Thomas K. Arnold is considered one of the leading home entertainment journalists in the country. He is publisher and editorial director of Home Media Magazine, the home entertainment industry’s weekly trade publication. He also is home entertainment editor for The Hollywood Reporter and frequently writes about home entertainment and theatrical for USA Today. He has talked about home entertainment issues on CNN’s “Showbiz Tonight,” “Entertainment Tonight,” Starz, The Hollywood Reporter and the G4 network’s “Attack of the Show,” where he has been a frequent guest. Arnold also is the executive producer of The Home Entertainment Summit, a key annual gathering of studio executives and other industry leaders, and has given speeches and presentations at a variety of other events, including Home Media Expo and the Entertainment Supply Chain Academy.
You've got to hand it to Toshiba. The consumer electronics giant, which was behind the ill-fated HD DVD format, has at last given up its attempt to kill Blu-ray Disc with its fancy DVD "upconverters" and is now going Blu itself. What's more, the company also is coming out with a new laptop, the Satellite P500, that's equipped with a BD-RW drive.
Kudos to Toshiba on both counts, but especially for the latter.
By coming out with a set-top Blu-ray Disc player, Toshiba is a definite latecomer. But by producing a Blu-ray Disc laptop, scheduled to hit stores in the fourth quarter, the company is returning to the leadership role it once commanded in the CE industry back in the early days of DVD.
Toshiba, you will recall, was the big driving force behind DVD, at least on the CE end, working with Warner Home Video to aggressively promote and market the format to consumers. Getting other computer makers on board, early in the game, was as significant a step as vanquishing Divx, the pay-per-play variant championed by the now-defunct Circuit City retail chain, so that there was only one type of set-top DVD player on the market.
With Blu-ray Disc, virtually every CE manufacturer is now on board. But computer makers are slow to the table this time around, and for the life of me I can't figure out why. You may recall that in early September, the technology research firm iSuppli estimated that only 3.6% of computers shipped this year, on a worldwide basis, have Blu-ray Disc drives. And even by 2013, four whole years from now, the total will only be 16.3%.
The reasons, according to various analysts, include price--computer prices are now so low that adding a Blu-ray Disc drive could easily double the total sales price--and the fact that the Blu-ray Disc picture is so good that most people won't want to watch Blu-ray movies on their computers.
What's more, analysts note, DVD drives had a unique selling proposition because the packaged-media format DVD replaced, VHS, could never be viewed on a computer. So it was a novelty that brought added value. If you bought a computer with a DVD drive, you could not only only store a lot more data, but you could also--drum roll, please--watch movies!
Blu-ray drives, on the other hand, will have to live or die by data storage alone--and according to industry wisdom that's just not enough, at least not now, not even in 2013.
I disagree, and I urge computer manufacturers to go Blu, and go Blu in a big way, pronto. More and more people I know are burning their own home-video DVDs at home, and they're getting tired of only being able to put an hour or so of quality footage on a disc. I would argue that the storage question is a big deal; when DVD came out 12 years ago there was no such thing as a multi-gigabyte hard drive, and most of us still shot home movies on camcorders that used tape instead of enormous built-in hard drives.
And whatever happened to computers being on the cutting edge of technology? IT companies are supposed to lead us, not lag behind everyone else. The iSuppli research I saw also predicts annual set-top Blu-ray Disc player sales will rise from 9.1 million this year to 42.1 million by the end of 2013. That means a vast body of consumers will be aware of Blu-ray Disc. And you're going to tell them they can't get that in their computers?
Come on, guys. Get real. If Toshiba can suck it up and go Blu, so can you.
Earlier this week I wrote a blog entry in which I said our industry needs to do a better job playing up the advantages of Blu-ray Disc over standard DVD, just in picture quality. I noted that the picture really is dramatically better, at least when viewed on a top-notch TV, and that we need to spread the word after several years of downplaying the difference in favor of hyping BD Live and other high-tech innovations.
So now, I'd like to share with you a post I unearthed from last March in which Eric Taub, a Gadgetwise blogger for the New York Times, talks about this difference, one that he frankly wasn't expecting. Taub wrote this piece when Toshiba, which just announced its first Blu-ray Disc player, was still hawking its DVD upconverters —and skeptics like Taub were saying forget about Blu-ray, DVD's just fine.
"I’m a big fan of the DVD format," Taub wrote. "It offers a quantum leap in picture quality as compared to videotape, longer-lasting media and random rather than linear access. But I’ve always questioned the benefits of Blu-ray; picture quality looks very good but I’m perfectly happy with standard-def DVDs. Unless you like Blu-ray’s extra features, like BD Live, the incremental difference in picture quality didn’t seem worth the expense. To check out my assumptions, I did two side-by-side tests. I connected Toshiba’s XD-E500 (a DVD upconverter) and Panasonic’s sub-$300 (discontinued) DMP-BD35K Blu-ray players to a 46-inch Panasonic 1080p plasma set, the TH-46PZ850U. I ran the same movie in both simultaneously, the De Niro/Pacino thriller Righteous Kill, using Blu-ray and standard DVD copies, jogging back and forth between the inputs to make instant comparisons in picture quality. Then I switched out the Toshiba for a simple Sony progressive scan DVD player that cost me $70 three years ago. The results: the XD-E image was better than the old Sony, but not by much. And both looked quite good. On the other hand, the Blu-ray machine simply blew away both standard-definition players. The difference was dramatic. The Blu-ray images were smooth, sharp and rich. Every scene “popped” with a clarity and presence never seen with standard DVD, making the scenes, whether daytime exteriors or heavily shadowed interior club scenes, come alive. The difference in picture quality between Blu-ray and standard-definition DVD was very obvious. But the difference is accentuated when you get the chance to flip back and forth between the two. Just as many owners of rear-projection DLP sets don’t notice that their picture is getting dimmer over time, many owners of standard-definition DVD players will be perfectly happy with the picture quality, and won’t notice what they’re missing, unless they have something better, such as Blu-ray, with which to compare it. Blu-ray player prices continue to fall.... The cost difference between the two is barely more than $100, and once that declines even further, there will be little reason for the average consumer not to choose Blu-ray when looking for a DVD machine."
For Taub's complete blog, click here.
In retrospect, our industry took a big misstep back when Blu-ray Disc first came on the market, and we all downplayed the improved picture quality, telling ourselves it wasn't nearly as big a leap as the diference between DVD and VHS. I don't know what we all were smoking — and I'm as guilty of this as anyone — but now that our TVs have gotten better and more and more Americans, the economy be damned, are buying high-def TVs, it's time to revisit this. When my kids are watching a movie on my 65-inch Panasonic plasma, I know instantly whether it's DVD or Blu-ray Disc. The Blu-ray Disc picture is so much cleaner and sharper — to the point where even my kids would rather wait until a film comes out on Blu-ray Disc than watch it on DVD.
I remember the months surrounding Blu-ray Disc's launch. Everyone talked about the picture being better, and there were even side-by-side comparisons. But our collective thought was that the difference wasn't as pronounced as the difference between DVD and VHS and thus shouldn't be played up in marketing materials or sales-floor pitches. Instead, we focused on more and better extra features, picture-in-picture and BD Live, features few people could even access due to 1) the ridiculous progression of "profile" players that were obsolete almost as soon as they hit the market and 2) the CE community's failure to provide consumers with wireless Internet connectivity for standalone Blu-ray Disc players. BD Live was all well and good, but if you have to connect your player to the Internet with a cord you're simply not going to do it — not when you've had Wi-fi in your home for years.
So now we're hearing from consumers, largely through postings to tech forums, that the picture quality really is a key reason for their transition from standard DVD. And then we go back to our own TVs and, lo and behold, they're right. In fact, I would venture to say that the improvement in picture quality that Blu-ray Disc offers over DVD is comparable to the improvement DVD offered over VHS — even so-called "upscaled" DVD as seen through my Panasonic Blu-ray Disc player.
Now, it's up to us to spread the word — particularly since it's becoming clear that Blu-ray is the very best picture available, and that a lot of the cable stuff that passes itself off as "high-def" really isn't, or at least it's not 1080p, the proverbial cream of the crop.
As they say, if you've got it, flaunt it.
DVD sales may not be on fire, but players certainly are. Durabrand players, that is, a budget line sold at Wal-Mart that has the unfortunate propensity to potentially burst into flames. The latest U.S. Consumer Product Safety Commission communique says Wal-Mart is recalling 4.2 million players because of this burning issue. Initially Wal-Mart recalled only 1.5 million silver DVD players made by Durabrand, but today the recall was expanded to cover pink and purple versions of the same device, for a total of 4.2 million players. According to the commission, the recall was triggered by 14 complaints Wal-Mart received of DVD players overheating, seven of which caused a fire that damaged property. Click here to read our coverage.
On another note — an uplifting one, I might add — Home Media Magazine's inaugural Reaper Awards are generating a ton of press all over the world. In case you missed it, we are launching a new awards contest, in tandem with the Dread Central horror Web site, that is honoring and promoting the top horror DVDs and Blu-ray Discs of 2008. Studios and suppliers also are being given the chance to promote their current horror releases, including those still in theaters but scheduled to arrive on disc in time for Halloween. Click here to read our story about the event — and if you're in the area, make sure you attend!
Every year since DVD sales stopped posting double-digit gains each year we've been saying that the fourth quarter is make-it-or-break-it time, but it's never been more true than this year. DVD sales have been off by an alarming percentage for much of the year. And while that doesn't exactly paint a true picture of home entertainment consumption--consumers are simply opting for other means of bringing movies into the home, including renting, buying Blu-ray Discs and downloading movies over the Internet--it does ding the Hollywood studios' bottom lines, since DVD sales are far and away the most profitable business model they've come up with.
Short of unplugging every rental kiosk (take that, Redbox!) and convincing the postal workers union to go on strike (what are you going to do now, Reed Hastings?!?), studio executives are scratching their heads and wondering what more they can do to spur sales, short of spending even more money on the one surefire way to boost business, buying trade ads (I jest--sort of). So here are five tips I've come up with that make the captains of our home entertainment industry a little more jolly as we move into the holiday season.
1. Step up the counter programming. If your competitor slots a big kidvid release for the second Tuesday in November, immediately schedule your nearest chick flick for that same day. And consider talking to the competition about some joint marketing efforts for both titles. I don't care if it's never been done before--there's strength in numbers, and these are desperate times, to paraphrase two of my favorite cliches!
2. Don't cram everything into the fourth quarter. Each year Q4 is increasingly crowded, not just with hits but with everything else. Sooner or later the law of diminishing returns is going to come in. Consumers can't buy everything, and if there is too much product out there you'll find a particularly nasty development: Not only are rental kiosks cannibalizing DVD sales, but now DVD sales are cannibalizing DVD sales. It's much better to wait and save some of your strongest product for January. You'll still make money in Q4, and get the new year off to a good start, as well.
3. Put a moratorium on all TV DVD releases until after January 1. Last year I spent most of November watching season 8 of CSI. I missed a lot of good movies that came out around the same time because I was too wrapped up in those 26 hour-long episodes. I think we as an industry are throwing too much product at consumers, all at once, and then wondering why they aren't buying. The answer's simple: They don't have the time to watch everything!
4. Give consumers more affordable Blu-ray Discs. Launch value lines, something, but with Blu-ray Disc players selling for less than $250 consumers can't be expected to plop down another $30 or $40 for every new movie. Roll out catalog titles at $15--make 'em as vanilla as you need to--and get them hooked.
5. Buy more ads in Home Media Magazine. (Sorry. I had to throw it out there.)
If you believe the mainstream media, you'd think declining DVD sales were to blame for global warming, California's budget crisis and the apparent failure of President Obama's health care reforms. Virtually every day, some big newspaper or magazine, from the Los Angeles Times to the Wall Street Journal, runs a story in which something or other gets blamed on grim DVD sales.
The latest is a story in the Wall Street Journal on the Weinstein Co.'s continued financial struggles (to read the piece, click here). Brothers Bob and Harvey finally scored another box office hit with Questin Tarantino's campy Inglourious Basterds, but as the Journal points out "that still may not be enough to give the studio the boost it needs to climb out of its current financial troubles." The story goes on to note that after a string of theatrical flops the Weinstein Co. is struggling to stay afloat "in a harsh Hollywood climate where financing has dried up and home video sales have sunk."
Ironically, the Journal's assessment in blaming video rings more true here than in most instances. The house that Bob and Harvey built, after all, was funded largely on the premise that they would invest in a video company (Genius Products), that DVD sales would continue to soar as they did in the early 2000s, and that the result would be a huge influx of cash that would allow the Weinsteins to do what they've really always wanted to do: make movies, and make lots of them.
What everyone failed to note here, though, is that DVD sales of theatrical movies rely heavily on the box office success of these movies. If a movie flops theatrically, it's not going to be a No. 1 smash on home video, even in the glory days when consumer spending on DVD purchases was posting double-digit gains each year. And if your slate of theatrical DVDs aren't selling as well as you had hoped they would, you can't count on the rest--all the other lines and titles Genius picked up in the years the company was majority-owned by the brothers--to make up the difference.
You can have a wealth of secondary product you're bringing to market, but ultimately it's still your theatrical slate that carries the day, regardless of the state the economy's in.
That said, how do we get the media to stop saying such nasty things about our business? Why are we getting blamed for sinking all of Hollywood? Has anyone stopped to think of the idiocy of statements that blame DVD sales for creating a "harsh Hollywood climate?" At their very worst, sales of DVDs are down about 15% so far this year. Actual consumer spending on home entertainment is down maybe half that amount, when you factor in Blu-ray Disc--which is having a phenomenal year, despite the bad economy--and DVD rentals, which the studios don't like because for the most part they don't get a share of the action.
But even 15% isn't that bad when you look at most industries, from the automotive industry (auto sales are down by more than 30%) to tourism (hotel occupancy in the onetime tourist mecca of New Orleans was just 49.8% in the week ending August 15, a 22.8% drop from the same week last year, according to hospitality industry tracker STR) and publishing (don't ask!). And realistically speaking, you do have to factor in Blu-ray Disc sales and DVD rentals, as well as electronic delivery. Only then can you paint an accurate picture of how much consumers are really spending to bring movies, TV shows and other programming into their homes. And when you factor in all those things, hey, we're not that bad off.
Really, we're not.
Hot scoop: Warner Home Video says that among its special Blu-ray Disc editions next year will be a new restoration of <i>The Exorcist,</i> feauring both the original 1973 theatrical release and the 2000 extended director's cut.
The transfers, just completed in July, were supervised by both director William Friedkin and director of photography Owen Roizman. The disc should be out in time for Halloween 2010.
Big news this morning: The year's biggest box office hit, Transformers: Revenge of the Fallen, will be released on DVD and Blu-ray Disc Oct. 20 by Paramount Home Entertainment. Special features include a comprehensive documentary chronicling the making of the Michael Bay blockbuster, which has taken in around $820 million worldwide; an "all-access" featurette that lets viewers spend a day with Bay; indepth looks at a dozen characters in the movie; and multi-angle breakdowns of several of the film's most compelling action scenes.
The Blu-ray Disc and two-disc special-edition DVD also will include something called "augmented reality technology" that lets viewers interact with a holographic image of Optimus Prime using their own webcams and a special website. They can play a game in which they are asked to piece together the matrix of leadership to bring Optimus back to life, help repair his armor and calibrate his weapons by controlling his aim during target practice.
Exclusive to the Blu-ray Disc release is another interactive feature that lets viewers customize their own robot characters and catch a glimpse of a rogue robot. Out of all the various permutations, one will unlock an exclusive interview with Bay (sort of like the Easter eggs of old) in which the director talks about plans for his next Transformers adventure.
Well, the verdict is in, and it's not quite what everyone expected. Given our legal system's history of siding with intellectual property owners, studio executives were hoping a federal judge would quickly dismiss an antitrust lawsuit filed by Redbox against Universal Studios Home Entertainment over the studio's decision to impose a 45-day window on new releases. Similar windows subsequently have been imposed by 20th Century Fox (30 days) and Warner Bros. (28 days), and Redbox has already filed a similiar suit against Fox, with a third action likely against Warner. The Universal suit hasn't seen any action since last March, but today's ruling--and you can read the full story by clicking here--came as something of a surprise, since studio executives have privately said they believe a ruling in Universal's favor was imminent. Not that this is a defeat for Hollywood's attempts to maintain control over its own product, since the actual suit has yet to be heard, but it's certainly a setback.
Here's the press release that just came in from Redbox, which also directs reporters to a new site the kiosk company has launched in an attempt to get the public all riled up over the studios' attempts to crack down on dollar rentals. Studios believe the low price and ready availability of video-rental kiosks in such places as Wal-Mart stores is cannibalizing the sales business, while Redbox chief Mitch Lowe--a former independent retailer and Netflix pioneer--argues that his company is merely giving consumer what they want in these trying economic times.
As expected, Warner Home Video has chimed in with the "fight club" of studios that don't want Redbox renting their new releases for a buck the day they come out.
A day after the kiosk company fiiled suit against 20th Century Fox over imposing a 30-day delay, Warner Home Video has informed Redbox of a 28-day window before making titles available to kiosks. But while Fox's window was imposed through third-party distributors, Warner's announcement was coupled with word that it is eliminating whoilesalers and, come October, will sell direct to both kiosks and mail-order subscription rental programs (Netflix and the various Netflix wannabes).
Interesting tactic. Warner's line is that if it deals direct with different classes of vendors, it can impose different "business options," including windows (for kiosks) and revenue-sharing (for subscription rentals). We shall see if that reasoning will keep Warner from the legal line of fire Redbox already has aimed at Fox and, previously, Universal Studios, the first studio to just say "no" to Redbox last year with its 45-day window rule.
Here is the Warner press release, in its entirety:
Burbank, Calif., August 13, 2009 – Warner Home Video (WHV) today informed its wholesalers that beginning in October, WHV will engage solely in direct relationships with kiosk and mail-order subscription vendors.
Through a direct relationship, WHV can ensure that its titles are available through a variety of distribution models to serve all types of consumer preferences. WHV will be in discussions with both kiosk and mail-order subscription vendors, offering business options that will allow all parties to grow their respective businesses. The options offered to kiosk vendors will include a 28-day window, while mail-order subscription customers will also have a day-and-date revenue sharing option. Additionally, WHV has revised their wholesaler terms to prohibit the purchase and sale of WHV previously viewed product.