Log in

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
Sort by: Title | Date
19 Jan, 2010

Box Office and Home Video: No More Ties That Bind?

I remember in early 1997, when DVD was not yet birthed and the home entertainment industry revolved  around videocassette rentals. Rental revenues had flattened and concerned studios began talking about the "maturing" of the business, wondering whether the novelty of renting a movie had worn off and, if so, we were all doomed. The savvy number-crunchers at Warner Home Video appeared unruffled and put together a road show maintaining that the malaise in the rental business had everything to do with a poor box office the previous year. The message: Box office was down, so of course six months later, when these theatrical duds come to video, the video business will be down. Conversely, give us a good box office and six months down the pike video revenues will soar.

This scenario played out for the remaining years of the rental era and then seemed to carry over into the DVD sellthrough years as well, although for awhile there DVD sales were posting double-digit gains each year regardless of what was happening on the big screen. Then came 2005, the pivotal year when DVD sales growth began to slow, and home entertainment executives again looked at the box office as a harbinger of what was to come. Consumers were becoming increasingly picky, no longer rushing out and buying everything simply because they could. Movies that did well at the box office would sell well when they hit DVD three or four months down the road, and analysts, both within the studios and on the outside, again began looking at the collective theatrical clout of any given month's DVD releases to predict sales.

This past year, however, the ties that bind seem to have become untethered. Box office receipts hit record heights in 2009, and yet DVD sales for the year were off an alarming 14%. The correlation, a growing chorus of industry voices concluded, no longer holds true. Consumers are so "done" with DVD that not even a string of hit movies can get them interested again.

Not so fast. If you really analyze what's happening in the marketplace, you'll find that box office continues to be a quite accurate indicator of home video consumption, if not sales. True, DVD sales fell in a year when box office revenues rose, but factor in rental, Blu-ray Disc and digital delivery and the number of transactions--the number of times consumers brought a movie into their homes — also rose, according to a report released earlier this month by DEG: The Digital Entertainment Group.

In a way, that's reassuring — that even in our business, as packaged and commoditized as it has become, a lot still depends on the quality (defined as commercial success) of the movies. And when you've got films such as Avatar, District 9 and Paranormal Activity, each delighting critics as well as movie-goers (albeit in different ways, and for different reasons), you can't be too down on our little corner of the entertainment kingdom.

As long as there are movies people want to see, there will be people wanting to bring those movies home. And isn't that what we're all about?

14 Jan, 2010

Are the Days of the Rental Superstore Over?

Blockbuster put tons of indies out of business by being significantly bigger in size, and having lots more copies of the latest hits on hand. But in an era when the hottest rental store in town is a phone booth-size kiosk with a few hundred titles, the glory days of the rental superstore are clearly over.

I remember back when Blockbuster began its swift ascension up the ranks of rental retailing. The perception of the average video store at the time was of a small, dimly lit place, with faded posters on the windows and walls. Granted, there were a lot of really good indie operators out there, but this was the perception--and it was one Blockbuster capitalized on with its ad campaigns that highlighted its huge, brightly lit stores and vast inventories.

Other chains with aspirations of going national copied the Blockbuster model, including Movie Gallery and Hollywood Entertainment (now merged and having a tough time). Gradually Blockbuster stopped playing up its selection and, as the rental business matured and business growth began to slow, focused on the hits. Towering new release walls became a hallmark of Blockbuster, and the chain prided itself on satisfying customer demand for the hits, only to shoot itself in the foot. The rental business, you see, was built not on consumer satisfaction, but on consumer dissatisfaction. People went to video stores and if the hit of the week was out of stock, they rented two or three other movies. Sure, they complained, but it was an accepted practice that if you didn't hit the video store early on a Friday or Saturday night, you probably weren't going to go home with the movie you intended to rent.

Blockbuster took those complaints seriously and, with the studios' support, rolled in the hits by the truckload. For awhile, it worked, but then came DVD and the sellthrough explosion, which left Blockbuster out in the cold.

The trouble was, Blockbuster had trained its customers to settle for nothing short of the biggest hits, so when those big hits became available at a sellthrough price, consumers flocked to the mass merchants--who by their very nature are all about mass appeal--to buy them. Now that the economy's in the toilet, consumers are renting again, but they don't want to wade through 10,000-square-foot stores to check out the titles they want. They want them right at their fingertips, a desire that's quite successfully met by both kiosks and Netflix's rent-by-mail proposition.

What's the solution? Jim Keyes surely would like to know. He's tried everything, from offering DVDs and Blu-ray Discs for sale at competitive prices to launching his own mail-order and kiosk programs. Heck, about the only thing he hasn't done is put Redbox machines in his stores.

I'm joking, of course. But then again, maybe there's some truth in that. Maybe Jim should lose the biggest stores and completely revamp the smaller ones. Put in an expanded vending machine with the latest hits, and another machine offering these same titles, both DVD and Blu-ray Disc, for purchase. Toss in a couple of tables and chairs and a rack of movie magazines and maybe a couple of computers so customers can access sites like Home Media Magazine, Moviefone and others that talk about new DVD and Blu-ray Disc releases. Devote a corner of the store to a Blu-ray theater, with an HDTV and a Blu-ray Disc player offering continuous showings of the latest new releases. And then depending on the store's demographic, have a foreign film section, a horror movie section, a cult classic section--whatever works--in which each disc is available for either sale or rent.

Blockbuster would evolve from a chain of superstores to a chain of smaller, individualized movie stores, catering to both the quick-in-and-out "give me the hits" crowd and the neighborhood's film buffs.

Neither group may be enough to sustain a store on its own, but both are put off by the cookie-cutter superstores Blockbuster continues to be known for to this day.

9 Jan, 2010

Blu-ray Ready to Spread Its Wings

I had a very interesting conversation with a gentleman from Intel this afternoon on the show floor of CES in Las Vegas. Demonstrating Intel's new core processors, he noted that computers are being asked to do so much more these days, particularly in the way of high-definition video, that processor speed needs to come up -- hence, Intel's new line, which even has a "turbo" function to really rev things up when needed. He held up a JVC high-definition video camera and told me the cost has come down by half since Christmas, and when I told him I had held off buying one mainly because I wasn't sure my computer could handle it, he said, "Yeah, don't waste your time burning high-definition video of your summer vacation to DVD. You need Blu-ray."

That opened up a whole conversation about Blu-ray's current limitation in the portability realm, including the conspicuous lack of Blu-ray Disc drives in laptops and PCs. That's all about to change, he told me, because the cost of these Blu-ray Disc drives has plummeted.

"It used to be it would add $200 or $300 to the cost of a laptop, and when you're talking about a list price of $600 to $800, that's a big deal," he said. "But now, the upcharge can be as little as $100, so now it finally makes sense."

Hopefully he's right. For Blu-ray to really flourish, we need mass playback devices, and that includes computers. I continue to be amazed that Blu-ray drives are not yet standard in computers, particularly given the capacity issues we're now facing across the board with virtually all media. Three years ago the average digital image, from a point-and-click digital camera, was 800K; today, it's 5MB. And as my friend at Intel said, "We're now looking at 4GB of high-def video footage, just from a kid's birthday party." My hunch is that particularly now that the price of drives has fallen, we're going to see a proliferation of computers with Blu-ray Disc drives, maybe even as standard equipment. To not do so at ths point simply doesn't make any sense."

At the same time, I expect more portable Blu-ray disc players such as the one displayed by Toshiba, and hopefully some car units as well. At the Audiovox booth I saw a new car DVD player with a built-in PlayStation 2. Great idea, I thought to myself, but this is a marriage of two outdated technologies. Why not offer a combo Blu-ray Disc/PlayStation 3 car unit? You'd think that might even be easier, since a PlayStation 3 already has a Blu-ray Disc drive built in. Hey, now that's an idea -- the next generation of car players would simply consist of a PlayStation 3, which can double as a game and movie machine. Sony, are you listening?

8 Jan, 2010

New Dimensions at CES

It's been a wild and crazy two days here in Las Vegas, beginning with a most enjoyable cocktail party sponsored by DEG: The Digital Entertainment Group that ended with a bunch of us being holed up in a nearby banquet room watching the Crimson Tide roll all over Texas. I couldn't help but laugh when the goody bags were being handed out -- each bag contained maybe a dozen Blu-ray Discs and two DVDs, and I overheard one person pull out the DVDs and mutter, "What's this?" Granted, this was an industry crowd, but you can see the writing on the wall: DVD will one day soon be looked up much as we now look at VHS. I now firmly believe everything will ultimately be issued on Blu-ray Disc, even vintage TV shows and old black-and-white movies. People will gradually liquidate their DVD collections and go all Blu. Studios may not get the premium pricing they initially wanted, but they surely will get mass library replacements. Once you go Blu, you just don't want anything else anymore.

On the show floor, the big buzz was 3D, commanding center stage at vast booths from Panasonic (which was showing clips of Avatar), Sony, Toshiba and other large CE companies. The buzz was of course intensified with word that Sony Pictures and Walt Disney Studios are both plunging headfirst into 3D. Given 3D's acceptance in movie theaters, I think the home market is primed and ready. I know mine is -- and I'm talking not just about the kids but about me. I love 3D, and frankly I can't wait.

I also want to give kudos to Toshiba for displaying a portable Blu-ray Disc player. The company that for so long backed rival HD format HD DVD is now a true Blu convert and is back to innovating and leading the market. We need a lot more companies making portable Blu-ray Disc players and mobile units for cars, as well. Blu-ray Disc has the upper hand in quality and is now affordable as well. What we need now is flexibility.

6 Jan, 2010

A New Decade -- In 3D

Just rolled into town late last night from our annual winter road trip — my wife's from Alabama (she grew up not far from Warner Home Video president Ron Sanders!) and each year between Christmas and New Year's she flies home while I take the three boys on a cross-country road trip. As usual I've kept my eyes and ears open about anything pertaining to our business, and here are a few observations:

1) Virtually every minivan or SUV had a DVD player going. I could see it clearly through the back window as I drove through Arizona, New Mexico, Texas, Louisiana, Mississippi and Alabama.

2) Even in the rural South, Blu-ray appears to be catching on. I went to a regional chain called HH Gregg, sort of a mini-Best Buy, to buy a new router for Diana's sister and her family. Two people were ahead of me at the checkout counter on New Year's Eve, and both had a Blu-ray player in their carts.

3) I bought my nieces a Blu-ray player for Christmas. As soon as it arrived my 20-year-old niece Margaret sent me a text message: "Blu-ray player = best Christmas gift EVER!!!"

4) Aunt Tanya's neighbors, the Slawinskis, are big on direct satellite delivery of movies and other programming into their home. And yet they get most of their movies by mail from Netflix. "It's just simpler," the dad, John, told me.

So much for my road stories. On the last day of my trip, I was reading USA Today in my Hampton Inn hotel room in Las Cruces, New Mexico, when I saw the story about ESPN launching a 3D network June 11 with a three-dimensional broadcast of a World Cup soccer match (to see the story, click here). Does anyone out there realize how big this is for our business? You have to start with the proposition that the future of our packaged media business depends on Blu-ray, and that 3D is being widely hailed as the format's killer app — amid hopes that 3D in the home will be as big and as lucrative as 3D has been in the movie theater.

The fact that ESPN is committing so much time and money toward 3D is a tremendous vote of confidence, even just in the proverbial arena of public opinion. If I am Joe Consumer and I read about Blu-ray bringing 3D movies into the home on specially equipped TVs, I'd be thinking "Cool, maybe I'll get one if it takes off." But the ESPN announcement changes all that. Now, Joe must be thinking, "Wow — 3D is really happening, and I can't wait for the fall so I can enjoy football games in 3D with my friends."

If Joe was on the fence, the ESPN announcement just pushed him over. College football games in 3D? Come on! And once you start seeing a critical mass of 3D TVs in U.S. households, 3D movies on Blu-ray Disc are the logical next step, particularly since our business is all lined up and waiting to take the plunge.

Right now the biggest problem in getting the masses to switch from standard DVD to Blu-ray Disc is the perception that the difference isn't all that much. Throw 3D into the equation and that excuse no longer holds water.

Pardon the pun, but it's a whole other dimension.

23 Dec, 2009

Kudos to David Poland!

Up until this morning, I had never even heard of David Poland. But after getting a link to his latest blog (you can see it by clicking here) I am a devoted fan.

In a blog entry titled "NYT + Brooks Barnes = Embarrassment," he assails the august "newspaper of record" for misunderstanding the movie business and the movie-making process. He also calls the paper's repetitive "DVD downturn" chant "completely half-assed."

Poland's angry blog posting underscores a very real problem in the consumer media: Too often, they just don't understand our business, and rely on superficial analysis that bears no resemblance whatsoever to reality. The "packaged media is dead" mantra, which the press has been repeating for years, is now louder than ever, with journalists picking up the downturn in DVD sales while completely ignoring the uptick in rentals and the significant and impressive gains in Blu-ray Disc sales--as well as the studios' all-out efforts to truly take Blu-ray to the masses by both encouraging lower sales prices and making the transition to the high-definition format as easy as humanly possible through the proliferation of affordable, all-in-one combo packs and flipper discs.

I'm also going to do what I can to set the record straight, to make sure the real story about our business gets out in the widest possible way. Check back here on Monday for my annual year-end analysis, which also will be featured in next week's print and digital editions of our magazines. Pass it around to anyone and everyone you know. I've also written a shorter, more pointed analysis for The Hollywood Reporter that's getting some pretty nice pickup, including the New York Times. You can read that piece by clicking here.

Happy holidays to all--I'm taking the family to Disneyland today for our annual visit. I'll be here throughout the holidays, however, so please check back often! It's been quite a year, and if you read my analysis you'll see rumors of our industry's death, with apologies to Mark Twain, truly are exaggerated.



15 Dec, 2009

Random Thoughts, Observations and Musings....

Ah, technology! I am listening to a CD of Christmas songs that includes a rare 1971 rendition of "Oh, Holy Night" by Gary Puckett, the 1960s pop star I once managed (1979-1981). I found the song on YouTube, downloaded it for my RealPlayer, transfered it to iTunes and ultimately burned it onto a CD.

But hey, we're not here to read about me boasting about my technological prowess, are we? As the Christmas tunes play on I am reading a surprisingly thoughtful update on Blu-ray Disc in the Wall Street Journal, by Sarah McBride (to see the story, click here). The story details the studios' big push of Blu-ray Disc in the holiday season and skillfully avoids using any industry jargon to explain such elements of said push as price reductions, combo packs and flipper discs. McBride also quite accurately describes Blu-ray Disc as "potentially a critical bulwark against the plunging DVD market, now in its third year of decline."

It's a good story, an accurate story, and a far cry from the "disc is dead" stories we've come to expect from the mainstream media. McBride notes that while Blu-ray Disc sales are on track to account for about 14% of packaged media sales this year, half what DVD was doing compared to VHS in year four of its existence, the big push could realize significant gains in the coming year, beginning in January, when the studios will target new Blu-ray Disc households drawn to the format by the cheapo players we began seeing in Wal-Mart and elsewhere in the days leading up to Black Friday.

I did find it a little ironic that the only studio president quoted in the story, talking up Blu-ray Disc, was Craig Kornblau, who during the format war was the chief cheerleader for the rival (and ultimately vanquished) HD DVD format. But hey, he's a smart guy, and he went Blu in a big way as soon as HD DVD backer Toshiba threw in the towel back in February 2008.

On another note, let me throw some kudos toward 20th Century Fox Home Entertainment for throwing a spectacular party Saturday night at Seth MacFarlane's Beverly Hills home for the DVD and Blu-ray Disc premiere of the latest "Family Guy" feature, Something, Something, Something Dark Side, a sequel to the animated sitcom's Star Wars spoof. The unexpected downpour proved no challenge for Fox SVP James Finn and his team — MacFarlane's backyard was tented and plastic-sheeted and the party went on as scheduled, complete with a 50-piece orchestra and a guest list that included Paris Hilton and Alyssa Milano. (see story here)

Clearly, event marketing hasn't fallen by the wayside. And I've got a hunch when other studios see how much press Fox got for this little shindig, we should start to see more of these events again, regardless of the economy — or the weather.

9 Dec, 2009

Studios Wise to Focus on Turning the Masses Blu

I hate cliches with a passion, but in this case there's simply no better way to say it than this: The studios are finally putting the cart behind the horse instead of the other way around.

For much of this past year, I questioned the wisdom of increasingly inventive BD-Live options when 1) Blu-ray Disc still had not gone mainstream and 2) the vast majority of people who had Blu-ray Disc did not have it hooked up to the Internet. Exclusive content and climate-changing menus were all well and good, but--and here's another cliche I feel compelled to use--it seemed the studios were throwing a lavish, over-the-top party and no one was coming.

But in recent months, there's been a discernible change in the studio mindset, and it is one I heartily applaud. The new way of thinking is to save the thrills and frills for later, when everyone has Blu-ray Disc, and instead focus on getting Blu-ray Disc hardware and software into the hands of everyone and his brother.

The way to do that is simple: Focus on one compelling, easily understood message centered around Blu-ray's superior picture and sound quality ("Your high-definition TV needs a high-definition disc")--and then work like hell to get the masses to bite.

To do that, we need to make the transition from standard DVD to Blu-ray Disc as simple and easy as humanly possible--and everything I've seen coming out of Hollywood lately seems to be a step in the right direction.

Pricing parity is certainly one big step. Particularly in this economic environment, you can't expect people to pay $30 for a movie, especially when they can get the same film on DVD for $15. The proverbial "sweet spot" appears to be under $20 for new releases and less than $10 for catalog, and that's what we're already seeing. For those who still cry "devaluation," keep in mind that if Blu-ray doesn't catch on, and catch on quick, we might not have any product to devalue.

The other big step is to offer consumers convenience by adopting some sort of "a disc for all seasons" approach. Recognize that even if someone owns a Blu-ray Disc player, it is not a given that he's going to buy the Blu-ray Disc version over the standard DVD, since that same person probably has a DVD player in his car and in his bedroom and a DVD drive in his laptop. For the time being, at least, we need to offer consumers both, which is why I think the Disney-pioneered "combo pack" and Universal's flipper disc concepts are so smart.

Once we get Blu-ray firmly entrenched into the mainstream, we can always go back and jazz up the extras. We can produce BD-Live features that scratch your back and make the morning coffee, for all I care. But first we need to take care of the basics. And I'm relieved to see that's precisely what the studios appear to be doing.

2 Dec, 2009

Incentives Galore

Every day, it seems, there's a new development that makes Blu-ray Disc even more irresistible to the masses. The latest development: Universal Studios Home Entertainment's "flipper" disc, with Blu-ray Disc on one side and DVD on the other. Priced about the same as a regular Blu-ray Disc — or DVD, for that matter — the package offers Blu-ray Disc owners the chance to watch the movie in high-def in their home theater room and on DVD in their car, bedroom, laptop or anywhere else they haven't yet upgraded. And for non-Blu-ray Disc owners, it's an enticing lure to be able to buy something they can watch on their existing DVD player, while all the time the Blu-ray Disc side beckons to them, "Watch me, watch me...you don't know what you're missing." I know if I had an HDTV and hadn't yet gotten a Blu-ray player, all the hype about a six-times clearer picture would at the very least make me curious — and if I could now buy a disc with Blu-ray on one side and DVD on the other that Blu-ray side sure would make me antsy. I'd feel as though I was almost done with a puzzle, and the last piece was a Blu-ray player.

Uni's flipper disc comes on top of other nifty incentives to get the masses to convert. There's the Disney-pioneered combo pack, with a Blu-ray Disc, a DVD and a digital copy disc all in one package; there's loss-leader Blu-ray Disc pricing on hot new releases at Wal-Mart and other big discount chains; and there's a sharp drop in actual selling prices for Blu-ray Disc catalog titles, most recently an under-$7 promotion at Best Buy (click here to read our story).

There are a few things we still need to really get the masses addicted to this potent format:

1) A generic ad campaign aimed at those HDTV buyers who haven't yet upgraded to Blu-ray Disc. This is critical, because HDTVs clearly are the hot item this holiday season, and rampant discounting — I saw some decent sets, 19 inches, going for $149 at Best Buy on Black Friday — is going to make them even more hot as the season winds down to its Christmas climax. So let's go for broke and make it perfectly clear that those HDTVs just aren't complete without a Blu-ray Disc player. I'm not an ad copywriter, but I'm thinking something along the lines of "Go Blu. Your High-Def TV Needs a High-Def Disc."

2) TV combos. When are we going to see HDTVs with built-in Blu-ray Disc players? Those TV-DVD combo players that popped up shortly after DVD's launch more than a decade ago no doubt encouraged consumers to transition from VHS. They were like an affirmation that DVD had arrived. Now, we have a perfect opportunity to marry those HDTVs with high-def players. Why haven't we done so? It galled me to no end on Friday when I saw an Emerson HDTV-DVD combo unit. That's like installing a Blaupunkt stereo with an eight-track player. And just think of the message that sends to consumers: "Here's your shiny new HDTV and a DVD player, which really is all you need...." Let's counter this crap ASAP.

3) TV series on Blu-ray. So far, they've been few and far between. Kudos to Universal for putting out the complete series of "Battlestar Galactica" on both DVD and Blu-ray Disc, and ditto to HBO for "Rome." But what about "The Sopranos" or "Seinfeld"? We need to up the ante in TV DVD land, particularly on the complete series front.

Here's hoping we all have a Blu Christmas.

27 Nov, 2009

Black Friday: The Good, the Bad and the Just Plain Ugly

I headed out for the stores early on Black Friday not so much to do my own Christmas shopping as to see what retailers were doing to take advantage of what's traditionally hailed as the single biggest retail day of the year.

A full report on Black Friday activities, which is being updated all day long, can be found by clicking here. But if you'd also like to get my take on what I saw, please read on:


At Best Buy, people seemed to be buying handfuls of DVDs and Blu-ray Discs again. I was pleasantly surprised at the Blu-ray Disc racks, where several titles, including Disney's Snow White, were sold out long before 8 a.m. Smart merchandisers, again from Disney, also seemed like a beacon in attracting shoppers. Best Buy was a bustle of activity, and I rarely saw a cart with a 42-inch HDTV that didn't also have a Blu-ray Disc player stuck in there.

At Wal-Mart, $78 Blu-ray Disc players were everywhere, including right by the front door, in that aisle filled with promotional merchandise you have to pass by to get anywhere else in the store. I counted at least half a dozen carts with Magnavox or slightly higher priced Sony Blu-ray Disc players.


Wal-Mart may have created quite a bit of buzz in the days leading up to Black Friday with word of its deep-discounted Blu-ray Disc releases, both new releases and catalog titles. But my visit to the Oceanside, Calif. store was a big disappointment. Large cardboard Blu-ray Disc bins had been handed over to regular DVDs, and it took three passes through the electronics department before I finally found any Blu-ray Disc software--still behind lock and key. That's hardly a way to encourage the masses to go Blu, regardless of how many cheap players you've got stacked in the center aisle. If things were different at other Wal-Mart stores, by all means, let me know. I'm hoping against hope that lowball Blu-ray Disc pricing meant depleted inventories by 8, when I got there, and that the Blu-ray bins had been emptied by eager consumers and only then restocked with budget DVDs.


Stupid, stupid, stupid. I still saw several HDTVs with built-in DVD rather than Blu-ray Disc players. Why on earth would CE companies do something this asinine? Why not put an eight-track into the next home theater-in-a-box? Or a VCR in the plasma? The message we need to get across to consumers is this: Your high-definition TV needs a high-definition disc, or you're missing out. What companies like Emerson, the guilty party behind the combo I saw this morning, are doing is just wrong.