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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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12 May, 2003

A Man for the DVD Season

I first met George Feltenstein in 1994 at a junket for That's Entertainment III for MGM. In the presence of such MGM musical luminaries as Cyd Charisse and Esther Williams, Feltenstein seemed right at home.

Now, Feltenstein is appropriately heading up Warner Home Video's classic DVD effort as SVP of classic catalog. Warner has some 2,000 to 2,500 library titles, including classic titles from the old MGM, that Feltenstein said are viable for DVD, and I couldn't think of a better guy to head up the titles' rollout.

During Warner Home Video's Friday announcement of the studio's “DVD Decision 2003” -- a promotion in which consumers vote on a selection of classic movies on AOL to decide which five will be released on DVD -- Feltenstein told me he regularly surveys classic movie sites and other collector forums, scanning them for old footage and other material that could be useful for DVD extras on classic movies.

Unlike movies being made today, for which filmmakers dutifully collect making-of material, deleted scenes and other goodies for the DVD release, classic films often require some sleuthing and creative thinking for DVD. For the 20 films in consideration for DVD Decision 2003, Feltenstein has in mind such clever extras as a “Tom & Jerry” cartoon spoof of Bad Day at Black Rock. Through his involvement with Turner Classic Movies, he's got his sights on The John Garfield Story, a documentary about the legendary actor that ran on TCM, for The Postman Always Rings Twice.

Feltenstein stressed that Warner plans to give its classics tender loving care, adding that the studio won't -- as some have –- blow out its classic library on DVD just to “pay the rent.” I can't think of a better guy to mine the gems in Warner's vault.


11 May, 2003

Warner Promo First of Many Catalog Salvos?

Warner Home Video has always been a leader in the release of catalog into the sellthrough video business, especially with the advent of DVD. According to the most recent DVD Release Report Warner has released some 439 catalog titles onto DVD, trailing only MGM's 589.

But with DVD player consoles expected to reach the 50 million U.S. household milestone this year, it may not be surprising to see those studios with a deep catalog kick things up a notch in marketing those titles to an ever widening mass market of DVD consumers.

Last Friday Warner Home Video announced a new and corporate-leveraged effort to grab the hearts and minds of these 50 million households with its “DVD Decision 2003” promotion (see our story posted on this web site Friday). Basically the idea is to have consumers vote for which five of 20 selected classic movies Warner will release on home video in special single disc offerings next January.

Warner is leveraging several of its other media properties, America Online and the Turner Classic Movies cable channel, to drive the promotion for its home video unit. Votes will be cast on AOL between June 2 and July 1. TCM will air all 20 movies between June 23 – 27. According to Mike Saksa, SVP of marketing at Warner Home Video, it's the first time AOL/Time Warner has called on these two major media sources to help fuel home video marketing and sales. Of course, home video is the darling of the entertainment industry these days so it all makes complete sense. And it'll be a terrific opportunity for retailers.

With each leap of household penetration of DVD players a new and significant market is growing for all genres and types of programming on DVD; these are people who are buying everything to feed their hungry new machines. But another factor to consider is that at 50 million households, you are also now dealing with the beginning of some market maturation, if you can believe that. Even at the young age of 5 years, the adoption rate of DVD has been so incredible that there are people who may be nearing their saturation point of movies they want (or have room) to own. So if you have a lot of ammunition in your catalog cannons, you'd best get to firing before it's too late.

I would not be surprised to see a real strong move in the next 12 months to a higher flow of catalog product by those that have a lot of catalog that they can (and need to) release on DVD while the getting is still good and strong. According to Warner, it has maybe 2,500 viable titles for DVD release, so if they are counting the 439 or so they have already released over the past 5 years, which leaves them with about 2,000 to go. Naturally, they're going to have to step things up a tad or risk having titles in the vault that may not realize the kind of sellthrough potential that a younger, less mature market, might absorb with more gusto.


9 May, 2003

No Rhyme, No Season

Each year the seasons get longer. I'm not talking about the seasons of the year, but the seasons in Hollywood.

The Memorial Day weekend traditionally kicks off the summer movie season, even though it's in May. For the last few years, however, even that hasn't been enough -- the “summer” season has been quietly stretching and expanding, and now it's been pulled back all the way to the first weekend in May, when X-Men 2 became the first of the so-called summer blockbusters to go wide.

By the time The Matrix Reloaded opens May 15, the “summer” will be well underway, at least in Hollywood. And I haven't even filled the propane tank for my annual Memorial Day weekend barbecue!

We're seeing the same expansion in home video. Years ago, when sellthrough was in its infancy, studios rallied around Thanksgiving as the traditional start of the holiday selling season.

In the late 1990s, anything released in the fourth quarter was considered part of the “holiday” slate.

Last year, Monsters, Inc. came out September 17 -- heck, officially still summer -- and officially kicked off the holiday selling season.

This year, the season starts August 26, with The Lord of the Rings II: Twin Towers.

My question is this: Where -- or, more correctly, when -- will all this end? Will the summer movie season keep getting pushed back, a week or two at a time, until it backs in Christmas?

And will the holiday selling season for video one day begin the day the school bells ring in the start of another summer?

If that's the case, I figure by 2010 we should be back on track. Although by then, it probably won't matter. To paraphrase an old Chicago song, “Does anybody really know what time it is? Does anybody really care?”


6 May, 2003

It's All Good...I Think

It was the best of times, it was the worst of times. No doubt someone will dust off that opener some day to describe the dawn of the digital entertainment age: a time so full of possibilities and promise, yet fraught with so much danger.

And the perfect characterization for an industry filled with contradictions.

You have to give people credit for creative thinking, even if some of the ideas aren't necessarily trends we want to encourage. I just have to share a couple of head-scratchers coming to light this week:

  • In the same week, concert promoter Clear Channel hooked up with Best Buy in a deal to offer concertgoers CDs of the concert they just attended on the way out of the show (Best Buy will carry a limited number in selected stores after the show); and Volkswagen partnered with EMI Music to put pre-downloaded digital audio players in cars at the factory. So just about the time you can get the new concert CD you want when you want it, you will no longer be able to play it in the car on the way home. Still, could DVD instant replays be far behind?

  • Does anyone else think it's funny that Warner Bros. is dispatching stealth operatives armed with high-tech piracy detecting gear to screening rooms and movie theaters for the opening of The Matrix Reloaded -- a movie that glamorizes hackers?

  • How about Blockbuster Video CEO John Antioco championing independent video retailers as the defenders of the studios' digitized intellectual property? Gee, John, we didn't know you cared.

  • VSDA president Bo Anderson suggests retailers get into video-on-demand (VOD) to protect their share of the home entertainment industry. Last time I checked, most video retailers viewed VOD as the enemy that can't seem to get suited up for battle. Which was, perhaps, Bo's point. But I'm still trying to figure out how independent retailers get into VOD.

  • Small dealers also have a hard time getting revenue-sharing deals, but now there's a company that wants to change all that. For some, rev-sharing means getting product for peanuts. For others, there's Whittier, Calif.-based Pop N' Go, Inc., which offers rev-sharing on popcorn. The company makes in-store vending poppers that dispense fresh-popped single servings. A press release proudly touted placement for one of the machines at…

  • "The Original Drive-Through Biker Bar" -- 'nuff said.


  • 5 May, 2003

    Video Saves the Radio Star

    I can't recall hearing a radio disc jockey discuss music on videocassette before the advent of DVD. But I've heard them talk about music DVD several times. While listening to a classic rock station just a few weeks ago, I heard a deejay mention the high anticipation for a Led Zeppelin DVD set, noting rare, unseen footage that complements the music. I've also heard the acts themselves highlight DVDs packaged with their CD releases and encourage music fans to buy the CD to get the DVD extra instead of downloading the album illegally.

    Whether it's a marketing tactic, a phenomenon driven by the market or simply the fact that record companies are more comfortable with shiny little discs, the music industry is increasingly using DVD to sell music, treating it as an ace in the hole against file-trading.

    Robert Mugge, director of the music documentary Last of the Mississippi Jukes, told Video Store reporter Jessica Wolf “Being able to add nice packaging and added material helps a little to combat this looming industry of pirated music — and now, film,” he said. “You need to be able to have a product that can compete with what people can trade for free on the Internet.”

    In these tight times, consumers see DVD as a high-value product, partly because it is sellthrough priced (Wal-Mart blows out catalog at prices as low at $5.88), but also because that little disc is packed with information. As has often been noted, consumers get picture, audio and extras on DVD often for less than the price of a CD, which offers audio only.

    Just as television product, both classic and current, has found a friend in DVD, music is finding one as well. As studios go digging through TV libraries to goose the DVD pipeline, music suppliers will no doubt be looking for some video to go along with that classic audio recording and new acts may find video saves the radio star.


    4 May, 2003

    The Music Industry's Messy Battle Over Copyrights

    The Recording Industry Association of America's (RIAA) recent court victory over Verizon to cough up the names of Internet service subscribers suspected of trading in pirated music, and its online consumer enforcement maneuvers is the music industry's latest tactic in battling online downloading and trading of entertainment.

    The RIAA's frontal assault on the consumer is made all the more interesting with the recent federal court ruling that companies that provide the peer-to-peer software Internet users employ to share sometimes pirated music cannot be held liable for what these people are doing with their software. The RIAA and the Motion Picture Association of America (MPAA) plan on appealing that decision.

    As senior editor Holly Wagner points out in her article, both these decisions push digital copyright enforcement down to the consumer level. This is getting to be a very messy affair for the music industry, with the RIAA sending out hundreds of thousands of instant messages to users of Grokster and KaZaa warning them not to share copyrighted music. They can even reach into online log files and go after individuals trading in copyrighted material.

    Privacy groups and online rights organizations are urging Verizon to appeal the ruling, which it has vowed to do.

    The battle being fought by the music industry must have those in the movie business who are monitoring this situation shuddering at the thought of such a scenario ever occurring in any possible future digital copyright protection battle for movies.

    Even as the music industry tries to construct easy-to-use, low-cost digital download services for its customers, it's engaged in hand-to-hand combat with them regarding free file-sharing. It's a no-win situation for the music industry that, while it has every right to protect its copyrighted product, is finding the Internet an almost impossible environment in which to enforce that protection.

    For the time being, the MPAA is targeting hardware providers in state and federal legislation efforts as the point of control for illegally copying and/or electronically sharing copyrighted material. Hardware manufacturers, through the Consumer Electronics Association, are pushing back that they would be unduly burdened with what they feel is a software issue, and by what they feel would be inappropriate enforcement of otherwise fair use practices by customers using their hardware.

    The issue may, indeed, come down to fair use and, as some video industry analysts have expected, that could lead dangerously close to aspects of the First Sale Doctrine, on which the development of the video rental business was founded.


    1 May, 2003

    The Season Has Hardly Begun, But the Playoffs Are Already a Hot Topic

    With the summer movie season fast approaching, video prognosticators are predicting a slam-dunk fourth quarter even before the first of the summer blockbusters rolls out in a few weeks.Matrix Reloaded, which opens theatrically May 15, will surely be one of the biggest DVD sellers of the year, and of all time. A video release date, of course, hasn't been set, but most pundits predict a fourth-quarter release, ideally in time for the theatrical bow of Matrix No. 3.The preliminary slate for the fourth quarter already includes a good number of heavy hitters, including The Lion King (Oct. 7), the biggest-selling videocassette of all time.And with DVD increasingly dominating the home video — my hunch is this will be the final year for VHS to even matter — everything's coming out at one low price, making it easy for retailers to sell, rent or do both.But conversations in Hollywood as well as Retail Land aren't limited to the wads of cash most everyone expects will come streaming in. There's still a specter of uncertainty clouding our collective visions of sugarplums, and much of that uncertainty has to do with that onerous “P” word, pricing. I'm still hearing rumblings that some studios are seriously mulling a two-tiered pricing strategy similar to the old (and, as far as I'm concerned, antiquated) VHS model.God, I hope not. Tinkering with the successful DVD sales model would be the biggest mistake Hollywood could make, and I honestly don't think anyone would be foolish enough to give it a go.I firmly believe we're going to see a rental resurgence, as avid DVD buyers fill up their shelves/cabinets/shoeboxes and start getting more selective.But that doesn't mean we should see a comeback of rental pricing. It's simply too late — consumers have grown accustomed to being able to buy movies the moment they arrive in stores and, even if there's a title they don't necessarily want to rush out to buy, they don't like being told they can't.


    29 Apr, 2003

    Adventures In Retail

    Over the last weekend I had a couple of retail experiences that I found a bit harrowing, even though I benefited from them.

    Because I am refinishing some chairs, I had to go to a fabric and craft store to get some upholstery supplies. This was not a neighborhood store, but part of a national chain.

    I can remember when you had to know at least a little bit about sewing to get a job at a yardage store. I guess home sewing is a dying art, despite what the Home and Garden channel wants us to believe.

    I thought it was just lax service when the woman at the home d?cor cutting table sent me to the general cutting table to have my goods measured so she could continue sorting safety pins or whatever trinkets she was pushing into little piles on the table. But when I got to the general cutting table, the young lady there didn't know which direction to measure the fabric. For those who don't know about yardage, it comes in a handful of standard widths between one and two yards. Since I was buying a 7-yard cut, I could have taken advantage and got the whole piece for the price of the yard-and-a-half width. But I set the salesperson straight and we measured the whole seven yards.

    The POS system didn't register the advertised discount on one item so she told me to request it at the register.

    Once there, I stood in line for what seemed like ages as two clerks closed their registers and the remaining line stacked up behind a customer with two full carts of Independence Day decorations. When it was my turn I asked for my discount.

    First the clerk told me the discount didn't apply. When I pointed out three signs on the yardage table specifying that my goods did, indeed, qualify, she said she would give the discount “this time” – then proceeded to calculate it incorrectly, which gave me more of a discount than I was entitled to receive. I tried to call that to her attention but she was too frustrated and the line was getting too long, so she just sent me on my way.

    On the way home I stopped for a burger. In the drive through I announced my combo coupon into the speaker. The food technician got the amount wrong and when I tried to correct her (up $1) she said “fine” and charged the lower amount, then didn't even ask for my coupon.

    About now you're wondering what all this has to do with video.

    It's not so much about video as the general state of retailing. It happens all over, especially at chains like Wal-mart, Kmart and Circuit City, where corporate management decides the best way to save money is to eliminate minimum skills at the lowest rungs and hire anyone who can fill out the application, often to sell quite specialized items or handle complex transactions.

    Most of the time it seems like chains have all the marketplace advantages. But this street-level view proved to me that independents can do a better job of some things, like hiring and training people with at least marginal knowledge of the store's products and policies.

    Independent retailers may struggle to pay decent wages, but at least they are involved enough to see what's going on at the customer interaction level. As chains divert ever greater portions of their revenue to senior executives and shareholders, they forget the costs of leaving their businesses in the hands of ill-trained, apathetic minimum wage slaves.

    You can bet I won't be buying stock in either of the businesses mentioned here. If they run all their outlets like this, they'll go broke soon.


    28 Apr, 2003

    Rev-Share Deals Probably Don't Mean A Return to Bad Old Days

    A recent post on the Video Software Dealers Association discussion board noted the new DVD revenue-sharing deals with the big chains and asked, “Are we about to be screwed again?”

    The post referred to the controversial revenue-sharing deals of the late 1990s between the big rental chains and the studios, which forced many independent retailers to shutter, spawned a bitter antitrust legal dispute and changed the whole character of the business.

    Despite the bad blood of recent memory, the simple answer to the question of whether indies will return to the bad old days is probably no.

    The studios don't appear to be abandoning the sellthrough strategy on hit DVDs (Why would they want to upset Wal-Mart?), which levels the playing field on the most desirable titles between the big rental chains and the indies, thanks in part to the First Sale Doctrine.

    The new revenue-sharing deals seem to be aimed at getting retailers to bring in the secondary titles, not more of the hits. They essentially allow retailers to share the risk of buying the lesser-known titles with the studios and maintain a nice selection in the process. That's a far cry from offering must-have titles to the big rental chains at what indie retailers complained was a highly preferential price with which they could not compete.

    Retailer Tom Hannah doesn't seem too worried. In answer to the post, he wrote, “As for getting screwed by revenue-sharing, I think that will only happen to IVRs [independent video retailers] that enter into bad deals.”

    He noted the big retailers may be using revenue-sharing as risk abatement in a mercurial business and that it's harder for the big chains to judge the number of copies needed for each individual store.

    That's something independent retailers who are savvy enough to have weathered recent years probably won't have to worry about. If they've survived, they most likely have the expertise necessary to gauge their customers' demands. And, as Hannah notes in our article, the secondary titles are not must-have commodities. He's survived in the past by buying them later at a reduced price.

    Still, suspicions in this business run high -- especially since the recent bad old days of indies exiting the business in large numbers looms large. I wouldn't discount the studios' interest in earning top dollar for product, but I don't think the market forces today dictate indies' demise.

    Sellthrough DVD has been an unintentional peacemaker in the rental business. If the big chains think revenue-sharing on DVD fits into the company's business plan, it doesn't necessarily mean the indies need to follow suit.


    27 Apr, 2003

    Is It Time to Give Video Vending a Look?

    Is it time to add video vending machines to the list of options retailers have to growing their business? Well, perhaps it's too early to tell, but there has been a recent flurry of activity in the space, as chronicled in this week's issue of Video Store Magazine. DVD has spurred interest in video vending by specialty and non-specialty retailers alike.

    “It's a continuation of the channel blur,” Jeff Lenard, spokesman for the National Association of Convenience Stores told senior editor Holly Wagner.

    The variety of systems and services being developed for sale, lease and franchise in the video vending category and the number of locations where something like this might work could be both an interesting opportunity for established rentailers as well as a competitive threat from other retail sectors.

    There is no analysis yet available as to whether or not the video vending model is generally successful, but Blockbuster, as one example, has been active with video vending in Europe for a number of years in locations such as gas stations and grocery markets, and in Israel with machines placed outside some of their stores to extend their hours of business.

    Indeed, the idea of using vending machines to extend one's business is an attractive possible alternative to, say, opening another store to reach into another market. By seeking out locations that combine foot traffic and the convenience factor, specialty retailers can also compete with their retail brethren in supermarkets, for instance, who have those attributes built into their business who are in the rental business now.

    I also like the idea of the machine extending one's business hours, particularly in the morning. Many video stores open their doors at 10 am or later, and perhaps by having a vending machine outside their store, people on their way to work may take a moment to grab a video for that evening, instead of having to take the trouble to stop after work to rent a video when they'd rather be heading right home.

    Video vending has been around for a while, but perhaps with DVD's size (and selthrough pricing) making it possible for these machines to have a larger inventory, the financial model for vending has improved. It's worth considering. We'll have to see how this concept progresses.