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Universal Touts Banner Year

10 Jan, 2014 By: Thomas K. Arnold

Universal Studios Home Entertainment (USHE) finished the year on a high note.

The studio lays claim to 2013’s top-selling DVD and Blu-ray Disc, Despicable Me 2, as well as the year’s top video rental title, Identity Thief.
Despicable Me 2 is also the year’s No. 1 Digital HD, or electronic sellthrough (EST), title, while Identity Thief was 2013’s No. 1 VOD title.

The studio gained significant market share in the theatrical catalog arena as well, rising to 15%, thanks in large part to strong catalog sales of the first Despicable Me (the year’s top-selling catalog title) and the first five “Fast & Furious” movies — all heavily promoted during both the theatrical runs and then the home video releases of sequels Despicable Me 2 and Fast & Furious 6.

2013 also was the year in which USHE president Craig Kornblau’s division assumed responsibility for all of NBC Universal’s digital distribution and marketing, including VOD and EST; cut a fulfillment contract with Paramount Home Media Distribution to capitalize on its supply-chain strengths; and worked very closely with sister division Comcast Cable to launch a digital storefront to sell digital copies of movies to its 25 million subscribers.

Kornblau looks back on the year and said one of the best decisions his team made was to release Despicable Me 2 and Fast & Furious 6 on the same day, in early December — a departure from the standard practice of releasing just one big tentpole at a time. Both titles also were held back from retail significantly longer than the typical pattern of releasing movies into the home entertainment marketplace about three to four months after their theatrical openings, which would have put Despicable Me 2 in November and Fast & Furious 6 in October.

The gamble clearly paid off: the two titles drafted off each other in the busy pre-Christmas holiday shopping rush and wound up selling nearly 8 million units and 4.5 million units, respectively, in the first four weeks since their initial release.

“We decided to hold them for an extraordinarily long time to take advantage of the tremendous traffic at retail, taking a chance that the passion to own them would be maintained,” Kornblau said. “And it was a good pairing — Despicable Me 2, which plays younger, with Fast & Furious 6, which obviously plays a little older, but not a lot older.”

Kornblau said his team also made sure to have ample copies of the original Despicable Me and the five earlier “Fast and Furious” films in stores once the sequels began to generate buzz theatrically — and then maintain that supply through the sequels’ home video release window.

Kornblau notes that 2013 also was a “game-changing year” for EST, now known by the industry-wide name Digital HD, which topped $1 billion for the first time and generated about 50% more revenue for the studios than it did in 2013.

“It’s really due to three or four different factors,” he said. “First and most significantly, all studios, for the most part, are now releasing movies two weeks early, two weeks before the physical disc and VOD. And if you couple that with a pretty radical reduction in consumer pricing, and greater accessibility — which the Comcast and other recent digital storefront launches brought about — you’re naturally going to see stronger sales.”

Fast & Furious 6 was released on Digital HD even earlier than the two-week norm, becoming available three weeks before the DVD and Blu-ray Disc to coincide with the first week of movie sales at Comcast.

“Over the Thanksgiving Day weekend, Comcast was our biggest digital retailer,” Kornblau said.

He expects Digital HD to grow even more in 2014 now that Comcast has opened the door for other cablers to get into the movie sales business.
“Comcast has less than 25 million homes,” he said. “When you start to think about Time Warner, Cablevision and the others — it’s easy to see the potential.”

Kornblau also noted that the policy of Universal and two other big studios, Warner and 20th Century Fox, to hold back new releases from top rental outlets Redbox and Netflix by 28 days in an effort to spur sales is paying off for all parties involved. The fact that Identity Thief is the year’s No. 1 rental title, despite the holdback, validates this policy and shows it’s not hurting retailers, he said.

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