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.
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.
Walt Disney Studios Home Entertainment scored the top slot on the weekly home video sales chart for the week ending August 9 with Return to Witch Mountain, according to Nielsen VideoScan First Alert. Sony Pictures, meanwhile, snagged the top rental spot with Obsessed, according to Home Media Magazine's market research department. Obsessed was the No. 2 seller, while Witch Mountain was the No. 2 renter. Complete story to follow.