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Six Questions: Craig Kornblau, President of Universal Studios Home Entertainment

23 Apr, 2012 By: Erik Gruenwedel

Craig Kornblau

Universal Pictures finished as the No. 1 studio at the box office at the end of the first quarter (ended March 31), holding off Lionsgate’s juggernaut The Hunger Games thanks to three movies (The Lorax, Safe House and Contraband) in the top 10.

That’s quite a turnaround for the studio, which had just one movie in the top 10 during the same period a year ago and last ranked in the top three during the first 90 days of 2004. A strong box office typically portends a bright home entertainment future (physical and digital) — a reality Craig Kornblau, president of Universal Studios Home Entertainment, said actually began in the fourth quarter.

Kornblau, who has been USHE president since 1999, outlined to Home Media Magazine how theatrical results and a risky marketing decision for the animated film Hop have the studio on the right track in 2012.

HM: What kind of momentum does the box office give Universal Studios Home Entertainment going forward in 2012?

Kornblau: When you’ve got some box office successes, it sure is fun to work at a studio. We had a really exciting end of 2011. The results we had for Bridesmaids (the top transactional VOD title in history, according to the studio), Fast Five and Cowboys & Aliens are just fantastic. Those gave us clues that it looks like consumers are starting to open their pocketbooks. Clearly, we have been very challenged as an industry being a discretionary good sold at retail. In this tough environment, discretionary goods sold at retail got hit very hard. It is fantastic to see that when you bring great titles to the consumer that are highly ownable, repeatable and collectible, that they are opening their pocketbooks.

The Lorax is feeling like just another in that wildly successful series that started out of the Illumination Entertainment business for us. Despicable Me was just an explosion for us.

HM: Besides box office, what other titles have been key to sellthrough so far this year?

Kornblau: Our first title from a new deal we have in distributing Open Road Films (the joint venture of theater operators AMC and Regal), Killer Elite, did really well. We were really excited to see that as a start to our quarter. Then we had another one of our DVD Originals titles, The Scorpion King 3: Battle for Redemption, which did really terrific numbers. Then we had The Thing, which was a box office disappointment but sure played like gangbusters in home entertainment.

HM: Has catalog factored into the sellthrough turnaround this year?

Kornblau: Yes. We ended 2011 with really nice catalog sales. It has really taken off for us. We have double-digit growth in 2012 versus last year. A lot of this is led by our centennial catalog program. We started the year with To Kill a Mockingbird, and now we’ve had about a dozen classic titles that have followed. And we have dozens and dozens in various stages of restoration through the rest of the year, including titles like Jaws and E.T.

HM: What was the strategy behind holding Hop a year for the home entertainment release?

Kornblau: Before it came out theatrically [April 1, 2011], we decided to see how it played and determine if it’s the kind of movie we want to bring to market in the typical three-to-five-month window, hold until the Christmas holiday or be really bold and hold it a whole year. When I say bold, you know in a declining retail market we were facing, that’s a decision not made lightly.

During the year-long hiatus, we got some significant commitments from retail, including protecting the street date (it was released on a Friday) and giving us extraordinary placement and marketing opportunities. It was part of their Easter program. Consumers went in looking for chocolate bunnies and they found Hop to be a very compelling opportunity to buy for their family.

HM: What was the result?

Kornblau: When you look at the typical street date decay, each day is smaller [in sellthrough] than the day before. What’s most interesting about this title is that after 15 days, sellthrough was actually bigger than any other day except street date. The second biggest sellthrough day for Hop was the Friday before Easter. Even in the highly seasonal time frame, you never see that kind of sales curve. It’s just crazy.

HM: Is retail support key to keeping consumers away from rental and kiosks?

Kornblau: It starts with great titles. Then the next thing is getting retailers to support them in an extraordinary way. We find through research that more than 50% of consumers who buy a movie didn’t plan to buy it coming into the store. They bought it on impulse. You want to get them both ways. You want to support your titles with marketing so you build some pre-awareness, and then you want to grab them at the store. We had displays around the country for Krispy Kreme Doughnuts that featured Hop on Blu-ray Disc. We also had three weeks of placement in Target’s circular.
Blu-ray sales were over 30%, which was impressive considering it was a family title.

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