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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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3 Dec, 2002

The New Coin of the Entertainment Realm

Well, Black Friday is behind us and so far, retailers are reporting strong sales. On the other hand, economy watchers are saying shoppers are in mid-holiday-season mode (The Natoinal Retail Federation reported that 8.2 percent of consumers it surveyed were finished with holiday shopping by Monday and most shoppers have completed 38.7 percent of their shopping already), rather than at the starting gate, prompting some to suggest the best is behind us for this year.

DVD is in a strong position regardless, if only because of the deals available. Wal-Mart was offering selected catalog titles at two for $10 over the weekend. At that price, it doesn't pay to rent.

That's partly because DVD's durability is creating a whole new economy in used product. I'm not talking about the $9.99 “pre-viewed” (marketing spin for “thrashed”) copies from any of the rental chains. I'm talking good, old-fashioned used, as in someone else owned it, got tired of it and sold it.

This creates a parallel economy. Most stores that buy used DVD advertise it like a pawn shop: “Need some quick cash?” query the flyers at the counter and posters on the windows. “Sell us your old DVDs!”

That limits the long-range value of big titles because the studios have gravitated toward saturation marketing at street date and retailers have followed by making this week's title the loss leader. New DVD copies of Spider-Man were going for $13.88 on eBay's Half.com in the title's first week of video release.

Apparently not everyone who gets the hot new title wants to keep it. I was in a Wherehouse a couple of weeks ago and noticed a couple of things.

One big lesson is a new holiday paradigm: buy new for gifts, used for yourself.

I saw this when a customer went to the counter to trade off three used titles for a new one, a standing offer (within stated limits) at Wherehouse. The salesperson scanned the new title and offered, ever-so-helpfully, “We have this used…” The consumer chose new, explaining it was a present.

The chain has a limit of three of any title in the used bin at any given time. The shopper I observed was unable to trade off copies of Harry Potter and the Sorcerer's Stone and Hannibal because the store had already caught its three-used-copies per store limit. Which changes the DVD life cycle equation, at least for the consumer.

Now, if we really want to open a can of worms, we could ask whether studios count those resold copies in their sales figures…

Share your thoughts on the new DVD economy by clcking on Buzz Back below.

2 Dec, 2002

Street Date Still Murky in Practice

Among the biggest retailer pet peeves are street date violations. Studios often claim that violations are spotty and unintentional, but they certainly seem to persist.

Over the Thanksgiving weekend, I got to talking about DVD with my neighbors and learned that one mom had already picked up a copy of Lilo and Stitch from a mass merchant.

Being in the industry, I was aware that the title wasn't due to be sold until today, Dec. 3. What surprised me was that the purchasing mom knew it as well. It was only the clerk who seemed in the dark about the street date issue.

“I knew she wasn't supposed to give it to me, but they were out of the title I wanted, so she offered it to me instead,” the mom commented. Happy to receive the title early, the mom didn't enlighten the clerk.

Street date violators often mount the “uninformed clerk” defense, but I, for one, find it to be a bit of a stretch. If a harried suburban mom can keep the dates straight, why can't the store clerk? The clerk's job is stocking and selling the correct inventory.

While generally ignorance of a law is no defense, it's the common one for street date violators. And until the studios assess some real punishment for violations, it seems certain clerks will continue to ignore the calendar.

1 Dec, 2002

DVD Space For Sale?

There was a recent item in the trade news about ad-skipping on personal video recorders and how this trend is causing advertisers to dramatically rethink their whole approach to broadcast advertising. And with advertisers looking to spend that money elsewhere, I wonder when and how some of those dollars might end up on DVD?

According to a survey of major advertisers conducted by Forrester Research and the Association of National Advertisers, 75 percent of national advertisers said they will cut their TV ad spending because of ad skipping taking place on the nearly 2 million PVRs already in U.S. households. Also, 75 percent of those national advertisers said they would be cutting their ad budgets by as much as 21 percent to 40 percent.

While this reaction may be a bit over the top, considering the small percentage of homes with PVR, the message is clear: Consumers faced with traditional advertising in an interactive environment such as PVRs (and the Web) will choose to not interact with that advertising or avoid it altogether.

I can't help but think that somewhere, someone is trying to develop an advertising model that works for DVD, especially in light of the growing trend of consumer goods companies participating as marketing partners in home video.

So far, studios have not attempted to place advertising on discs for fear of ruining the commercial-free experience. The endless trailers of upcoming studio theatrical releases can be skipped, although several studios are guilty of making that maneuver maddeningly difficult, even to the extent of causing one's DVD player to freeze.

There were a few early attempts at placing ads on VHS movies — Top Gun and Pepsi is a good example — but the concept never got much traction in the industry after a fair amount of consumer backlash at having to view commercials on what they thought was supposed to be a theater-like experience. However, interestingly enough, advertising on home video is fairly common in Europe.

For advertising to work in an interactive environment like DVD, it has to be part of the environment and more closely linked with the content. And by this I don't mean more creative product placement in films, which is now becoming more and more obvious.

If studios and marketers are looking for ways to capitalize on the entertainment platform of DVD with paid-for marketing partners (short of selling logo plugs on DVD menu pages, etc.), they will need to explore the opportunities to create sponsorships of special features or other value-added content that the sponsor can benefit from being attached to. This approach will be a challenge in that the content has to be truly meaningful to the film, yet offer some promotional opportunity at the same time.

As DVD grows, we can expect to see some attempts in this vein.

28 Nov, 2002

Sellthrough styles are evolving, leaving rental behind

We're seeing two different strategies when it comes to studios marketing their DVDs: dump and run, and product management.

The dump-and-runners — we all know who they are — flood the market with their latest big theatrical DVD releases and hope the sheer ubiquitousness of their product will boost sales. The down side is that in some areas they may run out, while in others they have a big surplus — but in the end they hope it will all shake out and, besides, there's a minimum of tracking and paperwork.

The product managers carefully analyze each market and ship accordingly; then, when a retailer runs out, they immediately ship more. Stores are not flooded with their product; the product goes where it will sell and then gets replenished. The down side here is that this can be a taxing proposition, with a lot of analysis and research — but in the end returns are minimized and that alone is worth the hassle.

Each side says their approach works better to achieve the end goal: maximizing sales. And it's interesting to note that while last year studios were crowing about first-day and first-week sales numbers, this year the battle for bragging rights seems to be around first-day selloff, with DreamWorks maintaining Spirit's selloff rate of 29 percent was much better than anyone else's.

What's interesting about all this is that no one's even mentioning rental. Studios are infatuated with the new collector mentality among consumers; rental is almost an afterthought. Whereas we used to hear studios boast about prebook numbers on hot rental titles — remember the Pulp Fiction versus Die Hard battle of a few years back? — or even first-week rental proceeds (the notorious Green Mile versus Sixth Sense scuffle), the studios' sole concern these days appears to be what consumers are buying and how much of it.

This, despite the fact that most video sales to rental dealers are through revenue-sharing programs, which you'd think would give the studios more of an incentive.

But this just shows you how times have changed. This business was built on rental and now no one cares. Even Blockbuster says it wants to make a big push into sellthrough, while limiting rental to monthly subscriptions (my interpretation).

As a result, terms like “turns per copy” have lost their relevance. Whether this trend continues into the newyear, with video rentals ultimately ceding the transient portion of the home video business to video-on-demand or rental will stage a comeback, remains to be seen.

26 Nov, 2002

DVD Succeeds Because it Mimics Our Life Cycles

I've written before on how I am clearing out the junk vault (aka garage) by putting stuff on eBay. It's liberating to pack stuff off to happy buyers and that isn't an accident, it's a life stage.

Our society is built around ownership. I believe that's one of the pillars of DVD's success – it's priced at a low entry point so lots of people can get in on it. But there's more to it than that. Marketing gurus measure consumer life cycles like release windows.

The theory goes that consumers are buying goods in their 20s and 30s; then in the 40s people have made most of their major hard purchases and there's a shift to buying services. Finally, at whatever is retirement age, thery go to "buying experiences" -- gourmet food, travel, Broadway shows and spa weekends.

DVD straddles those boundaries.

I was exchanging Christmas lists with family by e-mail the other day and my sister-in-law Lisa inadvertently summed it up: "DVDs are the best gift for me since I can't think of much else I want or need." She and I are great fans of horror movies from classic to schlock, as well as what I like to call Train Wreck Video -- movies so bad you have to watch, like anything by Ed Wood. (Movies so bad Image has an awesome boxed set called The Worst of Ed Wood, which they tell me is a "perennial favorite," no doubt because of people like me and Lisa.) We speak a common movie language.

My dad is another story. I put him onto eBay in the hope he would follow my lead and clear his junk vault, but so far he's only buying. I think he's trying to preserve his youth and avoid confronting mortality through acquisition, an almost superstitious belief that as long as he has things to do and watch he can't get sick or die.

Maybe he'll come around. But in the meantime, his latest purchase was a DVD player, his first real foray into 21st Century home entertainment technology. Probably the best I'll get in the way of his following my leads. Then again, I partly got the schlock horror and creature feature thing from him.

See what I mean? One thing we all have in common is consuming home entertainment. Even those of us who are sliding out of the major purchase stage can appreciate a slender little disc with hours of diversion on it. It's compact and it covers all the consumer bases: it is all at once goods, a service and, if it's done well, it's an experience.

25 Nov, 2002

Despite Its Cursed Cassette Plot Point, <I>The Ring</I> Is Perfectly Suited to DVD

There are few movies that leave viewers more curious than before they've seen them, making them perfect for DVD. The Blair Witch Project was one; it had viewers going online before and after seeing the flick for clues in the faux mystery. The Sixth Sense also prompted viewers to watch the film again to catch all the hints they missed the first time around.

This year's hit The Ring has characteristics of both movies, as well as such scarefests as The Exorcist. It's got an online component (take a look at themorganranch.com) and a surprise ending that prompts viewers to want to watch the film again. It's chock full of mysteries that have elicited more than one conversation with friends about what they thought they saw and didn't see. It's also got a Japanese predecessor, Ringu, with some plot twists not included in the American version from DreamWorks.

Happily, all this adds up to what promises to be a great DVD. DreamWorks holds the rights to Ringu, according to a spokesperson, which should make for a great combo with The Ring. I've seen the original and both films have uniquely scary characteristics. The final appearance of the girl in Ringu is not to be missed.

Since the plot revolves around an investigation of historical newspaper articles and the famous “student film' videotape, the background clippings and ancillary video material possibilities are numerous. Any commentary, especially one explaining the choices made for the American version, would be engaging.

While DVD viewers will be denied the chill of watching the film on videotape (for those who haven't seen The Ring, the plot involves a cassette that kills those who watch it), The Ring is remarkably well suited to the extra elements a disc can offer, including slow-motion and pause capabilities.

Suffice it to say, this jaded video journalist can't wait for The Ring DVD, which means fans will be clamoring for it. DreamWorks may have been a bit surprised by its theatrical success, but here's hoping they'll be prepared and pull out all the stops for the video release.

24 Nov, 2002

How A Magnetic Personality Launched An Industry

Tomorrow marks the 25th anniversary of the home video industry. It's pretty unusual for any industry to be able to pinpoint its start to the day, but Nov. 26, 1977, is the day on which an ad appeared in TV Guide offering Hollywood movies (in this case all from Fox) for sale on VHS cassette for just $49.99. The ad was placed by Andre Blay and his newly formed company Magnetic Video, which had licensed for home video 50 Fox titles, an act that earned him the right to be called “the father of home video.”

“People were absolutely smitten with the idea that they could buy movies,” Blay told Video Store Magazine. So smitten, he said, that of the 12,000 people who responded almost immediately to Blay's ad, sending him $10 to join a subscriber's club from which they could acquire these videos, about two-thirds of them didn't yet own a VCR player.

Ah, but the birth of the home video business was really a story of twins, because not two weeks went by before another ad appeared Dec. 6 in The Los Angeles Times, this one placed by a man who previously had rented super-8 movies and projectors to show them on, quietly announcing the availability of video titles for rent. Yes, George Atkinson had bought tapes from Blay and decided that maybe people would rather rent them than buy them.

There is a quote from Abigal Van Buren (Dear Abby), that goes, “It is true that I was born in Iowa, but I can't speak for my twin sister,” that speaks somewhat to the different paths rental and sellthrough have taken since their almost simultaneous appearance. Rental, for a lot of reasons including consumer choice and studio pricing, has been the sibling that built the multibillion –dollar home video business over the past quarter of a century while sellthrough was pretty much left to evolve slowly from its historical roots of special interest and kids video.

But along comes DVD and now, five years later, consumers are once again smitten with sellthrough and building a collector's mentality in the marketplace. In every family every sibling enjoy periods of bounty and hard times and Blay, who said he still believes sellthrough is a better business because “people like to build libraries,” can take a measure of satisfaction all these years later.

As for the business that Atkinson started, while rentals are already showing a decline this year from last, there are those industry observers who feel that as penetration of DVD continues into the second 50 percent of U.S. households, rental will see a resurgence and, with a healthier sellthrough business as well, the home video business will be one bigger happy family.

21 Nov, 2002

Music Labels Should Sing A New Tune

This week we did a big question-and-answer interview with John Beug, the Warner strategist who is a key figure in DVD-Audio.

He makes some compelling arguments as to why DVD-Audio should fly, but I still respectfully disagree, despite the format's obvious superiority to the CD.

That said, I do happen to believe a successor to the CD is on the horizon. It's called DVD-Video.

Here's what I think will happen: No matter how many extras the record companies put on DVD-Audio, they will never live up to consumer expectations. The difference in audio quality is not so great that consumers will run out and buy new DVD-Audio-ready players, particularly after they've already bought a DVD-Video player in the recent past. Instead, they'll slip their DVD-Audio into the drive, stare at the lyric sheet or handful of still photos for a few minutes and wonder why they didn't just buy a regular CD.

If consumers buy anything that's called a DVD, they're going to want visuals — bright, clear, moving visuals. That's where music DVD-Videos come in — ideally, a hybrid that can be played on regular CD players, in the car and at home, with no visuals, or on a DVD player with visuals — visuals that last as long as, and go with, the music, like a live performance.

The technology to do this exists — Artisan did a great job two years ago in releasing a bonded DVD-CD hybrid in which Blair Witch I was on one side and the soundtrack was on the other. Why not apply this to music, particularly on live albums, with the full concert on the DVD side and the audio tracks alone on the CD side?

I know, I know — if there's too much video, it's no longer considered a sound recording and that means it can be rented — a concept the record companies positively abhor.

But I think as time goes on and CD sales continue to slide, the rentability factor is going to look more and more attractive compared to the alternative, which is ceding the audio business to downloading.

Already, three classical labels have said they are no longer going to release operas on CD, only on DVD-Video.

It's an idea that might sound radical, but one that should definitely be explored further.

19 Nov, 2002

Promotions Take Advantage of A Familiar <I>Ring</I>

Taking advantage of having all three parts of the Lord of the Rings film trilogy in the can, New Line Home Entertainment has done it again with the latest promotional pairing.

The extended release that became available Nov. 12 includes not only the extended cut of the movie (Wow!) and three discs of bonus materials, but tucked into many copies is a free adult movie pass, good for a seat up to $10.50, for the second installment, The Two Towers.

This not only adds value to the video release – essentially reducing the price to be comparable to the first , double-disc release – but the ticket promotion, stickered prominently on packages containing the ticket, will help ensure the early success of the second theatrical release.

The catch, you see, is that consumers must use their ticket vouchers within the first two weeks of the theatrical release. (That information is on the voucher itself, not the external sticker.) The vouchers must be used between Dec. 17 and Dec. 31. That may force some folks to give gifts early, or pillage the presents before actually giving them to use the tickets while they can.

But I suspect the short window won't bother most consumers: Anyone who rushed out to get the extended version instead of waiting to see if one turned up under the Christmas tree is likely to try to see the sequel early in its run anyway. Youths will be out of school for holiday vacations during that time and competition for their attention will be fierce.

For New Line, this tactic is a stroke of genius because it virtually guarantees packed houses from coast to coast, driving up the box office figures for the first two weeks of release. That, in turn, is likely to bring out more audiences to see what all the fuss is about. And you can be sure marketing folks will trot out the box office numbers to promote the home video release when The Two Towers makes its way to disc and tape.

Each step in the series' releases and marketing builds upon the last, each feeding the next step and helping its success. I can't help wondering if this latest wrinkle is coming out of the theatrical or home video marketing budget, or perhaps a combination of the two.

Warner tried a similar tactic with Harry Potter, but the offer had a lower dollar value and was bound to miss some consumers because it was not initially included with the video release. Instead, Warner put tear-off pads into stores in October, months after the initial Sorcerer's Stone home video release, so only the late purchasers were eligible to get a Chamber of Secrets voucher. Also, the voucher has a maximum value of $6.50, less of an incentive than the full ticket price for the Two Towers promo. On the other hand, consumers have four more weeks to use this ticket, from Chamber's opening to Dec. 31. AOL Time Warner's HBO did start airing Sorcerer's Stone Friday, no doubt to whet consumers appetites for Chamber of Secrets on its first day of release.

Maybe it's just that luxury of having all three films in the can that makes New Line look so good; they can plan around release dates much more tightly than when movies in a series are filmed one at a time.

Either way, I'm predicting huge opening weekend numbers for Two Towers, maybe even better than the $88.3 million young master Harry raked in last weekend. Only time will tell.

17 Nov, 2002

Can Harry Potter Follow His Own First Act?

As I write this Monday morning column Friday afternoon the buzz is already building for another successful Harry Potter theatrical opening. As early reviewers stated, and as the first theatergoers (who stood in lines to catch the first screenings at midnight) attested, Harry Potter and the Chamber of Secrets is a better movie than its predecessor. I am sure my 11-year-old daughter will soon drag me to one of the 3,682 theaters that were set to open the film Friday on some 8,500 screens, a larger opening than Harry's first theatrical run.

Whether the better film (I hear it's a little edgier, a little darker and with more action) and more screens translates into Chamber of Secrets besting Sorcerer's Stone's opening weekend of some $90 million will be known maybe by the time you read this. Early handicapping says probably not, but word-of-mouth on the quality of the film may serve to attract an even broader audience and keep the film's momentum going perhaps even past Sorcerer's Stone's domestic take of $317.6 million.

Curious that with the pre-promotion of the new Potter film we didn't see or hear much about any significant Potter tie-in promotions on the home video retail or rentail front. Warner Home Video didn't execute any significant re-promotion of the Sorcerer's Stone video. This is the sort of thing one might have certainly expected not too long ago. I suspect, however, that, firstly, Sorcerer's Stone was a huge sellthrough title and thus a second wave of purchases and rentals on the back of the new theatrical release may not have been reasonably expected. Secondly, last week alone saw two other huge fantasy films hit video shelves with Star Wars Episode II and the extended edition of Lord of the Rings, and these, certainly, would have crimped the style of any pretheatrical Harry promotion of the Sorcerer's Stone.

The fact of the matter is, this is going to be a very, very busy fourth quarter for home video, perhaps the busiest ever, we'll have to see. With so much big product coming out, retailers are gong to have to be juggling promotions quickly to maximize sales and rentals of the newest hits to arrive at retail and consumers will have more than they ever have had to choose from in home video.

Still, video retailers can be sure that come next spring, Harry Potter will fuel yet another period of video mania at stores and the train – or joyride – to Hogwarts will just keep chugging along for the next several years.