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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.

TK's Take
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28 Oct, 2009

"This Is It" a Winner

I went to the world premiere last night of the Michael Jackson concert film This Is It, a patchwork documentary of sorts about the concert tour that never was. And while I have never considered myself a diehard Michael Jackson fan, I will say the movie captivated me for its entire two-hour run. I'll admit, part of it was my almost morbid curiosity about what, exactly, Jackson was like in what turned out to be the final three months of his life. And what the film portrays is a more personal, more revealing portrait of the real Michael Jackson than any previous documentary or film I've seen about the King of Pop. Director Kenny Ortega really did a good job with this movie, taking what one would think would be a series of random behind-the-scenes clips from Jackson's rehearsal sessions and fashioning them into a real movie that requires neither narration nor plot to offer a revealing glimpse into one of the most interesting pop cultural icons the world has ever seen.

Much has been made of Sony Pictures' contention that it will only keep the film in theaters for two weeks; I think if the movie catches on, it will stay longer, but then again, it's aimed at Jackson's fans, and those fans are going to rush out and see it right away. My prediction: The film will wind up grossing about $60 million in U.S. theaters, but when it comes out on DVD--and I've heard varying dates, both before and after Christmas, although nothing's been officially set yet--it's going to become one of the biggest-selling music discs of all time. It's made for Blu-ray--and I don't think Sony Pictures Home Entertainment executives will be disappointed in total sales, even though their hoped-for total, 3 million discs, seems a little high.

21 Oct, 2009

Media Missing the Point About Disc Decline

I sympathize with President Obama’s frustration with Fox News over what he perceives to be the network’s not-so-hidden agenda to “get” him.

Our industry has been fighting similar battles for years, but in recent months the rhetoric has been stepped up by such big mainstream media outlets as the Wall Street Journal and the Los Angeles Times, both of which seem to consider it a preordained destiny that packaged media is on life support and will soon disappear altogether.
The Wall Street Journal, for example, just published a story on the Walt Disney Co.’s latest venture into electronic delivery, a quasi-secret project (dubbed “Keychest”) that would allow consumers to pay one price for permanent access to a movie across several different digital platforms or devices. The headline: “Disney Touts a Way to Ditch the DVD,” which paved the way for the writer to proclaim, “the decline in DVD revenue has undermined the business model Hollywood has relied on for more than a decade.”

Reality check: We’re in the midst of a format transition, and it’s going to take a little while for Blu-ray Disc to fully compensate for the decline in DVD. Blu-ray is, however, making significant gains, particularly in light of the troubled economy, and remains the only way for consumers to watch movies and other programs in true high-definition on their expensive new HDTVs, which are now in nearly half of all U.S. homes.

Moreover, Disney and the other studios that are aggressively going after digital delivery options aren’t trying to “ditch the DVD,” but, rather, broaden the home entertainment market to include on-the-go users armed with iPods, laptops and smart phones. Convenience is the primary selling point; the quality just isn’t there for proper viewing in the home, especially now that everyone and his brother is getting a high-def TV and snazzy home theater system. 
Not to be outdone, the Los Angeles Times took a decidedly negative spin on third-quarter home entertainment numbers issued by DEG: The Digital Entertainment Group, maintaining that “Hollywood’s biggest and most profitable business shrank a little slower in the third quarter than in the first half of the year, thanks entirely to rentals.” As for the dramatic gains in Blu-ray Disc sales that were duly noted in reports in our magazine and other publications, the Times had this snotty reaction: “In its news release with the data, DEG attempted to highlight sales of Blu-ray disc sales, which rose an impressive 66.3% in the quarter. That’s a substantial slowdown, however, from the category’s 91% growth in the first half of the year.”
Reality check No. 2: Blu-ray’s first-half growth rate was bigger because HD DVD only gave up six weeks into the first half of 2008, which held back sales. So it’s really an unfair comparison. What the Times should have noted is that in an economic climate where everything is down, Blu-ray is one of the few products that’s selling better than it did a year ago — and that’s a significant accomplishment, by any measure.
The Times also failed to even mention what I consider the key point in the DEG release: That the number of consumer transactions to bring entertainment into the home rose 6.6%. That tells me that consumers have hardly lost interest in home entertainment; indeed, they’re snapping up more discs than ever, which translates into a tremendous vote of confidence for packaged media.
But then again, that’s apparently not the sort of analysis the Times wants to hear.

20 Oct, 2009

Behind the DEG Numbers

It was interesting to see the various news stories based on home entertainment spending numbers released yesterday by DEG: The Digital Entertainment Group. Most news outlets, including ours, really played up the rosy Blu-ray Disc numbers (to see our story, click here). Others, in particular the Los Angeles Times, chose to feed their own perception that packaged media is dying by focusing on the continued slump in DVD sales, which even with the mitigating factor of Blu-ray Disc are now down 13.9% for the year, slightly worse than the 13.5% deficit reported at the year's halfway point. Still other media outlets took the middle ground by noting that total consumer spending on packaged as well as digitally delivered media was down 3.2%, a modest drop given the troubled economy but still nothing to cheer about it.

Not one focused on what, in retrospect, is the real story: Consumer transactions, meaning purchases as well as rentals, rose a healthy 6.6%. That's a resounding vote of confidence in the core premise of our business, which, after all, is simply the act of bringing movies and other pre-recorded programming into the home (or the car, or the laptop) for at-will consumption. The transactions number does not distinguish between a purchase and a rental; both, it can be argued, involve a conscious decision by a consumer to go out and spend money on bringing a DVD or a Blu-ray Disc into the home. Now, studios don't like rental because they don't get as big a piece of the pie as they do from a sale. Heck, sometimes they barely get crumbs, if that.

But looking at things solely from a consumer interest angle, rentals are the same as purchases, and the fact that transactions are up 6.6% is a healthy indicator that consumers most certainly have not lost interest in home video. They're simply going back to their old ways--renting rather than buying--and they're doing so in record numbers.

What the studios need to do now is figure out a way to monetize that 6.6% gain so it doesn't continue to wind up as a 13.9% loss.

16 Oct, 2009

Dennis Maguire: A Common Sense Choice

By selecting Dennis Maguire to run Paramount Pictures' worldwide home entertainment unit, studio vice chairman Rob Moore demonstrated a great deal of common sense--a trait we could use a lot more of in this struggling business of ours.
Dennis Maguire is a seasoned, experienced veteran who knows the home entertainment business inside and out, from his early years at Disney to his many years on the international side of the business. And it's precisely this type of institutional knowledge that is critical in our leadership. You must have vision, true, but before you look to the future you need to thoroughly understand what happened in the past. And as one of the architects and engineers of our industry during its greatest growth period, Dennis Maguire is ideally prepped to help position this industry for a comeback.
Maguire is known as a smart, strategic thinker with a great ability to soak things up and digest them before he makes decisions. With after more than 25 years in this business, Maguire has a solid foundation upon which to build and develop his new leadership role, which I presume, at least over time, will transcend the studio and extend into the industry overall.
In his interview yesterday with our senior editor, Erik Gruenwedel, Maguire
said the home entertainment industry has experienced as much change in the past year as it did in the previous 10 years, underscored by the rise in rental kiosks (for the complete story, click here).
Ain't that the truth. Go get 'em, Dennis.


12 Oct, 2009

Richard the Plumber

Richard the Plumber came by the other day to fix a toilet that's not holding up too well under three growing boys. He spied a DVD of the hit HBO series "True Blood" on the coffee table in my family room and told me his whole family is a big fan. What he said next surprised me. "You should get the Blu-ray version," he said. "You won't believe how much better it looks than DVD, and you've got the kind of TV where you're really going to notice the difference."

Two things about this exchange are worth noting: 1) Richard the Plumber has already invested in a Blu-ray Disc player, and 2) he just reaffirmed my belief that the picture quality, much more so than any novel special features or even BD Live application, should be the primary selling point in propagating Blu-ray to the masses. If Richard the Plumber notices the difference, and on a TV series, no less, then you can bet other people will, too.

Of course I didn't let the conversation end with that. Now that I knew he had a Blu-ray machine, I had to follow up with the big question home entertainment executives are all thinking about these days. "Do you ever watch BD Live?" I asked. His response echoed the sentiments expressed two weeks ago by members of the Home Media Tastemakers Forum. "Nope," he said. "My Internet's in my office and my TV's in the living room, and I sure as heck don't want to string a cable halfway across the house. You'd think they'd figure out a way to connect via WiFi."

You'd think, Richard. You'd think.

I told him the first wireless players came on the market in July and they're gradually rolling them out now. Richard's response: "I wish I would've knowed before I bought my player. Why are they always doing stuff like that?"

I didn't have an answer.

7 Oct, 2009

Blu Skies for 3D

I trust you all saw the report from the research firm GigaOM that predicts enormous growth for the home 3D market, with projections that by 2013 some 46 million homes will have 3D HDTVs. What makes this projection even more startling is the fact that it's being issued at a time when 3D for the home is still in the development stages. Sony is preparing to release its first 3D Bravia TV sometime next year, along with a 3D option for all of its PlayStation 3 games. And Panasonic has announced plans to ship a 50-inch 3D HDTV with a plasma screen sometime in 2010, as well.

In a proverbial nutshell, the study bases its optimistic projections on the overwhelming success of 3D in movie theaters. The powers that be in our home entertainment industry have taken notice as well and, more and more, seem hell-bent on recreating in the home the first-class 3D experience that moviegoers get in theaters. That means no more red-and-blue anaglyph glasses; instead, viewers will have to don high-end polarized glasses and, by the way, stock up on a new TV as well. And the vehicle to bring 3D movies into the home: Blu-ray Disc. Indeed, there are some who believe 3D may be the elusive "killer app" that makes Blu-ray a must-have commodity--a killer app for which some of the best minds in our industry have been searching for years.

Here's how the 3D experience works in theaters, courtesy of Wikipedia: "The projector alternately projects the right-eye frame and left-eye frame 144 times per second, and circularly polarizes these frames, clockwise for the right eye and counterclockwise for the left eye. A push-pull electro-optical modulator called a ZScreen is placed immediately in front of the projector lens to switch polarization. The audience wears recyclable circularly polarized glasses to make sure each eye sees only its own picture...The result is a 3D picture that seems to extend behind and in front of the screen itself."

I've experienced this myself, several times, most recently with Final Destination--and let me tell you, I, for one, am hooked. But before we get all worked up about 3D in the home, there's an awful lot of work to be done, not just on the CE end but also on the studio end, making Blu-ray Discs ready for the third dimension. But from what I am hearing, everyone is working at breakneck speed to achieve this, and I am fully convinced that by the time the first 3D HDTVs arrive in stores there will be 3D Blu-ray Discs to play on them.

If there aren't, our industry is going to be in bigger trouble than anyone could have thought.

1 Oct, 2009

Roman Polanski: The Movie?

A controversial biopic on director Roman Polanski is being released on DVD to retail stores around the country on Oct. 20. 

Damian Chapa, who directed, wrote and stars in Polanski Unauthorized ($25), says the film was initially distributed only to Wal-Mart and various Web sites through Terra Entertainment. But recently, Chapa said, he decided to expand distribution to other retailers through Victory Multimedia—just before the controversy hit over Polanski’s arrest on a 32-year-old sex charge.

“It was coincidental,” says Chapa, whose Amadeus Pictures produced the film in early 2008 and gave it a limited theatrical release.

The film casts a cynical eye on Polanski and explores in detail his life, from his early years in war-torn Poland to the 1969 murder of his wife, Sharon Tate, and his exile from the United States in 1977 after he pled guilty to having sex with a 13-year-old girl.

Click here for the full story.




25 Sep, 2009

Yea, Toshiba!

Another hearty kudos to Toshiba for its announcement this week that its upcoming Qosmio X500 line of laptops will come with built-in Blu-ray Disc drives as standard equipment. The laptops will start arriving in stores Oc. 22 (to read the complete story, click here).

As I mentioned in a previous blog posting, the computer industry is moving ridiculously slow in incorporating Blu-ray Disc drives into its PCs, mostly because of the additional expense. It wasn't this way with DVD, but then again computer prices have plummeted over the last decade and new PCs and even laptops can be had for a fraction of what they used to cost.

But still, why not offer a premium line of laptops and settops with a Blu-ray Disc drive--or at least offer Blu-ray Disc drives as an upgrade, the way car makers do with seat warmers and DVD players? I know, consumers can always add a Blu-ray Disc drive later, but come on--it's just not the same.

I'm more convinced that Blu-ray Disc is going to make it, and make it, big. Just look at last week's top home video seller, 20th Century Fox's X-Men Origins: Wolverine, the first of the year's big tentpoles to hit video. An impressive 27% of sales came from the Blu-ray Disc version, or 810,000 of the first-week sales tally of 3 million units.

The computer industry could really help lift Blu-ray Disc at a time the format needs it the most. And, conversely, Blu-ray, once established, could lift computer sales, just as DVD drives ultimately helped lift PC sales. Eventually there came a time when computer owners demanded DVD drives, and quite often bought new computers just to get one.

It's going to be the same with Blu-ray disc drives--but computer manufacturers need to take the first step.

22 Sep, 2009

Deja Vu

Are we going back in time or what? I read our story about Blockbuster chief Jim Keyes' conference call with Pali Capital (to see it, click here) and immediately rolled my eyes and let out a chuckle. Apparently Blockbuster isn't putting its own DVDs into the 2,500 Blockbuster Express kiosks the chain plans on rolling out through the end of the year. Instead, Blockbuster's partner in the venture, NCR Corp., is in charge of feeding, and among the sources for its dollar-a-day rental DVDs is — surprise, surprise — Wal-Mart.

That took me back to 2000 and 2001, in the early days of DVD, when studios were once again going through one of their period bouts of consolidating distribution. Retailers and even other distributors shut out by studios such as Universal limiting distribution to Ingram and VPD would simply turn around and buy product, on street date, from the local Wal-Mart.

It was something they couldn't do in the days of high-priced rental cassettes, when the mass merchants weren't even in the home video business, for all practical purposes. In those days, you will recall, videocassettes were released with list prices of up to $100, with the express purpose of limiting sales to video dealers who would turn around and rent them to consumers. No one thought consumers would actually want to own hit movies released on video, except for a smattering of family and children's features that would likely be viewed repeatedly. Six months down the pike, the price would come down, primarily to give retailers a chance to replace their worn-out rental cassettes. Marketing these no-longer-fresh theatricals to consumers was merely an afterthought.

But DVD changed the equation, and studio attempts to consolidate distribution — a ploy to both feed the burgeoning sellthrough market by limiting rental availability and at the same time get a share of the rental action, since the retailers and distributors who made the cut had to agree to revenue-sharing arrangements — were consistently dinged by the Wal-Mart factor. Indeed, independent rental dealers as well as smaller distributors like Flash unabashedly stated they would not be stymied by the studio clampdown and simply buy their DVDs at Wal-Mart, Costco and other mass merchants who were doing cartwheels just to tap into the booming DVD sellthrough business.

Nearly 10 years later, the same thing is happening, although now Blockbuster has joined the disgruntled indies in shopping at Wal-Mart. Here's a novel concept for the studios to entertain: Why not just ship everything to Wal-Mart and let Wal-Mart be the country's sole distribution source for DVD? Wal-Mart is open early and even has a good number of 24-hour locations. The chain is fairly ubiquitous; according to Snopes.com, 90% of all Americans live within 15 miles of a Wal-Mart store. And the prices Wal-Mart charges for new DVD releases tends to be lower than some distributors charge.

Hey, I think we're on to something ...

17 Sep, 2009

Will There Be a Fifth Quarter?

Remember the "fifth quarter" studio executives used to salivate back in the early years of this millennium? Year after year, strong DVD player sales at Christmas led to huge DVD sales in January, as the thousands of new DVD households flocked to stores to find something to feed their hungry little machines.

With Blu-ray Disc player prices now at truly affordable levels — even the respectable Panasonic DMP BD-60 can be had for just $179 on Amazon — studio executives are trying to squeeze whatever optimism they can out of this shattered economy and DVD sales slump. Everyone in our industry, it seems, is searching for even a modicum of light-at-the-end-of-the-tunnel-year, and Blu-ray Disc player sales could be just the spark our industry needs if there's a last-minute rush by consumers to pick one up and put it under the tree.

It is doubtful we are going to see anything like we did in the 2002 or 2003 holiday seasons, when DVD player sales went through the proverbial roof. But there are signs player sales could be stronger than anyone right now is thinking. I am now at the point where I can't count the number of people I know, from all walks of life, who have bought a Blu-ray Disc player for one of two reasons: 1) their DVD player is shot and they figure they might as well replace it with a Blu-ray Disc player, "because that's where everyone seems to be going these days," in the words of a car mechanic I know; and 2) they just bought a home theater system anchored by an HDTV and just feel buying a Blu-ray Disc player is a no-brainer, either because they've been told by their home theater installer or (and this is the reason I'm hoping is the zinger) because they are smart enough to figure out that the only realistic way to get true high-definition is from Blu-ray Disc.

I wonder if studios that are holding back hot tentpoles until December have this in the back of their minds. Sure, they're reacting to lingering consumer purse-tightening and purchase delays until the last minute. But they're also playing right into the hands of the "fifth quarter" concept. Wait until week two or three of December to release a hot title and you not onlyi increase the odds of your title being picked up on DVD as a last-minute impulse buy, but you also position yourself to be right there the moment someone walks in to buy a Blu-ray Disc player as a gift, making it a fair bet the giver will pick up a Blu-ray Disc of that same title as a stocking stuffer to go along with the Blu-ray Disc player. You're also going to be fresh enough once Christmas passes and new Blu-ray Disc owners head to the stores for more discs.

It's sure shaping up to be an interesting fourth quarter.