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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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14 Sep, 2000

TK's MORNING BUZZ: NARM Retailers Are Jumping on the DVD Bandwagon--Even at the Expense of Music CDs

NARM chief Pam Horovitz with Gil Wachsman of the Musicland Stores Corp. at the opening reception to the trade association's annual fall conference at the Coronado Marriott in Coronado, Calif., Sept. 13. (Hive News Photo)

Forget about DVD-Audio. Music retailers, at least at this point, are either skeptical or disinterested.

DVD-Video is what commands their attention, and at the annual fall conference of the National Association of Recording Merchandisers (NARM), now underway in Coronado, Calif., some of the nation's biggest music retailers are talking openly of beefing up their DVD inventories even if it means cutting back on music CDs.

Interest is so high that Universal Studios Home Video president Craig Kornblau took a cadre of top sales and marketing executives to this resort town just west of San Diego to participate in Universal Music and Video Distribution's gala product presentation last night.

After huddling with top clients like Best Buy's Joe Pagano and Musicland Stores Corp.'s Gil Wachsman at an elaborately catered reception, Kornblau took the stage to excite the retail troops about his studio's fourth-quarter DVD lineup, which includes 12 titles with a collective boxoffice gross of $1.9 billion.

"We're on a tear," Kornblau told retailers, and there are few who would, or could, disagree.

Kornblau's DVD marketing assault on the music confab isn't surprising, given the aggressiveness with which music retailers are jumping on the DVD bandwagon. Recent numbers show that while Best Buy is still the nation's No. 1 retailer of DVD software, Wal-Mart is a close second.

But music retailers I spoke with all agree there's an opportunity, with DVD a natural extension of their existing product line--and a much better fit than VHS. As one said, "We've been selling 5-inch discs for 15 years now. Why should DVD be any different?"

They further question whether Wal-Mart or any of the other mass merchants, for that matter, have the demographics to sustain their momentum-of-the-moment. They see music retailers as the dominant force in DVD sales, and their going to work their tails off to make this vision happen.

I do see a fit here. If you remember back to the middle 1980s, it was music retailers who took an early lead in laserdisc sales. My guess is the primary reason the laserdisc never really took off was timing. The 12-inch laserdisc came around at the same exact moment that the 12-inch vinyl LP was being phased out; even the packaging was the same size. No wonder consumers were skeptical.

But with DVD, it's a different story. CDs are still the dominant music format, and its eventual (theoretically, at least) successor, DVD-Audio, doesn't look materially different.

The 5-inch disc rules on all fronts, and music retailers are wise to take what for them is really a very small step.

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

13 Sep, 2000

TK's MORNING BUZZ: The Essence of Marketing Packaged Home Entertainment in the Convergence Era--Selling 5-inch Discs to Young People

Convergence affects people, too. I spoke last night with Mitch Koch, the president of Buena Vista Home Entertainment who is resigning next month to assume the vice presidency of Microsoft Corp.'s home and retail division.

Among his chief duties will be to oversee the launch of Microsoft's new X-Box, the much-ballyooed videogame console scheduled to launch in the fall of 2001.

While at Disney, Koch was a big supporter of DVD and other things high-tech. It was under his auspices that Buena Vista began issuing its animated classics on DVD, and stepped up its efforts to use the Internet to market to retailers through one of the most advanced studio Web sites I've seen.

While Koch maintains the move is a good one for him--he noted, with a laugh, that while his kids were little, he worked for Disney and lived less than an hour away from Disneyland, and now that they are a little older he's moving into the video game and computer sector--the hire also makes sense for Microsoft.

No one markets to kids better than Disney, and with Koch having pushed the pedal to the metal in the studio's drive to DVD, Microsoft is getting one shrewed cookie with plenty of experience in selling 5-inch high-capacity discs to young people.

And that, my friends, is the essence of marketing packaged home entertainment in the Convergence Era--selling 5-inch high-capacity discs to young people.

The video side is already well on its way toward a DVD-dominated universe. Already, studios are reporting that as much as 20% of their sales volume on hot sellthrough titles comes from DVD, and that ratio is going to soar, particularly if what DreamWorks did with Chicken Run--listing both the VHS and the DVD at the same suggested retail price--becomes the new industry standard.

On the rental side, a new report from Centris shows that the number of DVD households renting discs has gone up a whopping 333% in the last two years.

On the music side, the rapid development of DVD-Audio is causing lots of experts to predict the 5-inch high-capacity disc will eventually dominate there as well.

Retailers are anxious for something new and better that will rekindle consumer excitement, now that the CD is a rapidly maturing teenager and more and more of their customers are downloading music over the Internet.

The videogame sector is also moving to the 5-inch high-capacity disc, led by the PlayStation2 and the Microsoft X-Box, both of which will be able to play movie discs as well as dedicated game software.

And while Koch appears to be jumping from one industry into another, if you get right down to it, it's all rapidly evolving into the same sport:

The disc throw.

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

12 Sep, 2000

TK's MORNING BUZZ: A Video Is a Video, Whether It's on a VHS Cassette or a DVD

I just lost an argument with my 4-year-old. I asked Justin this morning whether he wanted to watch a movie, and when I pulled out the Rugrats feature on DVD, he gave me a dirty look and said, "Daddy. That's not a movie. That's a DVD." I tried to explain that this was a movie on a DVD, but he yanked out a VHS cassette and said, "THIS is a movie. That's a DVD."

Our industry is facing a similar battle of words. For a long time, anything you could pop into a set-top box on your TV and watch was called a video.

With DVD, the line has been drawn--people consistently refer to cassettes as "videos" and DVDs as, well, "DVDs."

That's wrong, and it's something we're combatting in our magazine. Videos is a generic term that applies equally to cassettes and discs, as long as there is, well, "video" on it.

There are two formats for video currently in use: VHS cassettes and DVDs. If you're a video store, you don't exclusively rent or sell VHS; you also rent or sell DVD, because it's simply another format.

The whole thing reminds me of the mid-1980s when CDs first arrived on the scene. At the time, I was covering the pop music beat for the San Diego County Edition of the Los Angeles Times, and I frequently referred to an artist's new "album."

That was wrong, my editor informed me. An album is a 12-inch vinyl record, also known as "LP" (short for "long-playing album).

Well, then, what was I to call a new body of work by a musical act? My editor instructed me to call a CD a CD. But what if the artist's "CD" was also available on audio cassette? He didn't have an answer.

Eventually, I won this argument. My editor saw the light and grudgingly accepted that CD, cassette, LP are nothing more than different formats on which a record company issues an artist's RECORD ALBUM, which is merely a collection of songs, just like a photo album is a collection of photos.

Today, "album" is a generic term for a collection of songs that have been previously recorded and can be purchased in packaged form by consumers.

It's also being used for music downloads, and no one blinks twice when someone says, "Hey, I just downloaded a really cool old album by Elvis Costello."

Hopefully the home video industry will also come around in time. A video is a video, regardless of whether it's on a VHS cassette or a DVD--or, for that matter, a Beta cassette or a laserdisc.

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

11 Sep, 2000

TK's MORNING BUZZ: Blast the FTC Report--You Can't Blame Hollywood for Irresponsible Parenting

What a way to start the work week!

The FTC releases its long-awaited report, blasting the entertainment industry for allegedly marketing violent movies, video games and music to young adults.

And then we're hit with another press release from that relentless hype machine, Kanakaris Wireless, bearing the headline, "Founding Father of Home Video, George Atkinson, Touts Kanakaris Wireless' CinemaPop.com and Predicts That Internet Will Replace Home Video as the Largest Source of Distribution Revenue to Hollywood."

Ah, where to start. In regard to the latest "Hollywood is responsible for the decline of Western civilization" missive, I tend to side with Jack Valenti, the longtime head of the Motion Picture Association of America.

Valenti immediately issued a response to the FTC report, arguing that the entertainment industry is the "only segment of our national marketplace" with voluntary guidlines as to what's suitable and what's not for those impressionable young minds.

Let me add to that: The object of marketing is to sell something, and young people constitute a significant chunk of the consuming public. Of course they're going to find out about new movies and new video games. When I was 12 I knew all about "Last Tango in Paris." But I didn't watch it. That movie was rated "X," and even if I could have somehow snuck into the local movie theater to watch it, my parents would have given me a sound thrashing had they caught wind of such a move on my part.

Like Valenti, I happen to believe our existing movie and video game ratings systems are fine. They tell us exactly what's suitable and what's not. If there's a problem, it's on the enforcement end. I don't have a problem with films like 8MM, which everyone knew up front contained a lot of violence--and which bore an "R" rating.

But I do have a problem with the young couple who brought their toddler with them to a theater near my home to watch the movie.

The entertainment industry has done its part. You can't blame Hollywood for irresponsible parenting.

As for the latest Kanakaris release, jeez, give me a break. I've written about CinemaPop.com's less-than-front-line cinematic offerings before, none of which I've been able to watch because I can't figure out how to download the player.

Yes, eventually, the Internet may very well "replace home video as the largest source of distribution revenue to Hollywood." Then again, it might not.

It's sort of like predicting that public transit will become the dominant transportation mode. Well, maybe one day it will--but for that to happen, a lot of variables are going to have to fall into place, and in the meantime, the vast majority of people still get around in their own cars.

In the far-off future, should this planet ever get so crowded that virtually every major freeway is a parking lot, public transit may very well be the way to go. Then again, everyone might just opt to stay home and watch movies on their computers.

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

8 Sep, 2000

TK's MORNING BUZZ: After Curbing Violent Video Games, Wal-Mart and Kmart Should Take the Next Logical Step: Stop Selling Guns

The announcement that the nation's two biggest mass merchant chains, Wal-Mart and Kmart, will tighten restrictions on violent and other "mature" video games deserves kudos.

While I'm a staunch opponent of censorship of any kind, I also don't believe any material of an excessively violent or sexual nature should be readily available to children. Video games that, according to the Kmart press release announcing the move, "may include imagery of intense violence, language or mature sexual themes" aren't exactly suited for 10-year-olds.

And yet, there's a certain amount of hypocrisy in the Two Marts' move.

Many of the same stores that are now going to restrict access to video games that show cartoon guns killing cartoon characters continue to sell real guns that can kill real people.

Wal-Mart and Kmart will undoubtedly reap tons of goodwill for their bold stand against violent video games. With kids bringing guns to classrooms, and school shootings no longer once-in-a-lifetime occurrences, the two big chains have certainly struck a chord with concerned families across America.

On behalf of the home entertainment industry, let me now ask Wal-Mart and Kmart to take the next logical step: stop selling real guns, especially since the gun departments in at least two Wal-Marts I've been in are just across the aisle from the toy departments.

There are some who blame the rash of school shootings we've suffered through on violent video games, movies and song lyrics.

I disagree. I happen to believe access to real guns had something to do with it.

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

7 Sep, 2000

TK's MORNING BUZZ: MP3.Com Ruling May Not Affect Home Video Today, But Its Impact Will Be Noticed in Years to Come

It was with a keen eye that the video industry watched yesterday's federal court ruling against MP3.com that found the Internet music file-sharing service guilty of copyright infringement and slapped the San Diego-based company with a staggering $250 million penalty.

The ruling cast a pall on the entire practice of downloading copyrighted material via the Web for free, a practice MP3.com and its brethren--Napster and other new-media upstarts--defended on the grounds that "sharing" isn't the same as "selling."

Regardless, U.S. District Judge Jed Rakoff's ruling seemed to say, it's piracy.

Technology hasn't yet progressed to the point where consumers can easily download entire movies. It's going to be awhile before we get there. And yet the ruling against MP3.com, barring any reversal on appeal, is sure to chill the enthusiasm of online entrepreneurs who are already making plans to take Internet file-sharing to the next level.

Video suppliers and retailers can breathe a little easier. Selling downloadable music over the Internet has already proven itself a formidable threat to brick-and-mortar retailers, some of whom, like Albany, N.Y.-based Trans World Entertainment, have shrewdly begun to sell music electronically themselves, both on their Web sites and at in-store kiosks.

But giving it away for free, well, there's simply no way any existing retailer can compete.

Not only that, but the MP3.com way of getting music to consumers hurts everyone else in the recording industry's food chain as well, from the studios, who get no licensing fees, to the performers, who get no royalties.

The landmark federal ruling may not affect home video today, but you can bet your Web browser its impact will be noticed in the years to come.

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

6 Sep, 2000

TK's Morning Buzz: How Far Can DVD Producers Stretch the Special Features Envelope?

Since DVD was officially launched in March 1997, special features have gone from a nice extra to a driving force.

Early advocates of adding commentaries, deleted footage, and other DVD exclusives, like New Line Home Video's Stephen Einhorn, are not only vindicated, but are being hailed for their vision and foresight. And consumers who still remember the days when the only special features on most discs consisted of subtitles, language tracks and the original theatrical trailer are now feeling short-changed if their discs don't include detailed cast bios, made-for-DVD music videos and at least one commentary track and "making of" featurette.

Looking at extras-packed discs like Artisan Home Entertainment's Terminator 2: Judgment Day, which includes more minutes of added goodies than the original film, makes you wonder where it's all going to end up. How far can DVD producers stretch the special features envelope? How high is the bar ultimately going to be raised, and in which direction will it lean?

I have to admit, when I first began getting DVDs, the movie came first. If I had time, I'd watch a few deleted scenes. Now, the extras are required viewing--and not just for me, but for other members of my family.

The other night, I watched Universal's excellent Creature from the Black Lagoon with my 4-year-old. Knowing it was a DVD, as soon as the closing credits came on the screen, he turned to me and asked, "Is that all?" I clicked onto "Back to the Black Lagoon," a historical look at the film that includes interviews with surviving cast members and mock-ups of alternative Creature costumes, and we both sat mesmerized for another 20 minutes or so.

Special features are changing our home entertainment viewing habits. We're no longer content with watching the movie--we want more. The only question, at this point, is how much more--and of what type?

I already see a trend developing--more and more, special features are taking the ROM route. Consumers watch all the extras on their disc on their TVs, and then stick it into their computer for more fun.

Columbia TriStar Home Video's innovative Men in Black disc is a harbinger of things to come--special features are going interactive, and involve the Web.

When Sony and Microsoft come out with their respective DVD-playing game machines, the PlayStation2 and the X-Box, I expect this trend to accelerate.

There will soon come a day when watching a movie is an all-day (or all-night) pursuit.

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

5 Sep, 2000

TK's MORNING BUZZ: Hollywood's Summer Bummer Shouldn't Chill the Thrill of Cool DVDs

The Labor Day weekend is barely over and the first press reports of what a down summer this has been at the box office are already trickling in.

As early as Saturday, two days before the official End of Summer, the Associated Press was already reporting that "Hollywood's summer fell well short of the record $3 billion that movies raked in a year ago.... There were solid successes and one unexpected blockbuster, Scary Movie, but nothing on the order of last year's string of hits and the surprise horror sensations The Sixth Sense and The Blair Witch Project."

For video retailers, such a story two or three years ago would have made them cringe and prepare for a long, hard winter. In the old days, a slow period of the box office would mean a slow period in video stores, five or six months down the line.

I remember in early 1997, when video rental was down about 5% from the previous year, Blockbuster was tanking and Forbes magazine ran a story on how the end was near for video stores. Warner Home Video put together a road show, explaining away the malaise to a weak slate of theatrical films; practically every video retailer I knew was crossing his fingers and hoping that Hollywood would get back in gear so he and his video-dealing peers could eat again.

But, as they say, that was then and this is now. And the fact that Hollywood had a bummer of a summer shouldn't send a chill up too many video retailers' spines. For one thing, the video business is in enough trouble, so what's one more blow? But, more significantly, I'm betting that DVD will be the critical factor this fourth quarter, and retailers on both the rental and the sales end of the business should stock up on the little discs and focus their marketing and merchandising efforts not on the hits, but on all things DVD.

It's not going to be a title-specific Christmas; if it's out on DVD, it will sell.

I bought a DVD player for my dad over the weekend. I went to the Best Buy near my house and the selection was dismal. I spoke with a manager and he said they'd get more players, if only they could. Player sales to consumers are already far surpassing even the most optimistic estimates, and the fourth quarter hasn't even begun.

I predict that once the fourth quarter selling season officially begins, we're going to witness something akin to the early days of VHS. Consumers are going to want to buy anything and everything on DVD; even though we're well past the early adopter phase and we're actually seeing players sell for as little as $96 (one of Best Buy's weekend specials), Best Buy executives tell me they're still selling an average of 16 discs for every player.

My only hope is that video software dealers will be there with a full array of discs, properly merchandised and promoted, instead of tightening their purse strings because Hollywood had a bad summer.

The old rules simply don't apply anymore.

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

1 Sep, 2000

TK's MORNING BUZZ: Warner's Crackdown on Sideways Selling May Come Back to Haunt Them

Today is the first day of Warner Home Video's controversial new Rental Direct program, and from what we hear, things went off without a hitch.

Retailers--at least, those who sent in their credit applications in a timely fashion--got their product in plenty of time for today's unusual Friday street date.

Warner also appears to be making good on its threat to crack down on sideways selling. That's their perogative--on the surface, it defeats the purpose behind copy depth--but if they continue to take a hard line against offenders, my guess is it that it may come back to haunt them.

Sideways selling, of course, is the practice in which one retailer meets goal and makes his buy, keeps only what he feels he needs, and then turns around and sells off the surplus goods to other retailers.

This helps retailers effectively lower their cost of goods even more than under the most generous studio-sanctioned copy-depth program. But it also cuts into studio revenues.

Nearly three years into the copy-depth area, sideways selling is running rampant. At last April's National Association of Video Distributors (NAVD) meeting in Indian Wells, Calif., distributors estimated as many as 80% of their retail clients engage in some form of sideways selling.

It's always been a thorn in the studios' sides, but there's never been an effective way to police it. But with Warner now in the driver's seat, selling its rental titles directly to retailers, the studio is in a far better position to closely monitor sales and punish retailers who aren't playing by the rules.

This could be a double-edged sword. For Warner's Rental Direct to succeed, the studio needs to sell as much product as it can to as many retailers as it can find. Many retailers insist that if it wasn't for sideways selling, they couldn't survive. Once word gets out about Warner's crackdown, some retailers might simply stop buying Warner product, partly because they can't afford to and partly to send a message to the other studios to please continue looking the other way.

Should that happen, Warner will have to do some serious number-crunching and figure out if it's costing the studio more, in lost sales, than it would if sideways selling were allowed to proceed.

In the end, it might just come down to profits versus principle.

What do you think? Will Warner's hard line against sideways selling come back to haunt them in the pocket book? Click on FORUMS and give us your opinion.

31 Aug, 2000

TK'S MORNING BUZZ: Are You Worried About the Class-Action Suit Against Blockbuster for Late Fees? You Should Be...

If I were a video retailer, I'd be mighty worried about the class-action lawsuit against Blockbuster Inc. for allegedly charging excessive late fees.

Sure, Blockbuster might be generating a little more revenue than the average retailer (16.7% as opposed to about 10%) due to its longer rental periods and higher rental/late fee rates.

But the underlying premise of the suit--that in the copy-depth era, retailers have so many copies of new releases in stock that they're highly unlikely to run out, thus minimizing the risk of taking a financial hit from a lost rental--applies to just about everyone.

Back in the old days, when retailers paid $60 or $70 for each new release, they were a lot more conservative in their buying habits, bringing in just enough copies to satisfy the minimum expected demand. Thus, if a customer didn't bring a tape back on time, there was a very real possibility that the retailer would lose business.

But now, even red-hot new releases are purchased in such high quantities--and not just by the big chains, with their direct revenue-sharing deals, but by most everyone who wants to remain competitive--that at least a few copies are bound to sit on the shelf. Just look at our turns-per-copy chart--dem videos just ain't flying out the door the way they used to!

Accordingly, Blockbuster's legal team would be foolish to make financial risk the focal point of their defense. A much better strategy would be to redefine "late fees" as "extended rental fees," much like hoteliers will charge you for an extra night if you check out past the deadline and car rental agencies will charge you for an extra day if you don't bring your rent-a-car back on time.

On the surface, the suit appears frivolous. And yet I don't think it would have been filed if the whole copy-depth phenomenon hadn't happened. I tried calling the plaintiff's attorney yesterday, but he was "unavailable." I bet he knows a lot more about the business than his client does.

Comments? Contact TK directly at TKArnold@aol.com

For the latest industry news and views, read the Sept. 3-9 issue of Video Store Magazine.