Six Questions: Cinram CEO Steve Brown28 May, 2010 By: Chris Tribbey
After a rough start to 2010 that saw it lose the biggest DVD studio (Warner Home Video) to rival replicator Technicolor, Toronto-based Cinram International Income Fund posted a solid first-quarter profit of $7.9 million in late April. Newly installed CEO Steve Brown spent some time with Home Media Magazine to talk about the future of the company.
HM: You joined Cinram nearly a year ago, and the company’s financial reports have steadily improved under your tenure. What significant changes have you overseen since you came on board?
Brown: When I joined the company last June, it was apparent to me I had a great team, a world-class customer base, and 13,000 employees around the world who where dedicated, well-trained and committed to the company and its customers. So really all the hard work was done. Between June and August, I traveled, continuously, got around to every one of our global sites and customers and spent many hours trying to be educated. Then I spent some time studying the competitive landscape. Followed by: Why do we do this? What does that do? Why do they want that? And so on. When I’d finished, or perhaps just got started, I set about plotting a five-year strategic plan. It’s kind of like I tell my two boys, who are both pretty good soccer players, Alexander at university and Oscar who’s only 9: “You can’t shoot and score unless you know where there goal is.” That’s what we all know now. Where the goal is. That being done. I just put the great players in the right positions. The improving results are all about the team, not the captain.
HM: We’ve been seeing a steady drop in overall DVD releases for years now, with little sign of letting up. What trends is Cinram seeing in terms of demand for DVD replication? Is DVD on its way out, or does Cinram still see a long life for the packaged- media format?
Brown: I believe the public likes to own, collect and feel a true value proposition. To me that’s physical media, DVD or BD. Sure DVD is going down in volume and sure BD took up that slack more slowly than anticipated, but it’s speeding up now. It’s no secret that I’ve said I see a 10-year to 15-year market for the optical disc, and I stand by it.
HM: On the converse side, Blu-ray Disc releases are on a steady upward tilt, and Cinram handled the No. 1 Blu-ray release of all time in Avatar. What type of demand is Cinram seeing today for Blu-ray, and where does Cinram see that demand being over the next couple of years?
Brown: Avatar was a huge success, perfect for the format. In my opinion Fox handled that launch perfectly. I remember the week of the launch being in L.A., Paris and London, and all I saw was Avatar, from billboards in L.A., posters in Charles de Gaulle and on double deckers in London. They did more for Blu-ray with that epic release than anyone. As for Cinram and our commitment, we’re committed, and our investment in Blu-ray continues. We’re in physical media until the end.
HM: What about other forms of physical media, such as CDs and video games? Does Cinram see the need for these discs drying up in favor of complete electronic delivery, and if so, how soon?
Brown: Our music business is going well. In a mature market, collaboration is essential. Drive out waste, increase trust and maximize margin. I’m not nearly smart enough to create these models; I just regurgitate industrial past successes. We’ll be doing some interesting stuff in music; just watch this space, it’s not done yet. As for games, the recent economic downturn was really tough on this space. It’s moving faster than most to connectivity. Our strength is getting what they want to where they want and when they want it there. We’ll change as they do.
HM: What about international demand for all forms of physical media? What trends does Cinram see overseas?
Brown: Early adopters move at different speeds geographically, so I feel as though we have a natural hedge. As long as we move lessons learned at light speed from each geo-local, it’s to our advantage.
HM: Recently you said Cinram would branch into digital rights and distribution for both music and movies. What exactly does that entail and what type of time line are we looking at for Cinram offering these services?
Brown: I did. You’re right, and we are. That sounds like a great segue to our next interview. We have a history of reinvention, from vinyl to 8-track, from VHS to DVD and now DVD to Blu-ray. Some of the analysts are betting against us. I guess time will tell.