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.
Last year’s Black Friday was a Roman candle of joy for Hollywood studio executives — bright, but short-lived. If you will remember, Blu-ray Disc and DVD sales soared dramatically the day after Thanksgiving, and everyone’s initial reaction was that the industry was finally on the verge of recovery. But by the time the holiday weekend was over, sales were back down to previous levels, and subsequent analysis revealed the boost was due primarily due to deep discounting — not just of hits, not just of in-demand catalog special editions, but of everything.
I’m hoping this year’s Black Friday will bring better news. What all of Hollywood is hoping for, of course, is that consumers will step up their disc purchases not because prices are so low that they can buy a movie for just a little more than they can rent one, but because they’re getting excited again about owning and collecting movies.
Granted, this may be a little too much to ask for, given the fact that the novelty of buying movies on shiny little five-inch discs has worn off and there are so many other home entertainment options available. But it certainly is a worthy goal for which to strive, and underscores the drive for “added value” studio marketers have been mouthing almost from the day the disc business was born.
So how do we get consumers excited? If I had the answer, I’d be up in Hollywood right now, proclaiming myself the new Warren Lieberfarb. But I do have a few hunches, beginning with the notion that the sellthrough business is actually two different businesses, with two very different audiences.
The first is the new-release business. These consumers tend to act on impulse; they want what’s new, and they want it now. If they see it first in the Redbox machine, great, they’ll rent it; if they spot it first inside Walmart or Target, they’ll buy it. The key here is to maintain the window from rental — although I’d let physical rental stores get new releases on day one, since they generally sell videos too — and at the same time boost advertising, both traditional and viral, stressing not just the movie but the value of ownership. To pay for the extra advertising, I’d cut back on extras — sorry, folks, but for new releases, special features just don’t mean that much. To borrow a quote from James Carville: It’s the movie, stupid.
The second sellthrough business is catalog. Here, I’d just take a look at what Jeff Baker and his team are doing at Warner and copy it. Sorry, but that’s about it — Warner takes the proverbial cake when it comes to dressing up old movies, both in terms of extra material, like rare behind-the-scenes footage and documentaries, as well as packaging, with such nifty items as watches, reproductions of actual programs and coffee-table books.
As the Apple iPhone has proven, even in a down economy, people will still spend money. You just have to cater to your audience and, as the song says, keep the customer satisfied.
For the fourth consecutive year, Home Media Magazine salutes the women of home entertainment with our annual tribute to the most influential female executives in home entertainment. When we launched this project in 2008 the industry was at a crossroads, with DVD sales flattening, Blu-ray Disc acceptance lukewarm, and digital distribution more a pipe dream than anything else.
At the time I wrote, “As our industry buckles down to weather the transition, we find a significant percentage of top industry executives are women. … I found some similarities among the honorees. Specifically, they are well-educated, well-rounded and in positions of increasing importance, both at their own company and within our industry.”
The industry has changed a lot over the past three years. DVD is clearly a mature, and declining, format, while Blu-ray Disc, after a rocky start, is finally being embraced by mainstream consumers the way we could only dream it would be in 2008. As for digital distribution, well, let’s just say that no one back then could have imagined there would be so many channels to bring entertainment into the home, and that Facebook — at the time an upstart challenger to MySpace in the nascent social networking space — would be among them.
One thing that hasn’t changed is that physical media continues to be the dominant distribution method for home entertainment. Another thing that’s remained the same: the caliber of our women executives. As I wrote back then, our list includes “more than half a dozen business and marketing leaders who essentially call the shots at their respective studios, from developing and implementing an overall Blu-ray Disc strategy and overseeing every stage in the product distribution cycle to acquisitions, packaging, sales and marketing, and fulfillment.” And, once again, we also have our fair share of “trendsetting retailers” and “entrepreneurial mavens who have been taking pot shots at the proverbial glass ceiling for years.”
The 2011 edition of our Women in Home Entertainment tribute is running in our Nov. 14 issue, and for the second consecutive year we are producing a gala luncheon to honor these women the day after the issue debuts — this year it’s on Tuesday, Nov. 15, in Beverly Hills, Calif.
I’d also again like to issue a special callout to our own women of home entertainment: Stephanie Prange, Angelique Flores, Julie Savant, Renee Rosado and Ashley Ratcliff. They’re a critical part of the Home Media team. Julie has been with us for longer than I have, and I’m celebrating my 20th anniversary here this month. Renee and Stephanie came along shortly after I did, while Angelique joined in 2004 and Ashley, our newcomer, joined our team last year.
This year also saw the passing of veteran home entertainment publicist Maria LaMagra, who spent nearly 30 years in the industry. She worked 11 of those years as head of publicity for what now is Universal Studios Home Entertainment and, as an independent public relations consultant thereafter, worked for just about everybody else. LaMagra died Aug. 7, 2011, at her home in Sherman Oaks, Calif. She had been battling cancer and was under hospice care. To Maria, the once and forever queen of home entertainment, we will dedicate this issue.
Herman Cain may have his 9-9-9 plan to remake the tax system, but the Hermanator’s plan is nothing compared to my plan to remake the home entertainment business.
The big problem, these days, is that studios aren’t making enough money because too many people are renting discs from Netflix and Redbox, and the return to studios from rental isn’t nearly what it is from sellthrough.
So here’s my three-part remedy:
Consumer electronics manufacturers immediately stop making DVD players and only manufacture Blu-ray Disc players. The margins are better, and if they tout the fact that these players not only play high-definition discs but also are backwards-compatible – and make standard DVDs look better – I think they’ll do all right. As any first-year marketing student knows, consumers need to be educated, and if we’re concerned that too many people are still living in DVD land, then maybe a forceful eviction is what’s needed.
At the same time, computer manufacturers need to stop putting DVD drives in new computers and also adopt an all-Blu-ray Disc approach. Again, they can tout the backwards compatability angle, as well as the fact that Blu-ray Disc offers far greater storage capacity – which in this era of increasingly large photo and video files should be a great selling point.
The third thing that needs to happen is for studios to release movies on Blu-ray Disc a month before they release them on standard DVD. They can charge full price for the Blu-ray Disc, and then a month later offer bare-bones single DVDs for maybe $5 a pop. The idea here is that consumers who don’t want to wait, as well as movie collectors, will rush out and buy the new release on Blu-ray Disc, while those who are less enthusiastic won’t mind waiting a month to buy it for $5 a DVD.
This second category of consumer is the rental crowd, and they already are accustomed to waiting a month to get their movies from Netflix or Redbox – which they don’t mind doing, because it’s only costing them a few dollars.
By imposing a similar window on DVD and charging just a little more than the average rental fee, I believe many of these consumers will migrate back to the purchasing habit, particularly since buying a movie at places like Wal-Mart and Target is so convenient.
It’s a way for studios to take back the rental business, once and for all, and not have to share with anyone. Netflix and Redbox can still rent movies, but under this scenario the playing field between sellthrough and rental is leveled.
As for physical video rental stores, they can do it all: They can sell new Blu-ray Disc releases, rent them, and then after a month do the same with standard DVD. I believe video stores will regain at least some of the market share they’ve lost over the years, and at the same time get a crack at the lucrative sellthrough business that for the most part has eluded them.
What do you think?
I ran across an interesting statistic the other day. Netflix accounts for about 25% of total consumer spending on home entertainment — figuring rental is half the market, and Netflix is half the rental business. And yet if you talk to any studio president, you’ll hear that Netflix, at best, accounts for only 5% of the average studio’s total home entertainment sales.
That’s clear evidence of just how much money the studios left on the proverbial table when all of Hollywood was touting the rapid rise of sellthrough in the late 1990s and early 2000s while completely ignoring the rental transactional end of the business. Left on the sidelines in our collective glee over escalating buy rates and what we mistook for a dramatic change in consumer behavior, the rental business mutated and evolved with nary a notice from Hollywood, which is why a smart guy like Reed Hastings was able to come in and in a few short years virtually “own” the business, hastening Blockbuster’s demise and, years later, putting a crimp in sellthrough now that the novelty of owning movies is over and consumers are a lot more selective in what they choose to buy.
The 28-day window three, and sometimes four, studios imposed on Netflix and its fellow rental renegade, Redbox, in an attempt to spur sales, hasn’t really been working all that well, my sources tell me. Back in the gaga days of DVD, when up to 60% of inventory sold through within a week and everyone rushed out to buy the week’s hottest new releases bright and early on Tuesday morning, 28 days was a lifetime. But as the business matured, that sense of urgency gradually went away, to the point where first-week sales are way down. People don’t mind waiting a few weeks to rent a movie from Netflix or Redbox, particularly at a time when the economy is still shaky and entertainment options are at an all-time high. There’s plenty to do in those weeks before a movie hits the Netflix queue, from updating Facebook to beating your kid at Angry Birds.
But after four weeks people are going to start getting a little antsy, which is why all eyes right now are on Warner Home Video and its still-unconfirmed intent to lengthen the window from 28 to 60 days — and perhaps include all classes of rental trade, including brick-and-mortar. If Warner’s new window is, indeed, the tipping point, the right amount of time for consumers to say something along the lines of, “Screw it, I’m tired of waiting, I’ll just buy the damn movie,” you can bet your state-of-the-art 3D Blu-ray player that other studios are going to follow suit.
And while the obvious goal is to boost sales, the other is to put the brakes on the Netflix phenomenon (although Reed Hastings has been doing a pretty good job of that himself). You can’t blame the studios for that: when 25% of consumer dollars flow into a business that only gives you 5% back, you’ve got to do something, anything, to at least even the score.
I’ve gotten a lot of calls today concerning the shakeup over at Paramount, ranging from “What the hell happened?” to “What does it mean?”
What happened is this: Paramount put all channels bringing entertainment into the home under one roof, in a new division, Paramount Worldwide Home Media Distribution, headed by Dennis Maguire, previously president of Paramount Home Entertainment.
What does it mean? It means the powers that be at Paramount are exhibiting a great deal of common sense.
One thing we learned earlier this year, when we were compiling our “Digital Drivers” section: The studios are all over the place when it comes to categorizing digital distribution. Some put it under the TV group; others, home video; and still others, on its own platform, separate but equal to TV and home entertainment.
In creating its new Worldwide Home Media Distribution division, Paramount has taken a bold step toward integrating its various into-the-home distribution channels and putting one guy, an industry veteran known for his team-building and ability to work well with others, in charge. Dennis Maguire is hardly a polarizing figure; he’s a universally respected, and accepted, executive who doesn’t have sharp elbows and, quite frankly, knows his stuff. He’s worked his way through the Disney home entertainment boot camp — which has produced myriad other talented executives, from Universal’s Craig Kornblau to Paramount’s own Mary Kincaid — and emerged as something of a statesman, if you will, in our industry.
Of course, he’s got a monumental task ahead of him, figuring out the direction our business is going and aligning the various delivery and distribution mechanisms now under his control to maximize value to both studio and consumer.
But at least he’s got a starting point, a general direction from which to begin.
As one observer put, Paramount finally has a blueprint. Now, it’s time to start building the house. And while there may be many design changes up ahead, at least there’s a solid framework for what’s to come.
It’s always gratifying to see one of our own make good, establish a name for himself outside of the confines of home entertainment.
Bob Chapek has made good for the second time in less than two years, and all of us who have worked alongside him for more years than I can recall should be very, very proud.
In what observers and analysts agree is a very smart move, the former president of Walt Disney Studios Home Entertainment has been promoted to president of Disney Consumer Products, an expanded group that includes toys, books, apparel, DVDs and Blu-ray Discs, and video games. Chapek, who since November 2009 had been Disney’s distribution chief, now oversees a mighty consumer products empire that will handle retail and licensing across all of Disney’s businesses, from film to television and interactive media.
The restructuring gives Disney more clout than ever at retail, now that everything it sells is under one corporate roof. Media analyst David Miller, managing director of Caris & Co., told the Los Angeles Times he surmises Disney’s goal is to become “a one-stop shop for the Wal-Marts and all the big-box retailers looking for a place to go with all kinds of toys and consumer products.”
That Disney entrusts such a critical mission to Chapek isn’t surprising. Chapek, who joined Disney in 1993 after working in brand management for H.J. Heinz and in advertising for J. Walter Thompson, quickly made a name for himself in home entertainment for an approach that was at once strategic and visionary. He emerged as a de facto industry spokesman as he eloquently and convincingly pushed for new packaged media innovations such as Blu-ray Disc and 3D when standard DVD sales began to flatten, and at the same time tirelessly championed digital delivery mechanisms such as Disney’s cloud-based KeyChest initiative, which lets consumers buy a movie once and access it whenever they want on computers, notebooks, tablets and other portable devices.
Accordingly, he also broadened industry trade group DEG from a DVD champion into one that promotes all facets of home entertainment, both physical and digital.
Having known Chapek for quite a number of years, I can say this: He’s a true standup guy, honest, forthright and approachable. He’s also a very, very hard worker, thanks in no small part to a solid Midwestern upbringing in Hammond, Ind. As a boy, he was an altar server who showed up at St. John the Baptist Church promptly at 6 a.m., according to a story in his hometown newspaper. His dad was an oil refinery machinist; his mom worked at an insurance agency.
Bob Chapek truly is a self-made man. He may not have been born with a silver spoon in his mouth, but he has a way of touching things and making them turn into gold.
Honey, they shrunk the magazine!
Your next issue of Home Media Magazine will be a little smaller — but not by much. We’ve trimmed an inch off the top to make our digital edition fit perfectly on the iPad, since the booming tablet market, dominated by Apple, is giving digital editions of magazines a whole new life. (To see for yourself, click here and subscribe to our digital edition — it’s free!
We’ve also taken the opportunity to redesign the magazine to give it a fresher look. Thanks to our creative director, Melbert Sebayan, and his design team, Home Media Magazine is now easier than ever to read and digest.
And coming soon will be smartphone apps for Home Media as well as a special “mozine” designed especially for smartphones, so you can get the latest news, reviews, commentaries, blogs and photos as soon as they are posted, no matter where you are.
It’s all part of the evolution of Home Media Magazine into the Home Media Group, our transformation from a weekly print magazine aimed at video retailers to an around-the-clock information source aimed at the entire home entertainment food chain, from content creators and producers to distributors, manufacturers, and of course retailers, analysts, the consumer press, and “super” consumers with a wide swath of influence through blogging or other means.
We were founded 32 years ago this month as Video Store Magazine, a selling tool for the studios as they pitched the concept of watching movies on videocassette to a wary retail base. We’ve grown up with the industry as these retailers established their own rental businesses, and the studios, eager for a bigger cut of the action, pushed a new and improved medium, DVD, directly to consumers to establish the even bigger sellthrough business that in 2001 overtook theatrical as Hollywood’s biggest source of revenue.
Today, there are more ways to bring movies into the home — or directly to consumers, one should say — than anyone could have imagined, even just five years ago. Home Media has been embraced as the voice of the industry, and with the industry going off into so many different directions, all at once, it’s critical for us to be everywhere, as well.
So that’s what we’re doing. Home Media’s voice is as loud, and as vital, as it’s ever been — and the more places you can hear us, the better.
Can there be any more obstacles to 3D’s growth as a home entertainment viewing choice, or option (emphasis intended)?
We’ve got far too many competing formats, not enough good content, media reports that theatrical audiences are tiring of 3D and that it may be bad for your eyes, and mass consumer confusion over exactly what it is — and how it differs from the old red-and-blue glasses we used to wear during periodic 3D fads in the past.
Plus, it’s not user-friendly. The best systems require glasses, expensive glasses, which can easily be lost, misplaced or broken — particularly in homes overrun with children.
Sad, because I really like the concept of 3D, and while I certainly wouldn’t want to watch everything in 3D, there’s a fair amount of stuff out there I would like to immerse myself in to feel as though I’m part of the action instead of merely watching it — which of course is the ultimate goal of the current wave of 3D technology.
3D also has the misfortune of being launched during the worse recession since the Great Depression — and an economy that continues to be troubled to the point where more and more smart minds are questioning whether what we’re all doing is even sustainable. The United States, Europe, Greece — Houston, as they say, we have a problem. A big, big problem.
Fortunately, Hollywood isn’t throwing in the towel, at least not yet. Avatar didn’t light the 3D world on fire, but Walt Disney Studios’ decision to give The Lion King a 3D do-over certainly could give the format a considerable boost.
It would be nice to see more films of that stature come to 3D, but honestly, it’s an expensive, time-consuming proposition, and one that studios are unlikely to invest more money into until they at least catch a glimpse of a potential return on investment.
I had the opportunity, recently, to speak with Robert Neumann, the chief stereographer for WD Animation Studios. He told me the process of converting The Lion King to 3D took a team of about 60-odd artists working for four months, full-time, “including overtime and crunch time.”
But the result, at least in his opinion, is certainly worth it. “The results are stunning,” he said. “After seeing the finished product, at that point I was convinced this is almost a new medium, a new kind of art form, because it retains all the character and energy [of the original] but at the same time gives it a different feel, a certain tangibility, a hyper-real feel. People feel they can reach in and touch the characters. It’s almost like a moving painting.”
Personally, I can’t wait to see The Lion King in 3D. But I’m already a fan. The challenge, now, is to get more people onboard — and that’s what’s going to take what I call the two “Cs,” consolidation (of formats on the hardware side) and content, a lot more content.
I’m still reeling with shock and sadness at the death a few days ago of Maria LaMagra, the veteran home entertainment publicist who spent more than a decade running the PR show at Universal Studios Home Entertainment and then went on to become a successful PR consultant and independent contractor for Walt Disney Studios, Sony Pictures and others
So often, when people die, those of us who are left say something along the lines of, “She left us too soon. She was so full of life.”
In Maria LaMagra’s case, this isn’t just another platitude. It’s God’s honest truth. Maria didn’t observe life, nor did she merely live life. She took life by the shoulders and shook the bejesus out of it, and made it do her bidding.
Come to think of it, she did that to all of us.
Maria LaMagra was the diva of the Hollywood publicists when I joined what was then Video Store Magazine in 1991 and she was still the diva of Hollywood publicists when she died after a brief battle with cancer.
Her family put out a statement saying she was 66 when she died. Maria would have killed them. We all thought she was at least a decade younger. After a certain point, you see, Maria LaMagra stopped aging and became, well, ageless.
I’ll never forget her raspy voice, her loud laugh, the way she would throw back her head when she laughed, those expressive eyes, the way she carried herself, her sense of fashion and style, that aura of self-assuredness she always projected. And her approach – well, let’s just say Maria LaMagra was not from the Subtle School of Publicity. She emailed and then she phoned; she phoned and then she emailed. And she kept doing it, over and over again, until a journalist had no other choice than to say “yes.”
She was, as rocker Dave Edmunds would say, “subtle as a flying mallet.” When Maria LaMagra walked into a room, she owned it. She was loud, no question – and yet her heart was even bigger than her voice.
I’m half expecting a phone call, chastising me for putting her age in print – and asking me for one last favor, for a client, of course. Just six weeks before she died, she was at the EAA’s Wine & Wisdom event at the Skirball Center – clearly ill, but still a big, overwhelming presence. I was on vacation, but our editor in chief, Stephanie Prange, was there and talked to Maria.
The last thing she said, as Stephanie was preparing to leave: “Tell T.K. he still owes me a write-up on Smore Entertainment.”
If there’s a heaven, I can only imagine Maria up there right now, that loud laugh echoing through the clouds as she tells God and his angels what to do.
Well, we finally have our first Internet-connected Blu-ray Disc player in our house, and the boys were beside themselves at the prospect of watching YouTube videos on the big screen … until they saw how crappy they looked.
Their excitement lasted roughly three minutes. Then, out came the Blu-ray Disc of Hall Pass (all right, I’m a bad parent!), three big bowls of popcorn, and just like that the novelty of connecting the big TV to the Internet was forgotten.
I say this because for years everyone has been proselytizing about convergence, convergence, convergence. Turn your TV into a computer, turn your computer into a TV. But as the failed Web TV experiment of the late 1990s showed, migrating the Web to the family room widescreen might not be what people want.
And today — exactly a decade and a half after the launch of Web TV, I might add — I still don’t see it happening.
As our primary home TVs have gotten bigger and clearer, anything less than high-definition simply doesn’t cut it. We’ll watch movies on our PCs, laptops and tablets, but we won’t watch YouTube videos or other low-res fare on our TVs.
Streaming HD movies may ultimately turn out to be a different beast, but for now getting a true high-definition movie on my HDTV in any manner other than a Blu-ray Disc is way too much of hassle. Netflix’s streaming-only plan continues to be hampered by a poor selection; pay-as-you go options from Vudu and iTunes are cumbersome and give me this nasty feeling of someone sticking his hand in my pocket, feeling around for every last bit of change I might have. And I am the only one who is sick and tired of slow download times and “buffering,” which is rapidly becoming the most hated word in the English language?
As for buying digital downloads, forget it. I’d still rather buy a physical object for $10, $15, even $20, than a digital version for half that amount. Too many things that I have downloaded onto my computer over the years have simply disappeared.
I think true convergence has come about, but it’s a one-way deal: our computers have become TVs, but not the other way around. And quite honestly, I don’t see that changing, at least not in the foreseeable future.