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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 Aug, 2002

THE MORNING BUZZ: Economic Indicators

Economists and politicians are divided on whether we are headed for a double-dip recession or will turn around by fall. Some speculate it's going to be a weak holiday season for retail, others believe consumers have plenty of disposable income and will unleash spending power.

For our industry, one indicator to watch is the electronics stores. Best Buy revised down twice for the quarter on low sales and other chains are turning in similar results. That could mean fewer DVD players getting into homes, or at least getting there at a slower pace. But even that could go either way: many people may be feeling the pinch right now and holding off on buying the player until the holidays bring sale prices and make it a family gift.

At the risk of getting branded an armchair economist, I have a few little points I watch as barometers of the economy in the real America, where most of us live.

Fast Food: I've noticed that fast food chains are among the first businesses to respond to recessionary times and the last to boost prices when the economy seems to improve. Just last year a variety of cheap deals evaporated in response to rosy economic projections. But they started to return just a couple of months ago and now you can get two burgers or tacos for 99 cents just about anywhere in town.

Fast food restaurants know they fall into a budget dining category and will lose cost-sensitive customers when times get tight unless they keep giving them a reason to come in. The lines are decidedly shorter at McDonald's this week since the chain lifted the 39-cent cheeseburger promotion, which I predict it will return shortly.

Wal-Mart: Wal-Mart sales were up 26 percent for July. That's a whopping bump even for a well known discounter with a respectable-sized garden center to bring in summer customers.

Wal-Mart does a great job of building community. The discounter features sales associates and their families in print ads. It has an entire TV campaign built around senior citizen greeters and families who shop together. The message? We're all in this together.

That sentiment is connecting with Americans who have lost jobs or investments or who fear what the future holds; and that sense of community will keep bringing those folks into Wal-Mart, where we're on a budget and proud of it.

eBay: As both of my loyal readers know, I have been selling stuff I no longer need on eBay since early this year. In the spring, folks were still uneasy about the recession and my items were getting lots of bids. Then things started to look better and, when the general mood was more optimistic, bidding slowed down. Now, with the threat of a double-dip recession looming, my items are trading briskly again.

I think when people feel like money isn't a problem, they just run out and buy new stuff. When uncertainty looms, they tighten the purse strings and cruise eBay for the same item, used.

So those are my amateur economic indicators and all of them say double-dip. I hope the holiday season is a huge success for all of us, but from the way things look now, I'd make sure I had a Plan B.


18 Aug, 2002

THE MORNING BUZZ: Is Online Delivery the Key to A Bigger Entertainment Pie?

Yet another report came out Monday that indicates consumers who get entertainment online buy a lot of CDs and that record labels may be wrong in attacking online delivery of music for hurting business.

Weekly “streamies” – people who have watched or listened to streaming media online in a week – bought more than one and a half times the number of CDs in the past year than the average American, according to a new study by Arbitron Inc. and Edison Media Research. The study found weekly streamies bought 21 discs while the average American bought 13.

Last week, a report from Forrester Research found that piracy is not responsible for the 15 percent drop in music sales in the past two years. “There is no denying that times are tough for the music business, but not because of downloading. Based on surveys of 1,000 online consumers, we see no evidence of decreased CD buying among frequent digital music consumers," said Josh Bernoff, principal analyst at Forrester.

“The results were compelling and conclusive: Nearly every variety of online music activity was likely to correspond with increased purchasing by consumers, while the absence of such activities correlated with decreased purchasing,” wrote the lead analyst on the Jupiter study, Aram Sinnreich.

And that report echoed a similar study Jupiter Media Metrix released in May.

Our audio brethren, who are leading the way into online delivery (whether they like it or not), are quarreling with their best customers when they rage against online music. Research indicates online music may actually be stimulating the CD-buying public.

It's the “pie gets bigger” theory that seems to be working to some extent in the video market right now. While a whole new arena of sellthrough business has opened up with DVD, it hasn't yet resulted in a sharp dropoff in the rental business. The pie got bigger. We've seen it before with pay-per-view, which settled into its niche without destroying the packaged media business. And, if these recent reports are any indication, online delivery of movies will find its niche in a bigger pie as well.

As movie downloading makes its way onto the scene, the packaged movie industry needn't rail that it is consuming its business – there will likely be enough for everyone.


15 Aug, 2002

THE MORNING BUZZ: The Uncertain Future of DVD-Audio

Nobody's come out and said it, but let's face the facts: While DVD-Video has been a spectacular success, DVD-Audio has been a most unspectacular failure.

Sales projections for 2001 were as high as 40 million units, according to some starry-eyed record companies. Actual sales clocked in at a measly 300,000 units and many of those were returned.

I'm not surprised. The DVD-Audio universe is still plagued by format wars between DVD-Audio proper and the so-called Super CD; then, within the ranks, there's a split between Dolby and DTS.

And then there's the fact that DVD-Audio discs won't play to their full capability in DVD-Video players; record companies, realizing the stupidity of this, have taken to including regular two-channel CD versions on their DVD-Audio releases, which makes even more sense – pay $30, $10 more than regular CDs, and basically get the same thing.

To be sure, DVD-Audio discs have visuals, but these usually consist of lyrics or still photos that don't even fit the screen. That essentially makes them a lot like music DVDs with crappy video – and at a price tag that's close to twice the street price of DVDs, why anyone would bother is beyond me.

Audio purists might argue that with the right system, DVD-Audio does sound better and more natural than CDs, but again, I beg to differ. I still remember one DVD-Audio demonstration in which the background vocals came out of the left rear speaker. The photo of the performance clearly showed the backup singers on stage, with the rest of the musicians; I asked the demonstrator why the singing came from the back and he said “the producer remembers the choir being in the back of his church while he was growing up, so that's where he put the vocals.”

More natural? Give me a break. While 5.1 Surround Sound certainly is more natural for a movie, because it gives you the feeling you are in the middle of the action, like a room in which people are talking from all corners, for music it just doesn't work. Every concert I've been to has the musicians up on stage, in front of me – and regular stereo sound works just fine.

As my friend John Thrasher of Tower Records and Video recently told me, “We only have two ears.”

This reminds me of the big fad of the late 1960 and 70s: Quadrophonic sound. Instead of two speakers, there were four, each with different tracks. Quad was a dismal failure, because no one wanted to invest the big bucks to buy an additional set of speakers – not to mention a receiver that could properly decode the four distinct channels.

Correct me if I'm wrong, but is it possibly that DVD-Audio is headed for the same scrap heap of failed technologies?


13 Aug, 2002

THE MORNING BUZZ: Disney's Borrowed Magic

It's no secret that HBO is rapidly becoming the top of the series TV heap. The cable channel keeps racking up nominations and awards for its original series like "The Sopranos," "Sex and the City," "Oz" and Emmy's prom date for the year, "Six Feet Under." I like all of those shows – all distributed by Warner Home Video, by the way, and I think destined to turn in good home video numbers based on word of mouth from subscribers.

I'm hooked on another HBO show right now. It's called "The Wire" and it's about the cops and drug dealers in a Baltimore housing project. It's interesting because, unlike detective shows that unravel crime scenes or clues after the incident, it's a cat-and-mouse game that lets viewers see bits of strategy on both sides. It has that grim soap opera quality its HBO predecessors have, the character involvement that makes you tune in each week to see what happens next. Already I can't wait for the first season DVD set.

HBO's latest move to the mass market is a deal with sister company Warner Books, to publish a cookbook called The Sopranos Family Cookbook: As Compiled By Artie Bucco. The collection of southern Italian style recipes peppered with advice from series characters promises to spread the brand where it has never been before. HBO is reportedly planning a gourmet food line under a deal with Halifax Group as well, to include marinara sauce, pasta, salad dressing and frozen pizza. Sort of Tony Soprano meets Emeril LeGasse.

While Warner/HBO is kickin' it up a notch, it's pretty interesting to me that sagging Disney (Geez, their stock dipped below $14 yesterday, even after an unexpectedly strong two weeks of box office on Signs) -- heretofore the master of Branding and Brand Management -- is striking a deal for television programming from the HBO studios. Disney cousin ABC's prime time ratings are in the dumper and, to hoist them up, the Mouse House is knocking at HBO's door.

No doubt the Disney execs are riveted to the same shows as the rest of us. They know where the weekly winners are coming from. It's smart to go there looking for booty they can bring home to their own TV empire.

I think much of Warner's and HBO's growing success (which lately is the tentpole in parent company AOL Time Warner's descending stock valuation) is their eagerness to embrace digital media. Warner (not entirely for altruistic reasons) led the parade to DVD. Hot title DVDs from Warner-distributed New Line Home Entertainment hit the shelves complete with InterActual's media player software. Disney, by contrast, has dragged its feet and in some cases even works to obstruct the progress of digital technology – although the Buena Vista Home Entertainment arm now rightfully has embraced DVD with such elaborate and well-made releases as the “Toy Box” collection of Toy Story movies.

Maybe the lion's share of the Mouse's anti-copying offensive is a smokescreen – a scapegoat for a loss of vision and behind-the-consumer-curve adoption of media technology. Maybe it's easier to point fingers at shadows (nobody at Disney has yet explained how its products get into the online stream before they make it into theaters) than to rethink a strategy that doesn't work so well any more.
Disney's formula has relied, for many decades successfully, on branding the same characters across theme parks, movies, merchandise and grocery items. Disney succeeds where it can control the environment, so Disney fights to control as much of the environment as possible. It is a company utterly unprepared for the wild and wooly frontier of the Internet.

Back in the 50s and 60s, Walt Disney took his company to the top on his vision. He embraced technology and looked for ways to be the first to harness it for entertainment and profit. I think the company's recent performance illustrates the leadership vision now.

Too bad for Disney – and good for Warner/HBO.


12 Aug, 2002

THE MORNING BUZZ: Are the Scrappy Indies Making a Comeback?

Sunsplash, the Myrtle Beach, S.C., bash that yearly taps into the pulse of independent video retailers, may be a bellwether of a brighter future for the segment.

Organizers said preliminarily that attendance was up at the Video Software Dealers Association chapter event, and indications are indies are on the rise as well. "The number of independent stores has grown in the last year or two," said Bill Crystal, VP of sales for the East Region at Ingram Entertainment, during his presentation at Sunsplash.

With the favorable sellthrough pricing of DVD somewhat leveling the playing field between the independents and the big guys, it seems logical the segment would be growing again, or at least cease hemorrhaging stores as it has in recent years. Flat pricing on VHS by some studios also has offered a more equitable environment on cassette rentals.

Sunsplash attendee and industry veteran Ray Jewell, after a brief retirement, has reentered the business with Mister Video in Athens, Tenn. That seems to presage something. Either he's a glutton for punishment, or he sees a future for the independent.

The quick extinction of the segment seemed a foregone conclusion not so long ago. The National Association of Video Distributors periodic release of statistics on the hundreds of stores going out of business seemed to strike a death knell for the independent operator. All the news was bad.

I may be wrong in seeing a glimmer of hope. But I'd be curious to hear from indies who've recently gotten into the business and hitched their fortunes to this mercurial business. The scrappy indies may yet rise again.


11 Aug, 2002

THE MORNING BUZZ: Poll Shows Avoidance of New <I>Smoochy</I> Plan

“What's old is new again” might be one way to look at the various swoops and turns some studios are taking as they look for financial models that make sense in this topsy turvy, VHS-to-DVD, rental-to-sellthrough world that is home video.

They can and will try all manner of approaches to what they perceive as a problem – not getting what they feel is the appropriate return from the market – but if the plan doesn't make sense to retailers, its chances of working are slim.

Warner is trying something “new” by returning to the old goal system for VHS titles, testing the concept on Death to Smoochy and Monday Night Mayhem. The new goal program, admittedly a test for Warner (the Oct. 15 release of Warner's Insomnia has VHS priced at sellthrough), is designed primarily to help the studio reach what it deems acceptable revenue numbers from its rental store customers, since it was not getting enough volume action under the flat-rate price program. The goal program, the studio said, helps it realize the numbers it apparently needs on the title for those that buy small amounts and allows those who buy more to realize the lower price if they hit goal.

Well, it doesn't seem to be making much sense from the retailer's viewpoint, if one considers an informal online poll taken by Video Store Magazine this past week on Hive4media.com. Asked, “What do you plan to do about Warner's ‘Death to Smoochy' under the new pricing plan?” the consensus was pretty clear from more than 80 percent of the more than 100 votes cast: avoid the Warner plan or avoid the title altogether.

The poll showed that 49.45 percent of the voters said they'd “buy the title sideways or at a mass merchant; 32.97 percent said they'd “boycott the title” altogether; 14.29 percent said they'd “buy more through my usual channels,” while 3.3 percent said they'd “buy less through my usual channels.”

Okay, this is not meant to be anywhere near a statistically valid piece of data. However, the significant majority holding out against the plan is at least an indication Warner may have some challenges ahead if it intends to roll this program out with other titles.

Then came the news last week that Columbia TriStar Home Entertainment is embracing a return to revenue now including DVD and VHS for specialty retailers. (CTHE is also returning, albeit temporarily, to its old relationship status with distributors, but that's another story…also on this week's print edition cover.

At first blush the new rev-share deal appears to have balanced opportunities for retailers and the studio; the program is designed to give retailers a chance to more affordably serve their VHS customers, while limiting DVD buy to no more than 45 percent under the program, another nod to trying to keep VHS from being prematurely excised from the market due to DVD pricing. But the program also seems to help protect the studio's sellthrough DVD business in that under the program, rentailers must wait 45 days before they can sell their DVDs as previously viewed, which is much longer than rentailers have been waiting to turn at least some of their DVD rental inventory into sellthrough.

The home video business continues to transform as DVD marches onward in its conquest of the home entertainment market. Studios and retailers will be trying all sorts of new things to find the best financial model for them. But in this fluid environment any concept had best adhere to the “win-win” philosophy to have any chance of succeeding.


8 Aug, 2002

THE MORNING BUZZ: Going Retro

TV shows on DVD are certainly a hot category. There's a Web site devoted solely to cataloging the various TV programs that are available on disc, appropriately called TVshowsonDVD.com, that at last count has more than 1,400 titles.

Retailers are anxiously awaiting the HBO Home Video's upcoming release of the third complete season of “The Sopranos,” while the second season of “The Simpsons” remains an exceptionally strong seller, even with all the big theatrical competition.

And my e-mail basket contains a pitch from Columbia House, the mail-order video seller, that is headlined, “Your Favorite Television Series Now Available on DVD or VHS.” There's a hot link to the Columbia House Web site that takes you right to the heart of TV land.

On a personal note, I'm going nuts at home, watching the complete first season of “The Outer Limits,” a Twilight Zone-esque series popular in the middle 1960s. There are 32 episodes, each nearly an hour long, on the four-disc set from MGM. I'm going to watch as much as I can as often as I can until I'm done.

What's behind the sudden appeal of vintage TV shows on DVD? Like music videos, this is a genre that never really caught on in the VHS-only days. But while DVD's superior sound is what did it for music video, it's the format's higher capacity that is making DVD such a natural conduit for TV shows. Our publisher, Don Rosenberg, is a big “Twilight Zone” fan, and he's ecstatic that the series is now available on disc (from Image). “I've got most of them on VHS, but one season takes up a whole shelf,” he said. “There just isn't room.”

I should point out that on DVD, the entire first season of “The Outer Limits” takes up about two inches of shelf space.

TV shows are the comfort food of our generation. We grew up with these shows, and we love them like a cherished friend. We all have our own favorites – me, I can't get enough of “One Step Beyond” (available on DVD through Slingshot Entertainment), “The Outer Limits” (MGM), “The Sopranos” (HBO), “Oz” (HBO), “The Twilight Zone” (Image) and “Alfred Hitchcock Presents” (Universal).

The problem is, we never had an easy way to access or store them, short of using up gobs of space by collecting the videocassettes and then trying to file them away in some sort of order.

DVDs, on the other hand, are great—particularly those “complete season” packages, or even single discs with four or five episodes.

The technology revolution that's putting all sorts of new devices into our homes—from cell phones and Palm Pilots to DVD players and TiVo – is making our society's space crunch even more pronounced.

When it comes to deciding what to collect, size does matter.


6 Aug, 2002

THE MORNING BUZZ: Dispatch From A Video Safari

Today our safari travels to a nearby Kmart, where we will attempt to sneak up on the latest home video release in its natural habitat, the home electronics department.

Our prey is elusive, at first hiding and difficult to find in the jungle of the Super K stockroom. We plod through thickets of school uniforms and endless shoebox pillars before we see it, hiding in plain sight: Our display is cleverly camouflaged in a plain, brown box to blend in with the environment.

We expect to find the displays traveling in pairs, but today we only find one. We wonder where its mate is and our guide -- aka the Kmart manager -- hasn't seen it either. So for now we study the solo display and we'll look for its mate later.

Our guide uses a large dolly to herd the display to its preserve on the sales floor. There we crack the cardboard shell and coax the display out of its defensive position. We make a few deft folds. We insert a few Tab As into Slot Bs and the display begins to show its plumage, transforming from a simple box to a hut-shaped corrugated cardboard standee emblazoned with the main characters from Lord of the Rings: The Fellowship of the Ring.

Our adventure is fraught with pitfalls, from pricing discrepancies to shorted shipments. We continue our trek undaunted, for our short-term objective is in sight: copies of Lord of the Rings: The Fellowship of the Ring are set up and ready where that most skittish of creatures, the retail customer, can feast on them at midnight.

Now that we've coaxed the creature out, other travelers are stopping to gaze at our discovery as they pass. One or two ask when they can buy the video. A small herd of teenage boys show up, circle the display and debate whether they can get one if they pool their money. They wander off to persuade the manager to turn up the sound on the TVs in the electronics department so they can watch anyway.

As the clock drifts past midnight, a few consumers venture forth to take advantage of the opportunity. Some merely sniff tentatively at the display, others grab the disc nonchalantly. These first buyers seem to feed on the DVD and leave the tapes for the scavengers.

Our safari has ended for the evening. By dawn, Rings hunters will be combing the urban savannah in search of the displays just like this one. Some will apprehend their targets, others will be too late and have to wait for the next stocking expedition. But we can go home, secure in the knowledge that no Kmart shopper in La Habra need do without the latest hot release.


See PHOTOS of the video safari!


5 Aug, 2002

THE MORNING BUZZ: Two Rings to Rule Them All

The two versions of New Line Home Entertainment's The Lord of the Rings: The Fellowship of the Ring begin the journey to video today, with the theatrical version hitting first and the extended director's cut coming in November. New Line expects many Rings fans will buy both versions, and execs say they are confident of the reissue strategy.

Still, studios seem to be cognizant of the fact that they are treading on dangerous ground.

New Line has been careful to position the extended director's cut version -- which includes more than 30 minutes of extra footage including new music recorded specifically for the added scenes -- as a completely different experience. Indeed, a poll on the Home Theater Forum site showed fan support for purchasing both versions.

Buena Vista Home Entertainment's Pearl Harbor got similar treatment, with a theatrical version streeting Dec. 4 and a “Vista Series” version featuring a director's cut and more extra features Jan. 15. The studio added more historical and special effects extras and audio commentaries on the second version; the “Vista Series” is positioned as the “definitive version” of films and a “collaborative partnership” with the director. Some DVD fans were skeptical of two versions for a film that garnered some critical pans. But I, for one, have not yet seen the Vista version and would love to delve into the historical information on the second release.

Early in the DVD life cycle, studios released vanilla or non-anamorphic DVDs and then later rereleased the titles in beefed-up versions. Some studios have singled out certain titles for reissue treatment, notably Fox with its “Five Star” line and Columbia TriStar with its “Superbit,” enhanced picture and audio series.

Reissues have come under fire on DVD Web sites, and critic Richard Roeper, co-host of the TV show “Ebert & Roeper at the Movies,” has knocked the practice on the air. To try and ameliorate the issue, studios and retailers alike have considered and sometimes instituted rebates to consumers who buy the first version. Indeed, Wherehouse is considering such a program on Rings.

Ultimately, consumers will vote with their dollars. Fans may decide to purchase multiple versions of a film favorite even if they aren't happy about it. They'll most likely eschew future versions of films they never liked in the first place. But studios must tread carefully. We don't want consumers to resist their impulse to buy titles when they come out, for fear a better version is coming in the future.

I think New Line execs are smart to offer a significantly more elaborate reissue. And if I know Lord of the Rings fans, they'll snap up any version they can get.


5 Aug, 2002

THE MORNING BUZZ: Studios&#39; Planning Still Staying Ahead of Duplication Curve

As the fourth quarter looms ever larger on the horizon, with promise of an even greater sellthrough bonanza this holiday season (especially for DVD), the issue of DVD replication and packaging capacity rears its nasty little head, as usual.

And while this has been a typical seasonal concern ever since DVDs were introduced five years ago, as the product enters the mass market, the issue becomes more critical.

The stakes are getting higher and the studios are continuing to ramp up not only the volume on new release hits, but on catalog as well. The goal is to drive DVD hit product into an ever-widening sphere of retail outlets with sellthrough pricing; and that requires mass-market-sized replication orders.

Adding to this challenge and opportunity is a public that continues its DVD buying apace even as DVD acceptance broadens into Middle America.

As you can see from the data on page 10 this week, compiled by our regular contributing DVD expert Ralph Tribbey, the buy rate of DVD software per DVD console appears to be holding fairly constant, at about 17 discs per year, even as penetration of DVD into U.S. households continues to climb toward what many expect will be about 40 percent by year's end.

The crux of the issue now, and for the future, revolves around the studios' ability to continue to forecast as accurately as possible, even earlier in the cycle of DVD planning and creation, both the number of titles and the amount of content and, therefore, number of discs required for any one release. Because of this, development of DVD materials begins earlier and earlier (even while the film is being made) so studios can plan their replication needs and make sure that completed DVDs arrive at plants in time to avoid traffic jams.

According to Video Store Magazine senior reporter Enrique Rivero's report this week, studios seem to have anticipated their needs early enough for this year's fourth quarter and gotten content lined up for the DVDs in time to ensure that no bottlenecks in duplication seem to be on the horizon. New Line execs, for example, said they pushed forward planning with duplicators for The Lord of the Rings, streeting this week, by three months over their normal time frame to ensure no problems or delays occurred.

The next challenge will be to see how the industry can improve the DVD packaging process, many aspects of which still must be done manually -- which boggles the mind when you consider the hundreds of millions of DVDs produced each year. If there is any jamming in the pipeline for the coming fourth quarter, some industry executives say it could well be in the packaging process.