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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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20 May, 2004

Shrinking Windows Make it Tougher to Predict Summer Video Hits

It used to be that box office was a surprisingly accurate barometer of home video six months down the road. A good summer for theaters meant a good fourth quarter for video stores.

But now the old golden rule just doesn't work as well as it once did. The six-month window between theatrical and video, once ironclad, has rusted through, and what you're seeing now is a variable window that can be as short as three months for a real box office stinker.

What's more, the emergence of DVD — and the dramatic shift away from rental and toward sellthrough — has made forecasting even more difficult. In the old days, a film that tanked — I'm sorry, “underperformed” — at the box office would often be a stronger renter, compared with its theatrical take, than a successful blockbuster.

These days, the bigger the box office, the bigger the sales — although with the DVD format still on a growth curve, virtually everything released on disc is ownable, even low-budget urban actioners. Just ask the folks at Ground-Zero, who are as surprised as anyone that people are buying, and not just renting, their movies.

Confused? I thought so. And if you're a bit puzzled about what the future holds for our business, just think how those poor folks in Hollywood are feeling. Focus groups, research studies, tracking data — and they still don't have a clue as to what the fourth quarter will bring any more than you or I do.

Let's take a look at what's happening with the crucial “summer” movie season, which this year opened the weekend of May 7 with the special effects-happy monster yarn Van Helsing and the Olsen twins' cute little New York Minute. Van Helsing had a decent opening, but died the following week, roughly seven days after the Olsens' much-ballyhooed feature breakthrough died an instant death.

My prediction: Van Helsing will be pushed out for pre-Halloween release, while New York Minute should be out by the time school starts. On video, both will be monsters, one because the timing is so perfect — and Universal knows the Halloween/horror playbook by heart — and the other because the Olsens are a direct-to-video phenomenon whose fans expect to interact with them on the small screen rather than the big.

Moving on, we have Troy, which failed to make what everyone expected and will likely fade away after this weekend just as Van Helsing did. Again, I see an October DVD release — maybe even a week before Van Helsing — in an attempt to steal some of the latter's thunder. It will sell well, but not as well as Van Helsing.

What's going to be the megahit of the holiday DVD season? It's hard to say at this point, but my hunch is Shrek 2, which opens theatrically this weekend, will be right there. As for a DVD release date, that's a tossup. DreamWorks might rush it out to coincide with the Oct. 1 theatrical release of Shark's Tale, created by the same team that made Shrek, or wait until late in the fourth quarter, which this year should be more crowded than ever due to the astounding success of December 2003 DVD releases Pirates of the Caribbean and Seabiscuit.

I also predict good DVD things for Spider-Man 2, which opens June 30 (it's currently the most requested trailer on AOL); Harry Potter and the Prisoner of Azkaban, which breaks in theaters June 4 (movie collectors just love trilogies); and The Day After Tomorrow, the disaster flick that opens May 28 (although the timing will have to be just right, because no one wants a downer for Christmas. If it makes a big splash in theaters, don't be surprised if it doesn't hit video until January).

My summary prediction: Despite a rocky start, it will be a good summer at the box office. And even if it isn't, it will be a great fourth quarter for DVD.


19 May, 2004

Disney's War-Themed Shorts Provide a Link to the Past

People's obsessions always amaze me. And I've always been intrigued by people with Disney obsessions. It seems that, for some people, when they fall in love with Disney as a kid, they keep that fascination going the rest of their lives.

I recently sat in a theater surrounded by such Disney fans for a screening of Buena Vista Home Entertainment's third wave of its “Walt Disney Treasures” special edition DVD, On the Front Lines, showcasing a series of propaganda and war-themed shorts and cartoons from nearly 60 years ago.

During the question-and-answer session with one of the DVD producers held after the screening of the shorts included on the double-disc set, I was surprised at how well-informed the audience was about the wartime propaganda shorts and cartoons we had just watched.

Plenty of Disney lovers eagerly waving their hands to query DVD producer Dave Bossert were right around my age, or maybe a little bit older. Only a small portion of the audience, I think, could remember actually seeing these shorts on TV or in movie theaters during World War II.

I realized these Disney buffs were likely the same kids who would race through the theme park as kids, parents in tow and personalized mouse ears perched atop their heads — much like I did. But, unlike me, their fascination for Mickey Mouse matured as they did into a fascination with the cultural and historical impact this company has had on our country.

Apparently, all were especially excited over the airing of “Der Fuehrer's Face,” in which Donald Duck has a bad dream that he's a Nazi. This cartoon hasn't been available for legit viewing for some time, in part because it is so negative in its references to German and Japanese people.

I actually found myself getting caught up in that fascination a little bit as I watched the WWII propaganda shorts. They're a little touchy, just a little beyond the pale for today's mentality, considering they're just this side of politically correct. Sensitivity issues were part of the reason much of this footage hasn't been seen in decades, Bossert admitted that night. But they made me think about what must have been going through Americans' minds as they sent their sons, brothers and husbands off to war. The shorts were about conservation, food storage, saving bacon fat to help with weapon manufacturing, even one with Donald Duck excitedly and happily paying his income tax to help the war effort and the Seven Dwarfs chipping away in the mines for precious stones, which they promptly traded in for War Bonds.

It called to mind footage of the old “duck and cover” public policy campaign from the Cold War. “Duck and cover,” like these shorts, gave people something to do, something to think about, besides how scared or concerned they were about the threat that loomed.

Maybe we could use something like that these days.


18 May, 2004

In the Market for Entertainment

Don't look now, but the ghost of Warren Lieberfarb is haunting a supermarket near you.

Or at least near me. I came into the DVD picture late in the first reel, but folks tell me Lieberfarb's vision all along was that consumers would pick up $10 DVDs at the supermarket, throwing them into the cart as casually as they do a brick of soda pop or a bag of dog kibbles.

That specter is true this week. Take a look in your nearby Ralphs market. At least all over Southern California, the stores now sport a standing display of MGM titles for $9.99 each and, as of last week by my reckoning, they also have 4-foot cardboard cubes emblazoned with the Paramount logo and brimming -— although I must say I have noticed the levels dropping quickly, which is bound to be good for Paramount — with DVDs for $9.99.

True, much of the fare is catalog. But I suspect a lot of folks who only recently got DVD players will pick up a copy of Titanic or The Wild Thornberrys for $9.99. Maybe Terminator and Legally Blonde as well, at that price.

Vons Markets in this area were devoid of video. Not one in sight at any price, in either format, even on the checkstands. Meanwhile, Albertson's, the only one of the three that rents video, had an odd mix of new releases, catalog and secondary titles. Plenty of Buena Vista stuff, I noticed, but product from other suppliers was pretty picky-choosey, with a couple of big hits and a lot of stuff that seemed almost out of place in a store with such a small selection. Apparently hits are not driving the Albertson's rental market.

It did have a display offering $5 off the purchase of any two DVDs priced $9.99 or less (I'm guessing it went up before the offer expired), bringing the price for those titles down to about $7.50. Many of the titles on display were kidvids, and I suspect a lot of parents were happy to fork it over for titles the kids will watch ad nauseum.

MGM has been offering catalog at these prices in Wal-Mart for a long time, but it's more recent at supermarkets, at least in my experience (please respond below or write to me at the e-mail link at the top of the screen if things are different in your area).

The Paramount bins are new, too. Ralphs markets still have their usual display of a handful of first-week titles at the checkstands and service desk, but these new bins of catalog titles are placed at the front of the store, beside the ice cream or seasonal patio furniture, beckoning to those seeking leisure.

Maybe Ralphs is using DVD as a way to distinguish itself from the other prominent chains here which, along with Ralphs, recently emerged from a bruising strike. The stores won, but at the price of a lot of shoppers getting trained to go elsewhere. Elsewhere like Wal-Mart. Looks like Ralphs is counting on DVD to bring at least some of them back.


17 May, 2004

DVD: Size Matters

While many have talked about the better picture and audio quality of the DVD and its neat package, not many have stopped to think how much the smaller size of the DVD has meant to the suppliers who ship it.

Without the small DVD, Netflix would likely not exist. Amazon is now offering DVDs at lower prices than VHS cassettes. Why? I'd bet they'd rather ship the smaller DVD.

This shipping advantage trickles down to secondary suppliers as well. The advent of the sellthrough business hasn't crimped their style. Why? Even though they have to ship more copies into the sellthrough arena than they did to rental dealers during the VHS days, those copies are both cheaper to make and cheaper to ship. The DVD's economy of scale has allowed strapped secondary suppliers to keep up with changes in the market.

Many collectors I know are downsizing by chucking the DVD cases altogether and saving them in pocketed albums. That's yet another space-saving advantage of the DVD. There's no way to similarly compress a cassette.

A Warner executive once told me that he attended a meeting at which then-Warner Home Video president and future father of DVD Warren Lieberfarb said he needed a video disc the size of a CD. Laserdiscs just didn't cut it. It's amazing to think now how visionary that moment was. If it were all about picture and sound, laserdiscs wouldn't have ended up on the scrap heap of obsolete technologies.


16 May, 2004

Many Factors Affect Early Video Window Release

As home video becomes the biggest percentage of a film's total revenue potential, it's clear that studios are moving video release dates up, in general, for all films and, in certain instances, dramatically forward.

Some industry watchers have suggested that an early release is due to a film's poor performance at the box office, but that's not always true. Timing is everything, and in the home video release game, it's a slippery slope, indeed.

We've been talking about the whole earlier windows issue for some time at Video Store Magazine, and it seems true that while there's a general trend toward earlier video releases, most studios are taking it on a title-by-title basis, likely factoring in such items as a film's box office momentum; the holidays or awards season; what else is hitting the market theatrically or in home video around the same time; and other factors.

One studio, Columbia TriStar Home Entertainment (CTHE), seems to have made a conscious decision to release films earlier (see the story on page 8 in this week's edition of VSM). Of the total number of DVDs released within 100 days of their theatrical debuts since the inception of the format, CTHE has about one-third of the titles, and the studio overall has had the shortest theatrical-to-video window average of all the major studios, according to the DVD Release Report.

One thing I was most curious about is whether box office disappointments tend to be released earlier. Recently, Video Store Magazine Market Research began listing projected theatrical-to-video windows in days in our monthly Theatrical Top 100. I took a recent sampling from that list of films that had already been released on video or had announced street dates and found the following:

• There were 12 films that did at least $25 million at the box office and were released in four months or less;

• And the average window was 105 days.

Sure enough, CTHE had six of the titles, but 20th Century Fox Home Entertainment, Universal Studios Home Video, Buena Vista Home Entertainment, MGM Home Entertainment and Warner Home Video were also on the list. Of the 32 titles earning $25 million or more with announced street dates, the average home video window was 138 days. Of the 33 titles with announced street dates earning less than $25 million, the average window was 146 days. Not much difference there.

On the high end, Fox's Cheaper by the Dozen ($138 million at the box office) had a 103-day window, and CTHE's Something's Gotta Give ($124 million) came in at 109 days. On the low end, CTHE's The Missing ($27 million) was out in 90 days, while Universal's Honey took 109 days.

Box office certainly doesn't seem to be the overwhelming factor in the early video window decision.


13 May, 2004

First-Quarter Results Prove Rental Model is in Serious Trouble

The sharp drop in rental revenue our industry experienced in the first quarter of this year — estimated at 16.5 percent, according to our market research department — is alarming, not just for the sheer magnitude of the decline, but also for the fact that soaring DVD sales couldn't offset an overall 4.3 percent decline in home entertainment consumer spending.

Each year, the home entertainment market has gotten bigger. In year-end stories going back into the late 1990s, we've seen studio executive after studio executive gloat over the public's infatuation with DVD and how sales records continue to fall. Through it all, we've been hearing that rental is flat or slightly down, but that overall spending is way up because consumer just can't stop buying DVDs.

I don't see the first-quarter results as a sign that the DVD boom is fading. After all, consumers spent 12.9 percent more on DVD purchases this quarter than in the first quarter of 2003. But I do see it as an indictment of the rental model, a sure sign that despite Joe Retailer in Podunk's insistence that his store is still doing fine, the rental industry is in serious trouble.

While studios have been so caught up in the euphoria of DVD sellthrough in recent years that they've all but ignored rental (maybe because they don't get a cut), the fact remains that rental was and still is a major component of the home entertainment pie and that we had all better become attuned to the fact that a major part of our business is slip-sliding away.

I must confess, I always thought rental would be second fiddle to sellthrough once DVD became ubiquitous, but I never once imagined this part of the business would get hit so hard, so fast — and that it would actually drag down the overall spending tally.

We know what the big chains are doing about it. Blockbuster is trying to find other ways to make money, like cracking the used-DVD market, while Hollywood is going private, perhaps not wishing to call attention to itself at a time when any company that depends on rental is coming under the microscope of the investment community.

But what are the other retailers doing about it? I'd love to hear from you at the e-mail link above. Just don't write and tell me things aren't really that bad.

Rest assured, they are.


12 May, 2004

Loose Discs Don't Sink Gift Sets

Sorting through Best Buy's stock of Universal Studios Home Video's The Monster Legacy DVD gift sets recently, Todd Brashear, co-owner of Wild and Wooly Video in Louisville, Ky., noticed a customer shaking each uniquely packaged boxed set that features miniatures of horror characters Frankenstein, The Wolf Man and Dracula, looking for errant discs.

According to Brashear, free-floating discs can kill the DVD set's appeal to serious collectors — never mind the potential for defective merchandise.

“They don't want anything to do with them,” said Brashear, whose clientele include connoisseurs of biker/gang, zombie and women in prison videos, among other eclectic fare.

Incredulous to the notion that somebody hawking images of women behind bars would care about free-floating discs, I called Best Buy.

“It's not something we get a lot of calls or complaints about,” Best Buy spokesperson Brian Lucas told me. “And usually I'm the one who gets those kinds of complaints.”

Bruce Herberger, president of Showtime USA Video in Loveland, Colo., and confirmed believer that the studios are out to eliminate independent video retailers, said that if the studio isn't putting the disc in a keepcase, then the product was planned obsolescence.

“There is absolutely no way that disc is going to reach you in any kind of descent shape,” Herberger said.

Most video retailers contacted, however, said the issue of was much ado about nothing.“I've never had anybody mention that to us,” said Russ Homer, president of Instant Replay in Pittsburgh. “You are the first.”

Best Buy's Lucas, who admitted the chain attracts an inordinate number of DVD box set collectors, said the problem might be self-induced.“Maybe if they stopped rattling [the gift sets] so hard,” he deadpanned.

Better yet, don't worry about.


11 May, 2004

Other Formats Gaining Attractive New Features

If you don't feel cable, satellite and video-on-demand breathing down your neck yet, it may just be luck.

The satellite and cable providers are increasingly luring customers with personal video recorders (PVRs) and, regionally, video-on-demand (VOD).

VOD isn't really practical for satellite providers, which must beam a signal to a lot of homes simultaneously. The closest they can get is the 24-hour pay-per-view (PPV) window or a PVR, which they are putting into homes just as fast as they can. I have DirecTV, and they are running a promotion now to get more customers onto TiVo. DISH Network has a similar device for its customers.

DirecTV, by the way, has a new ad featuring a guy on both sides of a split screen talking to himself. He talks all about how late fees and return trips drain the value out of rental. He talks about the space and money it takes to maintain a DVD collection. Make no mistake, these companies are intent on convincing customers they are better than DVD.

Up to now, most video dealers have largely pooh-poohed the impact, but I think it's starting to show. An article last week in the Port Orchard (Wash.) Independent lamented that the Cinema One video store was going out of business after 20 years. The owner, Diane Launius, was quoted as citing the effects of “new technology” and Netflix. In a post on our discussion board this week, one dealer lamented that a couple of young guys were in his store writing down movie titles — just so they could go home and add them to their Netflix queue.

If all that weren't enough, the companies that make set-top boxes are doing all they can to make them even more attractive. If you thought PVRs were the “It” technology for a decade, hang on. At last week's National Cable & Telecommunications Association's National Show, Scientific Atlanta was showing off its in-home video network, which includes a multi-room PVR setup and an HD PVR.

But wait, there's more! Motorola and AgileTV had the new killer app: a broadband set-top that responds to voice commands. No more remote control, just tell the box what you want with phrases like “find The Sopranos” or “find movies with Julia Roberts.” The other day when I was trying to recall the name of one of the better recent werewolf movies, that would have been great. Instead of giving fuzzy scene and plot descriptions to another werewolf movie fan, I could have requested werewolf movies and remembered Dog Soldiers in half the time. And I can hardly wait until I can tell my TV goodnight and have it shut itself off. To keep up with that, someone will have to come up with a DVD player that takes the disc back to the store.


10 May, 2004

‘Shrek' Sequel Positioned to Bring in More Green for DreamWorks, Retailers

The upcoming Shrek 2, due in theaters May 21, promises to be another blockbuster for DreamWorks and its home entertainment arm. In addition to the familiar trio of Donkey, Shrek and Fiona, the story introduces a slew of other memorable characters that are sure to delight kids and adults — all of which should boost the fourth-quarter gift-giving season coffers of retailers.

It's nice to see the summer season get off to a nice start; it often bodes well for the home video holiday season that follows. I recall seeing The Matrix and anticipating the excitement it would bring to the video realm. Shrek 2 should provide a much-anticipated boost.

Van Helsing, too, with its $50 million-plus opening, looks to be a winner for video retailers. It's just the kind of special effects-laden fare DVD enthusiasts clamor for, and it's got the added advantage of boosting sales and rentals of Universal's horror classics.

We've already seen some strong showings from such popcorn teen fare as 13 Going on 30 and Mean Girls. Those, too, should add to video interest in the summer and fourth quarter.

I'd be interested in hearing from retailers on the upcoming theatrical and video slate. Readers?


9 May, 2004

Game Rats

This week we have the Electronic Entertainment Expo (E3) taking over the Los Angeles Convention Center for the annual riotous frenzy of the video game industry. (See this week's issue of Video Store Magazine for a heads up on some of the hotter games making their debut at E3, and then look for post show coverage in a couple of weeks.)

In honor of that event we set up a little video game lab in one of our conference rooms here at VSM so staffers could get their hands on the controls to PS2, Xbox and GameCube systems for some hands-on experience. We tried games built around movie brands like James Bond, Lord of the Rings, Harry Potter and a few others, not to mention a variety of other titles.

Of course, some of us (not yours truly) have a whole lot more experience than others, and it showed. As a group, I'd have to say the majority of us were less than proficient with video games, even some of our younger staff members, which surprised me a bit. Being one of the old geezers in the group, I figured anyone in their mid to early 20's probably had these games wired. Not so. But even those that struggled at first, soon found themselves hooked on one game or another (since I'd wander by and find the same staffer who came back for another try at a particular game that caught their fancy).

As one inexperienced player noted “This would be great for a rainy day,” meaning they could see themselves spending more than a few hours trying to master a game.

Games can be extremely immersive and it's no wonder Hollywood has seen fit to work with game companies to extend a movie's brand lifespan, especially if that movie has sequels in the works. And it's no wonder that games can be a good rental business because for the more casual gamer it may take many rentals before they find a game that suits them enough to decide to fork over the $40 - $50 to buy it.

If you're a video rentailer who rents and sell video games (or is thinking about it) but who isn't particularly game crazy (ok, pun intended) I urge you to make an effort to carve out a few hours every now and then to play some of these games to better understand the customers you serve. Whether they are hard-core gamers, or casual weekend warriors, you can be a better resource for them if you have some working knowledge of what they spend those many hours doing. Who knows, you might just become a hard-core gamer yourself.