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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 Nov, 2000

TK's MORNING BUZZ: Studios Should Keep Indie Retailers Happy -- Their 45% of Rental Product Purchased Is Still a Big Chunk

The two major studios that in recent months have broken ranks with traditional video distribution are finding their bold new plans to get product to retailers aren't as simple as they may have appeared on paper.

Warner Home Video is reportedly having trouble making goal on its rental titles--perhaps because it severely understimated the number of independent retailers out there--and, judging from comments posted on the VSDA discussion board, there are serious problems with customer service as well.

Universal Studios Home Video's decision to only use three distributors, meanwhile, is being openly flouted by those distributors who didn't make the cut, but who vow to keep providing their customers with Universal product however they can. Two big buying groups this week weighed in against Universal as well, saying the bulk of their members won't deal with the two annointed full-line distributors, Ingram Entertainment and VPD, and would either buy Universal product on the sly from other distributors or not buy any at all.

Even so, it is doubtful whether either studio will backtrack--or whether Warner and Universal's initial stumbles will deter other studios from similar streamlining.

The percentage of product sold to independent retailers keeps shrinking, and in the studios' minds, there's simply no need for this many distributors. I disagree--I think it's vital to keep the independent retail community healthy and happy, because even if they only buy 45% of rental product, that's still a pretty significant chunk of business. Furthermore, I believe distribution serves a vital function beyond fulfillment and credit--the distributor reps I've known have been key members of their clients' teams, helping and supporting them and dispensing advice and suggestions that, in the end, benefit everyone in the home video foodline.

Nonetheless, distribution streamlining has begun, and in all likelihood will continue--particularly as studios prepare for the inevitable transition from VHS to DVD. Indeed, some pundits predict that it is the studios' ultimate goal to be fast and efficient content exploiters who outsource everything except sales and marketing. Under this scenario, replicators who currently manufacture DVD would be groomed to distribute product as well, leaving the studios virtual licensors, free to move from platform to platform and follow the money from packaged goods to electronic delivery.

Comments? Contact TK directly at:TKArnold@aol.com

3 Nov, 2000

APAR's WORKING WEEKEND: Video Is Dead, Long Live Home Entertainment

One by one, “home video” companies are declaring themselves dead as vaudeville. Stop the presses!? Don’t bother. We’re being figurative, not literal.

DVD has thrown home vide-oops, we mean home entertainment-–labels for a loop as they declare in their ad materials that the term “video” doesn’t connote DVD but does denote VHS, last century’s clackety cassette contraption not as moribund as the revenue-sharing rift makes it seem and also not exactly an elegant growth engine. (If this industry’s insufferable tendency to say a movie is on “video and DVD” were ported over to the book business, we’d be treated to “published in print and paperback!”; in music, ads would proclaim, “now on disc and CD.” The mass-market film industry’s regard for language can be gleaned from the amount of pre-verbal scripts produced, thank you very much.)

Truth is, the acronym VHS (Video Home System, via Victor Home System for inventor JVC) is not as sleek as the word video and its cool quotient is light years behind dynamic DVD (digital video disk). Slickness slays sensibility as video is substituted for the politically incorrect VHS and is made to appear a world apart from DVD Video. When it comes to causing consumer confusion, the home whatchamacallit industry has forgotten more than most markets will ever know.

Disney, per usual, has tried to trump competitors by branding its digital products “Disney DVD.” By not similarly attaching the cherished company logo to the video bug in its ads–-“on video and Disney DVD” – the Mouse House seems to be signalling that video is so five minutes ago, so analogged, it doesn’t deserve the Disney imprimatur as does darling DVD.

Now that Hollywood honchos have marginalized the term “video” by trapping it in the ghetto of planned obsolescence (aka VHS), how can they gladly suffer themselves sporting billion-dollar “home video” divisions that, by their own words, can be perceived as mere cassette canneries?

Enter “Home Entertainment.” It’s positively post-modern. This week, Columbia TriStar made the switch, dropping the old and tired “home video” hanging for dear life onto the end of its proud and proper name in favor of the manse-like “home entertainment.”

Recently, Home Entertainment Events, a show-producing joint venture of the Video Software Dealers Association and Advanstar Communications, Inc. (owner of Hive4Media.com and Video Store Magazine), performed simpler cosmetic surgery, dropping the “video” that once followed “home” in its name.

Apart from VSDA itself, the most prominent “video” entities left standing are Universal Studios Home Video and Warner Home Video. We like to think that its fiercely competitive and contentious chieftain Warren Lieberfarb–-soon to formally oversee pay-TV operations as well as his longtime video fiefdom-–is intent on fashioning a more ambitious moniker than “home entertainment.” And who’s to say that TW’s pending “partner” America Online doesn’t have its own thoughts about realigning and renaming some of the pieces it is picking up. There’s always AOL Warner Megatainment.

As the AOL and Time Warner handshake epitomizes, the notion of entertainment is changing at warp speed, with new forms of content ready to break through the formulaic stranglehold on our imaginations of feature-length fiction films. Those too will become one part of the entertainment equation, less dominant than before. They will begin to lose some of their centrifugal force in the culture as many other, more personal images crowd our vision.

Even today, beyond movies, home entertainment includes games, licensed merchandise, published works, and the online experience. It includes electronic delivery as well as packaged media. What we’ve known for years as home video is, in fact, becoming marginalized, in a relative sense, as one cornerstone of home entertainment. Just as vaudeville had to give way to more evolved forms of entertainment, the time is nigh for home video to accept that others are getting into the act.

Comments? Contact Bruce directly at:bapar@advanstar.com

2 Nov, 2000

TK's MORNING BUZZ: Why Don't the Studios Throw DVD Into the Revenue-Sharing Mix?

I wish the studios would leave well enough alone and stop tinkering with DVD release dates.

At a time when most major releases are now streeting day and date on both formats, VHS and DVD, two studios are putting a fly in the ointment.

First, Universal Studios Home Video held up the DVD release of U-571, Pitch Black and The Skulls by two weeks.

And now Fox Home Entertainment says it will split release dates on Me, Myself and Irene, with the rental-priced VHS coming out Jan. 9 and the $26.98 DVD streeting two weeks later, on Jan. 23.

I understand why they're doing this, but I don't agree with the strategy in the least. Universal and Fox--and other studios as well, for that matter--are fearful that as the DVD base continues to grow, retailers will cut back on their rental VHS buys and pick up more copies of the cheaper DVDs.

I know studios can't afford to take such a hit, particularly with the DVD market expanding as rapidly as it is. And yet by delaying the DVD release, they're only going to anger consumers and perhaps make them think twice about the viability of DVD, which I don't think anyone, at this point, wants to do.

Think about it--Joe Consumer gets a $200 player for Christmas, and he wants to watch every new movie he can get his hands on. He treks down to the video store shortly after New Year's, sees a release announcement for Me, Myself and Irene, and gets excited--only to be told the film's not yet out on DVD.

If I were Joe, I'd probably truck that player back to the store it came from and tell them where to put it.

I sympathize with the studios' dilemma, and I fully realize that they can't afford to let DVD cannibalize sales of higher-priced rental VHS videocassettes. But delayed release windows isn't the answer--it merely sends the wrong message to consumers.

Another option that's being discussed, and advocated by such high-profile industry leaders as Hollywood Entertainment Corp.'s Mark Wattles, is two-tiered pricing, similar to the existing VHS model. Again, I don't like it, because it could damage the sellthrough market--and DVD has always been envisioned, first and foremost, as a sellthrough item.

I'll say it again--revenue-sharing. And for those of you, like Wattles, who believe there's no point in revenue-sharing unless prices go up, consider this: Why don't the studios, who already channel more than 50% of their rental product through direct revenue-sharing, throw DVD into the mix and give retailers the option of buying VHS cassettes and DVD discs for a lump sum?

That would take care of a significant portion of the cannibalization problem, right then and there.

As for smaller retailers who aren't into revenue-sharing, studios can either let them continue to buy DVDs at low sellthrough prices or include DVDs in attractive and competitive copy-depth programs.

Of course, that hinges on whether the studios can even come up with attractive and competitive copy-depth programs...

Comments? Contact TK directly at:TKArnold@aol.com

1 Nov, 2000

TK's MORNING BUZZ: Video Retailers Must Work Harder Than Ever Just to Maintain Their Current, Falling Standard of Living

I received an interesting phone call yesterday afternoon from a reporter for a major metropolitan newspaper that shall remain nameless.

He had some questions about the flow of venues for movies. He knew they came out first in theaters, but after their theatrical run, was it true that they went straight to Blockbuster before their general release on video?

I corrected the good gentleman, but I can hardly blame him for his misconception. Blockbuster now controls nearly 40% of the rental market, and with Big Blue's push into secondary markets, it's hardly surprising that to many, renting a video has become synonymous with renting a video from Blockbuster.

Where is that generic advertising campaign when we need it? The VSDA is once again hoping to get studios to fund a major national awareness drive, but I'll put it bluntly--it's not going to happen. The studios are convinced that only title-specific advertising works, and there's simply no way they're going to pitch in for an ad campaign that isn't focused solely on their product.

In the past, I have always felt that Blockbuster's incessant TV advertising benefits all retailers, since it trumpets the video rental experience. But with Blockbuster now reaping nearly half of all rental activity, Big Blue's ads benefit Blockbuster more than anyone else, more than ever before.

Ironically, Blockbuster is now cutting back on mass-market ads in favor of direct consumer marketing. What little benefit other retailers got from Blockbuster's "rent a video tonight" ads will soon be history, leaving them with nothing, nada, nil.

When the revenue-sharing steamroller first got started, there were great expectations that studios would follow through with massive post-street-date ad campaigns for rental titles, since they now had a vested interest in the product they sold. But that hasn't happened--thanks to output deals and guarantees, studios have no more concern about what happens to their rental titles once they are shipped to retailers than they did under the traditional buying model.

The end result of all this is that at a time when rental revenue is flat, and turns are down by around 8% or 9% from last year, less is being done to combat this malaise than ever before. A generic awareness campaign simply isn't going to happen, post-street-date advertising on rental product is few and far between, and even Blockbuster is all but giving up on mass-market advertising to pump up the video rental experience.

Is there a light at the end of the tunnel? I certainly don't see any--which means video retailers are going to have to work harder than ever just to maintain their current standard of living, which has fallen drastically in recent years.

Comments? Contact TK directly at:TKArnold@aol.com

31 Oct, 2000

TK's MORNING BUZZ: The PlayStation 2 Effect -- Plenty of Action on the Software Front to Go Around

In the coming weeks, we'll be able to tell what effect, if any, the arrival of hot new game machine the PlayStation 2 will have on software sales and rentals.

In the best-case scenario, the influx of hundreds of thousands of PlayStation 2 units, capable of playing DVDs as well as PlayStation 1 and 2 games, will see a significant uptick in everyone's business. Owners of these revolutionary new machines will snap up not only video games at the sales and rental counter, but also DVDs so that kids can take a breather between game rounds and watch a movie or two.

In the worst-case scenario, new PlayStation 2 users will be so enamored by the graphics and what-not that they'll focus on games made exclusively for the new player and rent and buy less of the other stuff.

In the end, things could balance themselves out so that the overall effect on software retail is nil. PlayStation 2 games could see the bulk of the action, but enough DVDs and older games could still be sold and bought to make up for the exodus of PlayStation 2 owners who only want to play with the hottest, newest games.

But I doubt that. My hunch is that the PlayStation 2 Effect will be a positive one. When DVD players first came on the market, new owners bought an average of 22 movies to go with their machine. If PlayStation 2 owners are anywhere near as rabid, there should be plenty of action on the software front to go around.

There are only so many new PlayStation 2 games coming to market by the holidays. And I know if I had been lucky enough (smart enough?) to get a player, I'd be testing it out with the biggest variety of software I could find.

The key is for retailers to take advantage of the momentum by making sure their customers know they've got a wide selection of software that can be played on the new machine.

It's time for retailers to be retailers.

Comments? Contact TK directly at:TKArnold@aol.com

30 Oct, 2000

TK's MORNING BUZZ: Jeff Yapp's Take-Off From Hollywood Entertainment Is the Latest Exit Scene in 'Flight of the Video Executives'

Jeff Yapp's abrupt and unexpected departure as president of Hollywood Entertainment Corp. is the latest example of what many are calling the Flight of the Video Executives.

Buena Vista Home Entertainment president Mitch Koch has flown to Microsoft, MGM Consumer Products president Richard Cohen has winged it to a dot-com with an eye toward the electronic delivery of movies, and Columbia TriStar Home Video executive v.p. Paul Culberg flew the coop earlier this year to join a company with a dazzling technology for DVD enhancements.

Yapp hasn't announced his plans, but when the official press release hits today, trumpeting his departure, I've been told it will contain information about a hot new job he's gotten and strongly deny rumors that he quit because Hollywood isn't doing so well.

Therein lies the key to all these departures: video executives aren't exactly jumping off a sinking ship, but they certainly are eyeing the waters for any other opportunities that might be out there.

We can draw useful parallels for retailers. The video business is changing, and it's smart to keep one's options open. It's not necessarily time to get out--although for some, if they have the misfortune of being across the street from Blockbuster, it might be--but it is time to rethink career plans and decide whether to make a long-term commitment to video or else sample the grass in some other pasture.

Video rental isn't going away, at least not yet. But it is getting harder to make a living at it. Even retailers who are still making money concede their standard of living isn't what it used to be. That's why as the year comes to a close, it's important for retailers to assess their businesses, and their cash flow, and start making some pretty hard decisions about the future.

Many may opt to stick it out and shore up their businesses with DVD, adult and non-video products and services.

But others may want to keep their eyes and ears open to what else may be out there. Messrs. Culberg, Koch, Cohen and Yapp didn't aggressively seek to get out, but they didn't stick their heads in the sand, either.

Comments? Contact TK directly at:TKArnold@aol.com

27 Oct, 2000

TK's MORNING BUZZ: How Many Smaller Retailers Were Able to Get Their Hands on Any PlayStation 2s?

The flash-in-the-pan sales stampede yesterday morning in which all 500,000 PlayStation 2 video game consoles shipped to retail had sold through to consumers in a matter of minutes was nothing short of phenomenal.

And yet once again, as in the video industry, power was concentrated at the top. On launch morning, Video Store Magazine staffers visited Southern California outlets of Wal-Mart, Target, Best Buy and several other big chains. Each of them told us they had received allotments of between 50 and 100 PlayStation 2 consoles. Take the average, 75, and divide that into the 500,000 units that comprised Sony's initial shipment and you get just over 6,500 lucky retailers that were on the receiving end of Sony console shipments.

The big three mass merchants--Wal-Mart, Kmart and Target Stores--alone have 5,500 stores between them. Add to that Best Buy, Circuit City and Toys "R" Us, all of which also participated in the launch, and you're right at the 6,500-store mark. And that doesn't include games-only chains like Electronics Boutique, the various online sellers, and, of course, Blockbuster, which also got a few consoles per store to rent.

So my question is this: Exactly how many PlayStation 2 consoles were reserved for the smaller independents, the non-mega-chain toy stores, video stores and game stores that are also involved in the suddenly resurging videogame trade?

I don't have the answer, but I'd sure like to know whether any of you smaller retailers reading this column were able to get your hands on any PlayStation 2s--and if you did, did you have to wait in line like Joe Consumer to buy them from the big chains?

The home video industry, it appears, is not alone in favoring the strong and the mighty. I just hope independent retailers of all stripes are capitalizing on PlayStation 2-mania however they can--by pushing alternative game consoles, perhaps through ads or discount coupons; by hyping their PlayStation One and DVD software as readily available alternatives to already-scarce PlayStation 2 games; or through clever, unofficial "cross promotions" (bring us your receipt from your PlayStation 2 purchase and we'll give you a free video rental, so the rest of your household has something to do while you play with your new toy).

Sony is billing the PlayStation 2 launch as the biggest consumer electronics launch in history. And there's no reason everyone can't hitch a ride on the console's coattails, even if you're not among the chosen few.

Comments? Contact TK directly at:TKArnold@aol.com

27 Oct, 2000

APAR's WORKING WEEKEND: The Woodstock of Videogames

It’s World Series time, and even though I am writing this in the middle of the fifth game, with the score tied and the Yankees leading the series 3-1, I boldly predict that the series will be won by New York.

This past week also saw what could be considered, if not the World Series, then the Woodstock of videogame launches, with Sony’s apocalyptic PlayStation 2 rocking retail shelves nationwide.

Just like at Woodstock, there was false advertising (despite promoting “three days of peace and love,” I didn’t get much love myself at the festival), with stores brazenly advertising PS2 the previous weekend as if you could walk in off the street and take one home, no problem. Big Problem.

[My better half was literally laughed at when she tried to buy a unit at Babbage’s, which told her it was allotted 10 units a week and had 200 orders to fill, “so try us in March.” Toys “R” Us simply played an “out of luck” outgoing message to callers.]

Just like at Woodstock, teenagers camped out overnight storeside, in the slim hopes of laying claim to a precious PS2. Others camped in front of a computer screen to see auctioners on website e-bay posting “sale” prices of $700 for a PS2, past the point of silliness. Such is the cost of instant gratification.

We agree with Mindy Pickard of giant BMG, who notes in next week’s Video Store that music will propel DVD into a new dimension of entertainment that movies only have hinted at. The time and sensory obligation of watching a feature is no match for the more versatile uses of music, which can be used as background for homework (my kids better not be reading this) or a teenage party, with DVD changers turning Generation PS2 into homegrown VJs.

Besides, having Britney or ‘N’ Sync come alive on PS2’s DVD drive in a schoolkid’s bedroom will make static wall posters positively passe.

As if PS2 needed a boost, the scarcity of the magic mushrooms has its target demo in a frenzy.

We don’t necessarily doubt Sony’s reasons for the shortages, but we also don’t doubt Sony hasn’t lost a step in its widely admired ability to create a compelling mystique around cutting-edge gadgets. Even if the shortage isn’t marketing by design, Sony isn’t at all averse to play it as it lays, to the hilt.

Vivid memories linger of the 1980s press conference where the first Walkman was introduced. Journalists donning stereo earphones (until then, all we knew was a transistor’s mono earplug) looked at each other agape in disbelief at the sound from these little suckers, just as this weekend a lucky few are at home staring incredulously at the eerily lifelike graphics of the PlayStation 2.

Like Grace Slick said, it’s a new dawn.

Comments? Contact Bruce directly at:bapar@advanstar.com

26 Oct, 2000

TK's MORNING BUZZ: 'Toy Story' Snafu Is an Old Story for Big-Order DVD Replicators Once Again Stretched to the Limit

The flap over R-rated shots from High Fidelity making it onto copies of the kid-friendly Toy Story 2 from the Walt Disney Co. doesn't really surprise me.

DVD replication is taxed to the max, and whenever engines are running full steam for an extended period of time something's bound to go wrong. Customary quality controls are slackened, and in the rush to get things done mistakes can, and do, happen.

Something else is happening in DVD replication that doesn't have the sensational slant of the Toy Story snafu, but it's a whole lot more damaging to the industry.

Capacity limitations are such that the big replicators are focusing on their big orders and, in the process, some smaller suppliers are reportely having trouble getting their discs made. On the supply side, as in retail, the big guys come first.

You'd think that with DVD being the Great Savior of packaged home entertainment someone would have done better planning, and laid some groundwork, to prevent this problem from occurring--or, rather, recurring, as the same thing happened last year.

But instead, replication is once again stretched to the limits, and in the process someone's getting the proverbial short end of the stick--be it the independent suppliers who can't get their product to market on a timely basis, or the kids at Costco whose Ultimate Toy Box is a whole lot more than they bargained for.

Comments? Contact TK directly at:TKArnold@aol.com

25 Oct, 2000

TK's MORNING BUZZ: The 'Other' Blockbuster -- a Money-Losing Chain Struggling to Stem the Flow of Red Ink

Spin City, here we come.

I just finished reading the official Blockbuster press release, announcing Big Blue's financial results for the third quarter.

And boy, did the nation's "leading provider of rentable home entertainment" (that's straight from the release) ever do well!

"Revenues Increase 7% to $1.19 billion," screams one of three sub-headlines. "Same Store Revenues Increase For 11th Consecutive Quarter," proclaims the second. "Video Segment Cash Earnings Increase 45% to $33.3 million," blazes the third.

You have to dig pretty far into the copy to find out that the "leading provider of rentable home entertainment" (I like that!) also saw its net loss widen to $19.3 million from $19.1 million in the year-ago quarter, despite a 20% reduction in advertising expenses--which Blockbuster in the past cited as a primary reason for its red ink.

This net loss is almost as high as Blockbuster's cash earnings ($22.6 million) and brings the chain's total net loss for the year to $51.3 million.

As for Blockbuster's "11th Consecutive Quarter" of same-store sales gains, the press release states that the gains only amounted to 1.5% and that "higher same store revenues were driven by strong international revenues."

Huh? To me, that indicates domestic Blockbuster Video stores didn't fare nearly as well as the release intimates and probably finished the quarter flat, if not down from what they were a year ago.

So read between the lines and what do we have? A money-losing chain struggling to stem the flow of red ink by cutting costs, including advertising. A chain whose stores are chock full of hits, a chain that prides itself on guaranteeing its customers will "go home happy," a chain that now controls nearly 40% of the video rental market--and yet a chain that can't seem to get people to spend more money in its stores if its life depended on it, even with the added lure of DirecTV.

Revenue-sharing, what hath thou wrought?

Comments? Contact TK directly at:TKArnold@aol.com