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Good News on the Horizon for Home Entertainment

No, as far as I know, Hell has not frozen over. And pigs aren’t flying — at least, not the last time I looked out my window, which overlooks the flight path into John Wayne Airport.

But lo and behold, we’ve just received a glowingly positive forecast for the film business, from no less reputable a source than PricewaterhouseCoopers, the respected accounting firm. And packaged media, everyone’s favorite whipping boy, no longer has to duck its head in shame.

The PricewaterhouseCoopers report predicts that over the next five years, worldwide consumer spending on movies — meaning theater tickets, DVDs, Blu-ray Discs, VOD and EST — will grow to a record $107.5 billion in 2014, from $85.1 billion in 2009. That’s an annual growth rate of nearly 5 %.

The growing popularity of 3D films will spur box office revenue, while Blu-ray Disc sales, shorter theatrical-to-video windows (a la Alice in Wonderland) and low-price rentals of the sort offered by the proliferating Redbox kiosks will help “reinvigorate the physical home-video market,” according to the report.

Say again? Disc sales are expected to start rebounding next year and then will slowly rise each year to $15.6 billion in 2014, according to the report. That’s not a big gain — about 1.6% from 2009— but hey, we’ll take it. After the declines we’ve been seeing in our business, even staying flat would be a good thing — particularly in light of the fast growth expected to be seen in the digital arena, with PricewaterhouseCoopers predicting digital downloads of movies will triple from $364 million in 2009 to about $1.1 billion in 2014.

That’s not the only bit of good news we’ve been hearing of late. The NPD Group reports sales of 3D televisions and compatible Blu-ray Disc players surpassed $55 million in the first 90 days since their February introduction. And as of March, consumer electronics sales in general have once again been trending in an upward direction, Shawn DuBravac, chief economist and director of research for the Consumer Electronics Association, told attendees at the opening presentation of the two-day CEA Line Shows event June 22 in New York City.

Of course, our home entertainment business is by no means out of the danger zone. The latest concern I’ve been hearing from studio executives is that catalog sales are down a dismal 20%, TV DVD is a shadow of its former self, and new releases continue to be hit or miss — to the point where Tuesday is easily the most stressful day of the week at the studios.

But at least there’s hope that things will get better. The party may be winding down, but it’s not over.

Random Thoughts: Redbox, Rebates, Glee and Elvis

I spent much of today in Century City at the ESCA Edge conference and had the honor of introducing an old friend to deliver the keynote: Mitch Lowe, currently president of Redbox and, before that, a key player in the launch of Netflix and the owner of the Video Droid chain of Bay Area (California) video rental stores.

My favorite line came when Lowe discussed the fact that his company now has deals in place with all six majors and Lionsgate, and that he's back on amicable terms with even the heads of the studios with which Redbox was embroiled in litigation. "I can even hug Craig Kornblau again," he said, referring to the Universal Studios Home Entertainment president who was the first to challenge Netflix's dollar rentals of new releases. "Just not too close," he added.

The most interesting part of Lowe's presentation, however, was the presentation of data from NPD that suggests kiosk rentals may actually help rather than hinder sales. Fears that dollar rentals at Redbox were cannibalizing DVD sales prompted the whole Redbox-vs.-Hollywood brouhaha in the first place, with first Universal Studios and then other studios refusing to sell their product to the kiosk company on street date.

As our senior editor, Chris Tribbey, notes in his story (click here to read it), Lowe said NPD research showed that 41% of Redbox customers typically rent movies before they choose to buy them, and 9% of Redbox rentals later result in a sale. Lowe also said Redbox customers tend to buy more discs than the average consumer and often use Redbox as a sampling mechanism in deciding what to buy.

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On another note, 20th Century Fox Home Entertainment is doing something I'd like to see a lot more of: offering a rebate if consumers buy a new and improved version of a previously issued title. The studio on Sept. 14 is releasing the complete first season of the hit TV show "Glee," and anyone who bought the earlier Glee: Vol. One: Road to Sectionals gets a $10 rebate. That's nearly a third of what the new DVD/Blu-ray Disc release is going to sell for in stores (I know, I know, the suggested retail price, or SRP, is $69, but everyone knows SRP is merely a "value mark" that is generally a lot higher than the actual sales price.) 20th Century Fox is giving consumers a great deal here, and I hope the rebate offer is fantastically successful so more studios will follow suit.

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I know I called this out a few weeks ago, but now that I actually have the product in my hand I am WOWED. I'm talking about MGM's new Elvis Presley's 75th Birthday Collection, a set of seven films (including Clambake, Kid Galahad and Love Me Tender) presented in a compact boxed set with absolutely stunning box art. This is one of those rare releases of which I want a second copy to stash away, unopened, in my closet — next to such previously issued treasures as the complete series set of "Outer Limits" and Warner's The Wizard of Oz and Gone with the Wind 70th anniversary releases.

Creativity a Tool to Revive Catalog Business

Studio marketers have a difficult challenge ahead of them. They need to push Blu-ray Disc sales to make up for continued consumer disinterest in standard DVD. And yet at the same time they have to figure out ways to make DVD, as mature a format as it is, appealing to consumers again, at least until Blu-ray Disc truly becomes a mass-market item.

With new releases the strategy is pretty simple — and the results, increasingly hit or miss. Promote the title as much as you can, both among the masses and among specific niches. Tie it in with anything that makes sense, and don't let up until several weeks after release. Week one simply isn't as critical as it once was.

For theatrical catalog, the most common strategy is simply to slap an anniversary tag on the package and lower the price — with steadily diminishing returns. Consumers will only buy the same movie over and over again to a point — then they throw up their hands and cry, “Enough.” Why isn't the 25th anniversary edition of Movie X selling? Maybe because the film's fan base already has bought the initial DVD release, the 15th anniversary edition, the director's cut, the ultimate edition and the 20th anniversary edition. In the meantime, consumers have amassed hundreds of other DVDs as well, so many that there's simply no more room in their homes for more.

And yet as any good marketer knows, consumers will buy that 25th anniversary edition if there is a compelling reason for them to do so. And price just isn't one of those reasons.

The folks at Warner Home Video's theatrical catalog department are fully aware of the need to create a compelling reason for consumers to buy their library titles. That's why the division, under the direction of Jeff Baker and George Feltenstein, has created an incredible product line with its Ultimate Collector's Editions — lavish boxed sets that command premium price tags and come with all sorts of extra content and additional goodies, like books, postcards, reproductions of programs and, in the case of The Wizard of Oz, even a watch.

MGM Home Entertainment, under the guidance of veteran executive Eric Doctorow, also deserves a callout here. MGM's is mostly a catalog business, and time and time again, the studio has come up with truly captivating packages or programs to remarket old movies. Celebrity gift sets, each with four movies in collector-quality packaging, are breathing new life, and respectable sales, into deep-catalog movies that on their own wouldn't attract much attention. The Decades Collection, with iconic films from a specific decade packaged with a nostalgic booklet and CD with eight hit songs, is another remarkably clever marketing tool. And let's not discount the United Artists brand's 90th anniversary campaign, with a flagship collection of 90 UA films and a series of successful retail-driven anniversary events.

I should mention that both Warner and MGM also were pioneers in MOD (manufacturing on demand), a creative new business model that provides studios with a viable way to exploit titles that otherwise would not be available to consumers through regular retail channels.

By developing these and other clever initiatives to drive catalog sales, both Warner and MGM have kept their market shares relatively stable over the last four years even as the overall theatrical catalog business has tanked.

There's a lesson here, my friends ...

Change or Die: The Movie Gallery Story

The end came suddenly and swiftly, an affirmation of the old saying, "Change or die."

By steadfastly refusing to do the former, it was inevitable that Movie Gallery’s fate was sealed. And now the ailing rental chain has taken itself off life support and announced it will close all remaining Movie Gallery and Hollywood Video stores within the next two months.

I’ve written previously, and at great length, about all the things Movie Gallery did wrong over the last decade, about how it stubbornly clung to its in-store rental model even as the winds of change blew all over the home entertainment business. First came the subjugation of videocassette rental by DVD sellthrough; then came the revolution in the rental end of the business that saw mail-order subscriptions (Netflix) and, later, ubiquitous kiosks (Redbox) siphon an increasingly large percentage of consumers out of brick-and-mortar rental stores.

Blockbuster also was hit hard by this one-two punch, and yet that chain at least tried to survive by toying with subscription rentals and kiosks on its own. Movie Gallery did nothing, and when it became clear that the old rental model was in trouble, what did the brain trust that ran this chain do? Why, they bought another ailing rental chain, Hollywood Entertainment Corp., that was likewise stuck in the 1990s.

As a coda to Movie Gallery’s announcement last weekend that it would soon close up shop completely, the chain yesterday in a regulatory filing reported a net loss of more than $70 million just for the one-month period between March 8 and April 4.

I am genuinely sorry for the thousands of Movie Gallery employees who are losing their jobs because of management’s stupidity. I can only hope that at least some of them will find work among the ranks of the surviving independent video rental stores, scrappy fighters that have somehow been able to carve out a niche for themselves in a way a lumbering national chain never could.

The Windows of Hollywood

The move by studios to impose rental windows on their DVDs and Blu-ray Discs in the hopes of getting consumers to buy more discs shouldn’t surprise anyone familiar with the workings of Hollywood.

This industry has always been about windows, and managing those windows to make the highest possible amount of money.

Since the origins of the motion picture industry in the early 1900s, theater owners have always had first crack at movies, because until DVD overtook it in the early 2000s studios made the bulk of their money from theatrical exhibition. Only after theater owners squeezed every possible drop out of a certain picture could it be shown elsewhere.

Now, in the golden days of Hollywood there was no “elsewhere,” but with the advent of television in the late 1940s studios suddenly became alarmed. Not only could this newfangled invention compete against theaters for consumer eyeballs, it could do so with their movies. So up went a window.

Television wound up becoming the first of several profitable Hollywood aftermarkets, bringing in incremental revenues from movies that were no longer viable in theaters. As more aftermarkets emerged, a window strategy was developed to maximize revenues from each platform.

Today, theatrical is still No. 1. Home video is next on the food chain, although the average window between a film’s theatrical opening and its video debut has been cut in half over the last decade simply because DVD sales soared and studios decided it was better to ride the wave of awareness generated by theatrical campaigns into the home market instead of giving a film an additional six weeks of steadily diminishing theatrical returns.

Pay-per-view has traditionally been next, nipping at home video’s heels—although studios are toying with windows on pay-per-view as well as various digital distribution platforms to see if they can spur the market.

Digital distribution is a very attractive model to studios, since they don’t have to go through the hassles of physically creating, packaging and distributing a product—not to mention the hassle of returns.

Windows, you see, is not just about total revenue, but also about margins. And that is precisely why rental, at $6.5 billion as of calendar 2009, is now being treated as the red-headed stepchild of the still-lucrative home video market.

Studios see the rise of kiosks and subscription rental services as a direct assault on sales — and an impediment to the natural growth of digital distribution. So up goes another window.

Industry Now Playing the Waiting Game

The home entertainment business is being restructured before our very eyes. With Netflix agreeing to a 28-day window on new releases from three major studios — Warner, 20th Century Fox and Universal — we are seeing a new reality that I believe will spread to the other studios as well as the other key non-traditional rental player, Redbox.

The new reality is this: Netflix and Redbox won't get to rent new releases until 28 days after street date. For Netflix, the incentive is money  — the three studios that got the subscription rental pioneer to agree to a 28-day window made huge concessions in pricing. For Redbox, which should fall in line shortly, the incentive is both money and hassle — with several studios refusing to sell the kiosk vendor their product, Redbox's only alternative was to send scores of employees to Wal-Mart stores every Tuesday, armed with gift cards and instructions to buy as many copies of verboten titles as they can carry. Talk about a logistical nightmare!

The end result is that Netflix and Redbox customers are going to have to wait a month before they can rent hot new releases. The studios are hoping this will lead to at least a minor bump in the sellthrough end of the business, which is still hovering down about 10 percentage points even from last year. But if you consider how much more money the studios make from DVD and Blu-ray Disc sales to consumers, even a slight uptick in unit sales of 3% to 5% should be enough to put the overall sellthrough business back in positive territory, according to my calculations — particularly when you factor in digital delivery or VOD, which also gains an advantage over rental.

The studios also are hoping that the strategy will allow Blockbuster to survive. Hollywood has never really liked Blockbuster, but the studios dislike Netflix more — and passionately hate Redbox, with its dollar rentals and kiosks conveniently located in the lobbies of supermarkets and discount stores, including Wal-mart, their No. 1 sellthrough account. If Blockbuster goes, Netflix and Redbox become the only real game in town, and the studios certainly don't want those two to have a virtual monopoly on the rental market.

Netflix and Redbox, though, wouldn't go along with this strategy, regardless of how much money they can save (and, in the case of Redbox, hassle they can avoid), if they didn't believe the importance of new releases to their business is vastly overinflated. Even a leading analyst, Eric Wold of Merriman Curhan Ford in New York, told Home Media Magazine news editor Erik Gruenwedel that he believes "most consumers will wait the 28 days in order (and choose a different movie for now) in order to obtain the much lower pricing of Redbox and/or Netflix after the window passes." (To read Erik's story, click here.)

Under the best-case scenario for all involved, the studios will realize a decent gain in DVD and Blu-ray Disc sales as well as VOD transactions, Blockbuster will see a significant spike in rental turns, and Netflix and Redbox will rent more catalog titles and recent releases in lieu of the latest hits. And because of this last point, overall consumer spending on home entertainment will go up. Sales will increase, while the overall rental business will be flat, with older stuff making up for the newer stuff that's no longer available on street date.

The worst-case scenario: The impact on sales will be nil, Blockbuster will die anyway and consumers will simply rent less from Netflix and Redbox. Maybe they'll read more books. Regardless, overall consumer spending on home entertainment will go down.

But these are all just theories. Now it's time to wait and see what actually transpires, once these titles-with-windows start coming out. I'm as anxious as anyone, because after a recent conversation with three friends, there's certainly no indication which way the business is headed.

Friend No. 1 was disappointed when I told her about the window situation. "I'm tempted to cancel my subscription to Netflix," she said.

Friend No. 2: "I guess I'll just have to wait."

Me: "Why not buy it? You can get just about any new release for $15."

Friend No. 2: "It's not an issue of price. I've got too much stuff in my house and don't want to add anymore clutter."

Me: "What about Blockbuster?"

Friend No. 2: "The one in my neighborhood closed and I don't even know where to look for another one."

Friend No. 3: "Why don't you just pay-per-view it? That's what I do."

Friend No. 2: "No, I just don't want to."

So there you have it, folks. Let the waiting game begin.

Customizing Redbox

I went to the local Albertson's supermarket the other night and discovered that the Redbox kiosk had been banished to the outside. It used to be inside the store, right next to the exit; now, it's outside, by the front door.

"What's up with that?" I asked a clerk. He explained that the kiosk had been attracting such long lines that they were interfering with store traffic, with harried shoppers, their carts full of groceries, colliding with movie fans waiting for their turn to slip a dollar into the machine and leave with the evening's entertainment.

There's no question that the Redbox model is successful. And yet while I firmly believe in the old saying, "If it ain't broke, don't fix it," I wonder when the folks at Redbox will incorporate a little innovation into the mix. To quote another old saying, "Change or die."

One idea I had was to roll out kiosks with customizable inventories to movie theaters. That way, say, when New Moon was playing on the big screen, the theater owner could install a kiosk in the lobby filled with nothing but the first Twilight movie, maybe evenly split between rental copies and discs available for sale. After a week or two, change the inventory completely to complement whatever happens to be hot that week in the theater.

Think of the possibilities: When a new Johnny Depp movie opens, there's a kiosk with his entire catalog on disc. Or if an art-house theater is having a Hitchcock festival, offer fans the chance to buy the very same films as they leave the theater, enthralled all over again by the shower scene in Psycho or the lighting in North by Northwest.

The possibilities don't end there. A Redbox kiosk filled with sports movies at The Sports Authority. A kiosk of film noir movies at a trendy new 1940s-style nightclub or steakhouse. A kiosk with classic beach movies on the Venice Beach boardwalk; a kiosk with Breakfast at Tiffany's, Gangs of New York and other New York films at Grand Central Station or Kennedy International.

The studios could nudge such concepts along by not viewing Redbox as a mortal enemy, but, rather, as an opportunity. So what if Hollywood hates the very idea of rentals? Traditional vending machines rent things, so why can't Redbox kiosks?

There's an opportunity out here, a very big opportunity. When's someone going to jump?

Snide Media Jabs at 3D TV

As one of 23 Americans who still uses AOL as their personal email service, I frequently get news updates from a variety of sources right there on my snazzy, newly redesigned AOL home page. But a recent story from WalletPop really ticked me off — not so much the story as the snide headline: "3D TVs hit the market, but do you need one?"

Now, I'm one of those people who really hates any sentence (generally directed at me by my wife) that begins, "You need to...." I only "need" to do three things, and eating and sleeping are two of them. But since when has "need" ever factored into an entertainment option? None of us really "needs" anything — not DVD, not video games, not Blu-ray Disc, not a plasma TV, not any TV at all. Heck, if our entertainment consumption hinged solely on need, we'd be tramping through the bushes, playing hide-and-seek or tag or building rock forts, simply because we'd have to make do with our imaginations. Entertainment is not a need; it's a frill, a perk, an add-on.

And whether or not we choose a particular entertainment option depends primarily on one thing, which can be expressed in several ways: Is it fun? Will we enjoy it? Will it bring pleasure into our lives? Will it bring a smile to our faces?

3D certainly fills the bill. I enjoy watching movies in 3D, and I can't wait to start watching movies in 3D in my home. I'm happy that companies are making plans to sell 3D TVs, and while I won't be among the first wave of buyers, I can certainly see getting one within a year or so. In fact I believe that one day 3D TV will be the new standard.

I'm not saying we're going to watch everything in 3D, or even that we would want to. But I do relish the notion of being able to watch certain movies or programs in 3D, be it Alice in Wonderland or some other colorful, complex fantasy, or the Chargers winning the Super Bowl (come on, it can happen!).

3D is just the latest in a series of enhancements to the basic TV set, which popped into living rooms in the 1940s and 1950s and has been getting better and better all the time. First came color, then stereo, then cable (giving us more programming choices), then VHS, then DVD, then flat-screen, then high-def — and now, in swift succession, Blu-ray Disc and 3D.

No, we don't need any of it. But we sure like it when we get it. And isn't that the whole point of entertainment?

I See, You See, We All See in 3D

I was disappointed, but I went anyway.

Last Sunday night was date night for my youngest son, Hunter, and me. We went out to sushi--hey, I know he's only 7 but he's already got a refined palate--and then headed over to the Carlsbad movie theater to see Alice in Wonderland. I had been looking forward to seeing the film, and even brought along a Tramadol for the occasion (no, not to get high--to ease the pain from my fractured arm injured in a skiing misshap a month ago). Much to my chagrin, there was a sign at the ticket window that informed me that "regrettably, this picture will be shown in 2D because the theater is not currently equipped for 3D performances."

It was late, Hunter was driving me nuts and I didn't feel like driving somewhere else, so I paid for the little fellow and me and we went inside. I thoroughly enjoyed the movie--it's this vibrant, moving collage of colors and cool shapes and characters (and, no, that's not the Tramadol talking!)--but the entire time I thought to myself, "Man, this must look so much better in 3D."

And as I left it dawned on me just how quickly I have been sucked in by this whole 3D experience. I have seen exactly two movies in 3D in theaters, The Final Destination and Scrooge.  And that was all it took to get me hooked. I want to see more movies in 3D, especially ones known for their artsy look, like Alice. Now, if you're wondering why, if I'm such a 3D fan, I haven't seen more than two movies in 3D--heck, I haven't even seen Avatar!--then let me clue you in to my character: As much as I like the movie theater, I am partial to watching movies in my own home, on my 65-inch Panasonic plasma, in the comfort of my own family room, preferably after the kids have gone to bed and the wife is upstairs reading or doing whatever it is wives do at night. I'm one of those consumers who won't think twice about buying a new TV just so I can watch 3D at home, regardless of the price. It's something I want--and it's something I think will catch on pretty quick to the point where it becomes the new standard for home entertainment, just like color TV in the 1980s, cable in the 1970s and home video in the 1990s.

I'm not saying I am going to want to watch everything in 3D. No need to see the news or Leno in three dimensions. I don't even want to watch every movie in 3D. But I sure would like the option, the choice, to watch certain films in 3D, and to me that's the whole beauty of the home 3D juggernaut: It broadens our entertainment choices. I can watch a documentary just to sharpen up on a certain subject, I can watch an old film noir to escape back into the mystical 1940s of Raymond Chandler and Philip Marlowe, or I can watch Shrek or Alice or Monsters vs. Aliens in 3D and have a completely different entertainment experience.

I know there are naysayers out there who think we've seen it all before, that 3D is a passing fancy, having originated with the monster movies of the 1950s and periodically come and gone in the years since. But the new 3D is nothing like the old. Instead of putting on red and blue glasses and getting a headache, you are thrust into the action, into the center of things, and you feel almost physically transported into the movie, if that makes any sense. That's what appeals to me-it's not an enhancement of the viewing experience, like the old 3D, but, rather, it's a completely new experience--and one that I first experienced about two years ago in Panasonic's 3D lab in Universal City, watching a clip of a canoe ride.

That canoe ride forever altered my perception of 3D and left me wanting more. Whenever I watch a 3D movie nowadays, I leave the theater with the same feeling--I want more. But it's more than that--I want more 3D at the time and the place of my choosing, which happens to be my family room. That's why I think 3D for the home will catch on, and catch on big. In this era of personal control and home theaters, I can't imagine I'm alone.

There must be thousands of 3D junkies like me out there, just craving for a fix--on our own terms.

Can Blockbuster Be Saved?

Analysts and observers have been predicting Blockbuster's demise for years, but the death watch has never been more focused than it is today. The chain's latest financials paint a grim picture: Blockbuster says it lost $435 million in the fourth quarter of 2009, with a revenue drop of nearly 18%, from $1.31 billion in the fourth quarter of 2008 to $1.08 billion in the quarter that ended Jan. 3. The news was spread by a widely circulated AP story that quoted BMO Capital Markets analyst Jeffrey Logsdon as saying the company had "a dismal holiday season performance." The AP further quoted Logsdon as saying "revenue erosion is now a defined trend" at Blockbuster, which if true is certainly a kiss of death. Blockbuster has already closed more than 1,300 stores and plans to close up to 545 additional stores this year.

On top of that comes news that for the first time ever, the No. 1 video rental chain isn't No. 1 anymore. Netflix in the fourth quarter of 2009 made more money renting DVDs and Blu-ray Discs than Blockbuster did (see story here).

Blockbuster also has about run out of options to remain solvent in this business. The chain has tried just about everything short of offering customers a fresh-baked pizza with each movie rental, from its own mail-order subscription service (a la Netflix) to its own movie rental kiosks (ala Redbox). But the market leaders in each category have swatted down those attempts like pesky flies, to the point where Blockbuster's only hope of salvation is essentially an unfair competitive advantage.

The chain can only survive — and even chief Jim Keyes intimated as much in a recent call with investors--if other studios follow Warner, 20th Century Fox and Universal Studios in imposing a window on new releases that are sold to Netflix and Redbox. Warner has actually negotiated deals with both Netflix and Redbox in which those two outlets get new DVD and Blu-ray Disc releases 28 days after they come out, and it is widely expected the two other two studios soon will have deals in place as well. (Sources say the prospect of getting new releases a month late isn't nearly as bad as the through-the-roof labor and logistical costs of sending out packs of staffers and temporary workers, armed with gift cards, to Wal-Mart and Costco to buy product sideways. Prior to settling, Warner, like Fox and Universal, simply refused to sell product to Redbox.)

The window — 28 days at Warner and as long as 44 days for the other studios' product — is a ploy by Hollywood to prop up the sagging sellthrough business by forcing consumers to either buy the newly released DVD/Blu-ray Disc or wait. But it's also expected to boost in-store rentals, not just at Blockbuster but also at the remaining independent rental stores, because brick-and-mortar retailers will continue to get new releases the same day as Wal-Mart, Best Buy, Costco and the other big retail sellers of DVD and Blu-ray Disc.

The big question: Will it be enough? Obviously the studios are hoping consumers who can no longer rent new releases the day they come out from Redbox or Netflix will start buying them again, as most of them did before the recession hit. But old Jim Keyes is looking to siphon off at least a fraction of those consumers to Blockbuster, which puts him in a rather delicate spot.

If he fails, Blockbuster may well be finished. But if he succeeds — particularly if he succeeds in a big way — the studios may take a second look at giving store rentals a pass.

My advice to Jim: Fire up Blockbuster's sellthrough presence and make a big splash of the fact that only at Blockbuster can consumers buy or rent new releases right out of the gate. Match the big-box prices on new releases for sale and make sure you have a steady supply of the hits on hand to satisfy both sellthrough and rental customers.

That way you'll be helping the studios achieve their goal of selling more discs to consumers while at the same time protecting your rental exclusive.