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 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."
We’re getting ready to celebrate our 30th anniversary. Yes, it’s been exactly three decades since Stuart Karl, who would later rise to fame for launching the Jane Fonda fitness video series, started publishing what was then known as Video Store Magazine in the garage of his Orange County, Calif., home.
To celebrate our 30th birthday, we are planning a special issue next month, and a key part of that issue will be a retrospective feature highlighting what our editors consider the 10 biggest stories of the home video era.
This task gets harder each time we celebrate an anniversary, since so much tends to happen every five years. Since our last anniversary issue was published in 2004, we’ve seen an end to soaring year-over-year DVD sales gains, the launch of a new format, a divisive format war and the unexpected resurgence of rental. We’ve also seen the emergence of digital delivery. Five years ago YouTube, “user-generated content,” Hulu and EST were in no one’s vocabulary; today, they’re every bit as much a part of our business as DVD, Blu-ray Disc, sellthrough and rental.
I’d like to throw my own personal list of the video era’s 10 biggest stories out there for our readers to review. This list was compiled one morning on my Blackberry during my daily pre-work hike, stream-of-consciousness style, and is presented here in reverse chronological order. I’d love to hear from you—please email me with your comments at tarnold@questex.com.
10. The resurgence of rental (and studio haplessness as kiosks proliferate but share none of the spoils, at a time when the economy, and DVD sales, take a tumble).
9. Digital delivery takes off (not so much streaming and downloading of movies as the fast acceptance of alternative forms of entertainment, from YouTube clips to Hulu).
8. The launch of Blu-ray Disc (and the protracted format war that preceded it).
7. Rental’s do-or-die transformation (from traditional brick-and-mortar to the Netflix subscription model and the proliferation of kiosks).
6. Sellthrough’s explosive growth, 2001-2004, and home video eclipsing theatrical as Hollywood’s primary revenue stream.
5. The demise of the independent video rental store (round two, as DVD takes the business sellthrough and the mass merchants take over).
4. The launch of DVD (which changed consumer habits from renting to buying and took our industry to new heights).
3. The rise of the public video chains (which grew the business but also undermined the base of independent rental stores, triggering significant changes in the way the business operates—including revenue-sharing, supply-side economics and direct selling by studios).
2. The First Sale Doctrine, which solidified retail’s right to rent just as our first format war,
between VHS and Beta, was beginning to wind down.
1. Andre Blay birthing the business by licensing 50 films from 20th Century Fox and releasing them on videocassette.
All right, I'm back. In case you were wondering where I was and aren't following me on Twitter or Facebook, I spent the last week backpacking in Yosemite National Park, making do without running water, bathrooms and electricity. Am I glad to be back? HECK YES!!!
I spent last night catching up on emails and industry news and saw that another salvo has landed in the stare-off between the studios and Redbox: 20th Century Fox is calling for a 30-day delay in new release DVD movies becoming available in buck-a-night rental kiosks (for the original story, click here).
That's in sync with the perception by some studios that rental kiosks are the home entertainment industry's equivalent of dollar movie houses and, like their theatrical brethren, should not get first-run movies.
Our story prompted this official rebuke from Redbox, which appeared in my email box early this morning:
Oakbrook Terrace, Ill. – Despite 20th Century Fox’s effort to delay consumer access to new release DVDs by 30 days at rental kiosks, redbox reaffirms its commitment to providing consumers new release DVDs. Redbox will protect consumers’ rights to access new release DVDs at their preferred retail channel at the price the consumer deems reasonable. Redbox will continue to carry all major new releases, including 20th Century Fox titles, at the more than 17,000 redbox locations nationwide. The first priority at redbox is the customer.
Smart move by Redbox to play the customer card--although the studios could rightly argue that if the customer is always in the driver's seat, new release movies routinely could be downloaded for free over the Internet. The customer, you see, is not always right, particularly in this new era of entitlement when nobody feels they should have to pay for anything. But by the same token, Redbox is complying with the law, specifically the First Sale Doctrine--and it does have a point, saying it is merely following the business.
The real issue, of course, comes down to dollars. Redbox is making a mint by renting studio movies and not sharing any of the proceeds with Hollywood. And at the same time, the kiosks are undercutting not just regular rental dealers, but also the sellthrough business, which in the studios' eyes is far more important.
I don't think this matter will be resolved anytime soon, if ever--hence, the differing approaches the studios have taken in dealing with Redbox, from Universal Studios' lawsuit to Sony Pictures' five-year deal to lease its titles to the kiosk company.
After reading one of my columns on the Redbox rental kiosk phenomenon, a reader by the name of David Sedman of Dallas sent in this photo he snapped at the Dallas-Forth Worth Airport. "I think the people in DFW think that Redbox is a service consumers are well pleased with, based on this photo I shot last weekend," he writes. Sedman also noted that some stores in the Dallas area with Redbox kiosks "added second units to alleviate long lines."
You’ve got to hand it to the studios—if nothing else, they sure know how to follow the money.
After more than half a year of slumping DVD sales but soaring rental action, studios that had previously all but ignored the rental market are all of a sudden clamoring to get back in.
Two studios, Paramount Home Entertainment and Summit Entertainment, last week announced a “back to the future” ploy in which they will release titles exclusively to the rental market before selling them to the big retail sellers of DVD and Blu-ray Disc software.
When Summit’s “The Brothers Bloom,” currently near the end of a limited theatrical release, hits DVD and Blu-ray Disc Sept. 29, sales will be limited to rental dealers. Wal-Mart, Best Buy and other big sellthrough merchants are going to have to wait until the first part of 2010 before they can buy the title from Summit, at a discount from the usual wholesale price for a new release.
Similarly, Paramount announced that when the Wayans brothers comedy “Dance Flick” comes out on disc Sept. 8, a DVD of the original, rated version will only be sold to rental dealers. Sellthrough retailers will have to pick up the Blu-ray Disc edition, featuring an unrated version of the film plus gobs of extras, or wait four to eight weeks for a sellthrough DVD release.
Both moves came just one week after Sony Pictures Home Entertainment stunned—and, some say, angered—other studios by reaching an agreement with Redbox to effectively lease its titles for distribution through the chain’s 17,000 rental kiosks, in a five-year deal valued at $460 million. Studio executives have long railed against Redbox for allegedly devaluing DVDs by renting them for only a buck—and, more recently, for cannibalizing the sellthrough business by setting up shop in the entryways of Wal-Mart stores. Universal Studios Home Entertainment has even gone to court to try to stop Redbox from renting its titles, while another studio president told me that in his view Redbox kiosks are the equivalent of “dollar movie houses” that certainly should not get first-run releases.
But hey—according to mid-year estimates from Rentrak, consumer spending on video rentals is up a remarkable 8.3% so far this year. And studio executives, who undoubtedly are getting hammered by their bosses for lackluster DVD sales numbers, are going to do what they have to do to make those elusive budgets and forecasts—even if it means sleeping with the enemy.
Man, is Blu-ray Disc ever picking up some real steam. And we're not talking industry-hype steam, but REAL steam, as in Big, Serious Numbers.
According to this week's Nielsen VideoScan data, 36% of consumers who picked up a copy of Warner Home Video's Watchmen its first week in stores went with the Blu-ray Disc edition. Granted, that movie was aimed squarely at the young-male demographic that in our biz tends to be synonymous with the "early adopter," but still, 36%? That's a real healthy number. I remember at the end of last year, when we were all crowing about The Dark Knight generating nearly 20% of its sales from the Blu-ray Disc edition.
There's more: Universal Studios Home Entertainment's Coraline, an edgy animated hit that didn't zero in on young males, nevertheless generated 18% of its total sales from Blu-ray Disc, and Summit Entertainment's Knowing, in week three of release, had 17% of its sales coming from Blu-ray Disc. (For our complete chart story, check out our Web site by clicking here.)
Hey, all you skeptics out there. Can you say "M-O-M-E-N-T-U-M?"
Insights from the "voice of the home entertainment industry." Thomas K. Arnold gives the inside scoop on entertainment news, DVD, Blu-ray releases, and what's happening at the key studios and retailers.
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