”

While Blockbuster's stock recovered somewhat, it is taking another dip today on yet another revised outlook. Given this latest development and last year's experience, the coming holiday season must give chain executives pause. With DVD household penetration at 50 percent, might the sellthrough business eat into rentals again this year?

Certainly, Blockbuster and the other rental chains have done much to diversify their businesses, including getting into sellthrough. I also expect them to tout the gift-giving value of a previously viewed DVD. But I can't help but wonder whether consumers will deliver another surprise this holiday season, preferring to buy, give and watch gifts of the hits, rather than rent them. It seems possible the family will gather around the set to watch a DVD junior got for a gift rather than take a trip to Blockbuster this holiday season. Hopefully, the rental chains are better prepared this year.


19 Oct, 2003

MPAA, Junior Achievement School Program on Slippery Slope

Last week, the Motion Picture Association of America (MPAA) and the Junior Achievement organization announced a new program called “What's the Diff?,” designed to teach kids “responsible digital citizenship.”

For reasons I cannot fully articulate, this leaves me with an unsettling feeling in the pit of my stomach. Primarily, because it strikes me that this effort, as legitimate as it appears on its face, is in many ways an effort by one industry to penetrate the hearts and minds of a generation of middle-school kids on an issue of vital financial importance to that industry.

OK, before you fire back an angry e-mail to me, please understand that I am not a proponent of file trading of copyrighted material. I understand that it is illegal, and we all have a responsibility to act accordingly in front of our PCs in the privacy of our own homes and offices. I understand that there may reasonably be a place for a discussion of intellectual property rights in our schools' curriculum in some form or fashion.

But at least in the middle-school curriculum that I reviewed on Junior Achievement's Web site, I found no similar “sponsored” tracks for other single-industry issues as this issue is for the entertainment industry. Indeed, the JA's programs on personal finance, math in business, economics in action and others don't appear to be attempting to convince kids of anything other than the value of staying in school (there's even a track called the “economics of staying in school”). I don't see the cable industry sponsoring a track on the impropriety of illegally taping cable or satellite programs to which one has not subscribed. I don't see the computer industry sponsoring a track focusing on the unlawful copying of computer programs (maybe they'll be covering this in the MPAA program, but it wasn't mentioned in the press release).

Now, I recognize the problem that exists. A recent Gallup Poll found that 83 percent of teens ages 13 to 17 felt that downloading free music was morally acceptable. The Internet culture has bred the feeling that anything on the Web is free to do with what you want if you can get it, and that is wrong. But so is taking two newspapers out of the dispensing machine when you only paid for one — and I don't recall seeing the newspaper industry trying to integrate that message into America's education program. Parents, I think, must be the source for this sort of teaching. The Recording Industry Association of America's (RIAA) efforts to prosecute file swappers and the online and TV public service announcements about the illegality of downloading are all legitimate exercises of “educating” a public about these improper practices.

The message of responsible digital citizenship is important to those in the entertainment industry from a financial standpoint — I agree. But is it of such national priority that we use a portion of the already precious educational time and attention in our schools (even in ancillary programs such as Junior Achievement) to focus on it at such a significant level? It is an issue of ethics, and I agree that kids need to be able to understand the file trading of copyrighted materials they have not paid for individually is stealing. I just wonder if our entertainment culture is not penetrating too deeply into areas of our society once governed by a more broadly based set of intellectual standards.


16 Oct, 2003

And Now for Some Really Creative Ways to Use EZ-Ds

I don't know yet how Disney's disposable disc test is going, but let me tell you, I'd bet my three sons that no one's going to buy a disc for $6.99 that's good for only 48 hours before it self destructs if they can go into any Wal-Mart and buy top-quality catalog titles — even real hotties like MGM's special edition of When Harry Met Sally — for $5.88.

That said, I don't think the folks at Flexplay have a complete turkey on their hands — although if you've seen the package, it does bear an uncanny resemblance to lunch meat.

The way I see it, EZ-D is simply in the wrong market.

I can see two far better uses:

  • It's a great way to solve the screener issue. As you may have read, the Motion Picture Association of America has instituted a ban on Oscar screeners because too many of the movie-only discs are winding up on eBay or in the hands of pirates. Awards voters, meanwhile, are in a tizzy because now they have to physically go to screenings and the problem is, many of the smaller pictures simply don't play in Peoria, which puts independent films at a decided disadvantage.

    EZ-D to the rescue. The little things are only good for 48 hours after opening, so there's little risk of them being sold on the black market. Studios can send the discs out to award voters — and probably save a little on postage, because the packaging is so flimsy. The recipient can then watch the film and chuck it — which I presume many of them did (with their ancient movie-only videocassettes) before eBay came along.

  • EZ-D also offers game manufacturers a way around the rental conundrum. They want fans to try their games, but they hate the concept of rentals because they don't get to share in the spoils. It's the same mindset the studios had in the early days of video rental, and which they continued to have until revenue-sharing gave them a way to get their much-longed-for cut.

    With EZ-D, they don't have to worry about retailers buying them and then renting them out over and over again because the damn things commit suicide after a mere two days.

    Consumers can buy them for a few bucks — as opposed to $40 and up for a real game disc — and joystick away for two whole days before they decide whether to go all the way with the real deal.

    Flexplay execs, you can send my consultancy check directly to me, care of this magazine.


  • 14 Oct, 2003

    How Gov. Schwarzenegger Contributes to Digital Piracy

    I knew that would getcha. What, you ask, could Arnold Schwarzenegger being California's governor-elect possibly have to do with digital piracy?

    I think, to some extent, Hollywood brings piracy on itself and encourages scofflaws. Not just because of leaks in the studio marketing and distribution system, but because Hollywood has, for decades, built up this mystique around its darlings. The entertainment industry spends wads of cash to convince us that stars are somehow better, more attractive, more deserving of rewards than the rest of us.

    As singer/songwriter Liz Phair said in a recent appearance on HBO's “Real Time with Bill Mahr,” fans see their favorites on a carefully calculated pedestal.

    She's right – you never see Nicole Kidman pull up to a premiere driving a battered VW Beetle. Or driving at all, for that matter – stars have drivers for that. You never see the cast of “Sex and the City” arrive at an awards show wearing anything less than Versace. Tabloids are filled with the exploits of stars and former stars, from Michael Jackson to Ben and JLo.

    And then there was the California recall, which proved that even without answering most questions, stating a position on most issues or participating in debates, a movie star could get elected governor.

    So without condoning illegal conduct, I can understand why some people think downloading one song or movie won't really hurt anyone. No doubt that's why the Motion Picture Association opted to focus on the “little people” in its antipiracy ad campaign.

    What the recall election here proved was that if you have a high enough profile, if you're famous enough, you can have anything you want. Including a term in office.

    Maybe things will change the night we turn on the Academy Awards broadcast and see a sea of our favorite screen idols in ratty Levis and chambray trade show shirts.


    13 Oct, 2003

    How Are You Driving Your Used-Disc Sales?

    While in Toys “R” Us the other day to purchase a birthday gift, I naturally inquired how The Lion King was doing. It was soon after street date, and the store had a large display near the cash register. The clerk said it was doing fine, but what was really in short supply was Sleeping Beauty.

    “Why Sleeping Beauty?” I asked.

    The clerk said a Disney title offer the store had with The Lion King had cleaned out the store's supply of the older Disney classic.

    It got me thinking about how important loss-leader promotions are to the big sellthrough chains. The too-good-to-pass-up offer on the Disney titles obviously brought in the customers, who likely purchased something else at Toys “R” Us that helped the chain make a profit on its traffic.

    In the sellthrough business, this has been a time-tested practice, one that frustrated rental dealers who felt they could not compete and gave up trying to sell videos. But now the rental dealer has a new option: previously viewed DVDs. While customers never held pre-viewed cassettes in much esteem, the previously viewed disc is a highly valued product, something many customers look at as almost as good as new.

    Blockbuster and the other big rental chains have taken to aggressively promoting used discs – often combining them with free rental offers. Independent rentailers, too, have wised up to the used-disc phenomenon. I'm curious to hear what sorts of promotions have worked best – and conversely, which ones have proven to be less so. I'm sure fellow rentailers can use some tips in the relatively new arena of used-disc sales.

    Readers?


    12 Oct, 2003

    Politics as Entertainment

    You can always count on California to bring a little entertainment into your homes every evening, if not through the TV programming and movies produced out here in “la la land,” then through its politics.

    The recent election of Arnold Schwarzenegger as governor in the recall of Gray Davis captured the attention of the entire country and, as you'll see in this week's issue of Video Store Magazine (page 40), at least helped to keep sales of Arnold's videos moving along after the release of T3. I can't help but think that Schwarzenegger's own continued references to his movie personas could not help but fuel sales a bit.

    Of course, we have been down this road before with Ronald Reagan, but no one can argue that Reagan's 60+ films, such as Knute Rockne: All American (from whence he got his nickname, The Gipper) or his critical success in Kings Row, ever put him in the same realm of fame during his Hollywood years as have Schwarzenegger's “Terminator” films or other efforts. To be sure, Reagan's terms as president, spanning 1981-89, likely had little impact on the rental or sales of home videos of his movies, coming as they did during the early years of the home video business.

    Voters had begun to learn about Reagan while he honed his political chops as two-time president of the Screen Actors Guild, then as a reborn Republican who took the governorship of California before moving on to The White House. No need to watch Bedtime for Bonzo to try to understand what sort of president he would make.

    This time around, however, voters in California and those around the nation following the election here had no such background on Arnold from which to try and figure out what sort of political leader he might be. And his reticence to engage in but one public debate (and a few interviews on “Larry King” and “Oprah”) gave voters little real substance as to his specific views or what he would do as governor.

    Nope, Schwarzenegger, it can be argued, took advantage of a bizarre moment in California political history to leverage his fame, moderate Republicanism and Kennedy clan connection (through his wife, Maria Shriver) into winning the popular vote in an angry voter backlash recall election. My guess is no small percentage of voters retained images of Arnold as the indestructible Terminator — who can “clean house” with a swoosh of his formidable arms — when they punched their chads. My bet is Arnold's staff continues to keep the “Governator” in controlled media circumstances, and the electorate will be kept at arm's length as Arnold and staff struggle with California's fiscal problems.

    It's that curiosity factor that likely will continue to draw a stream of people back to Schwarzenegger's videos seeking, if only jokingly, to get some idea of how he will govern in the next three years.


    10 Oct, 2003

    Entertainment Industry Needs to Prepare for DVD's Inevitable Decline

    The holiday selling season is shifting into high gear, with a blitz of summer blockbusters and high-profile catalog titles arriving on DVD amid a splash of elaborate launch parties and expensive, high-tech marketing campaigns.

    The studios are already starting to battle over bragging rights — no sooner had Universal put out a press release touting first-week DVD sales of 2 million units of Scarface than Disney countered with a claim of 3 million The Lion King DVDs passing into consumer hands in just three days.

    And with the DVD penetration rate among U.S. households fast approaching 50 percent, I fully expect at least a half-dozen sales records to be set and promptly broken in the coming two months.

    Underneath the glee in studio executives' eyes over the continued, and still-accelerating, DVD juggernaut, however, is an undercurrent of uncertainty.

    That's because one of the unwritten laws of consumer products is that all good things must come to an end. DVD has been hailed as the hot gift item in 2001, 2002 and now once again this year, but believe me, one day this ride will come to a screeching, grinding halt and something else will arise in its place.

    The entertainment industry is hoping this “something” will be high-definition DVD, but precious little progress has been made in bringing the feuding sides to the table for a compromise everyone — Sony, the DVD Forum and all the other next-gen wannabes — can stomach.

    Guys, I'm afraid we're running out of time. DVD's still going to go strong for another two or three years, but by the time the steam starts running out we'd better have something else waiting in the wings.

    I have no doubt that getting consumers to rebuy their movie libraries will be a lot easier than anyone probably imagines — provided there's a new and better format out there on the table.

    But if we're still squabbling over blue lights and red lights and whatever else at the time high-definition television rolls out a few short years down the pike, our entire industry's going to be in big trouble.

    We need a leader. We need a summit. And, perhaps most importantly, we need to get the consumers involved, or at least aware of what's going on — that we're making some progress behind closed doors.Assuming, of course, that we are.


    7 Oct, 2003

    It Could Be a Happy Holiday Season – Or Maybe Not

    Fasten your seatbelts. And then tighten them, because I think this holiday season is going to be a bumpy ride.

    Already analysts are making predictions that range from wild optimism to utter doom for retailers this holiday season.

    The National Retail Federation released an optimistic 5.7 percent growth projection in mid-September, but said it would probably revise that forecast down as consumer confidence and debt reports are telling a different story. Forrester Research predicts a 42 percent increase in online spending, but that may just mean shifting sales from malls to computers.

    I don't have answers or analysis as much as gut instinct, but my gut instinct is usually pretty good in these matters, so I'm going with that.

    My gut instinct says spending this year, with a few possible exceptions, will be dismal, because pretty much everyone whose job title isn't initials starting with a ‘C' is in pretty dire straits these days.

    Some people, victims of the longest “jobless recovery” ever, have no job titles at all. Chances that they will be blowing wads of cash on robotic pets or high-end video game consoles seem pretty slim; I expect a lot of those folks to spend their unemployment checks on the family holiday dinner, new winter clothes and maybe one or two special gifts.

    For the rest of consumerdom, worries about the economy in general, credit debt and job stability are likely to cool spending. We've all heard how home refinancing has propped up the economy during this recession, but by now that cash has to be running out for a lot of people, and mounting interest rates have stopped others from refinancing at all.

    That could be good for game and video rentals, because people who are counting their pennies are more likely to opt for the incremental expense of renting as opposed to the outlay of a purchase. It could be really good for rental subscriptions, which offer a real value in tight economic times.

    Or maybe the quantity and quality of bonus features will make some folks buy discs instead of renting them, figuring they will get more bang for the buck by getting several hours more of entertainment for their money. It could add up to a “buy the disc, rent the game” mentality, partly because game prices tend to be stable and higher, while mass merchants make discs accessible with discounts in their first week or two of release.

    For now it's anyone's guess, but I'll try to keep you posted.