Bewkes: Industry Must Simplify Movie Ownership ‘Quickly’28 Feb, 2012 By: Erik Gruenwedel
CEO again gives shout out to Netflix, saying the SVOD service has become a ‘complimentary’ source of demand for Warner movies and TV shows
Characterizing the home entertainment business under siege by low-margin rental options such as kiosks and by-mail rental, Time Warner CEO Jeff Bewkes told an investor group media companies need to replicate the user experiences perfected by companies such as Apple (iTunes) and (ironically) Netflix to drive content ownership.
Speaking Feb. 28 at Deutsche Bank Media & Telecom Conference in Palm Beach, Fla., Bewkes said consumers continue to vote with their fingertips in home entertainment, which he said includes ease-of-use, mobility and portability when accessing content.
“Apple didn’t invent the computer, the music player or the tablet,” Bewkes said. “It just made them simpler, cleaner, easier to use … and in so doing have set the standard for what consumers expect in a user interface.”
The CEO said domestic home entertainment revenue throughout the past five years has decreased 20%, or about $4 billion annually. Bewkes said the positive in that fiscal decline is that there remains strong consumer demand for home entertainment.
“Viewing of movies in the home is actually up,” he said. “But revenue is down, as we all know.”
The CEO said consumer migrations to Redbox and other rental sources suggest indifference toward content ownership.
“We don’t agree,” he said. “We think that is overly simplistic.”
Bewkes said options for consumers to buy and manage movies digitally have been limited and not intuitive. He said the rise in movie rentals merely reflects the ease of use for consumers and not necessarily price.
“When you give American consumers a real choice between owning and renting digital goods, they choose ownership more often than not,” he said. “We’ve seen that in music and we’ve seen that in books.”
He said in data surrounding iTunes where consumers can both purchase and rent the identical content, two-thirds of movies downloaded is for sellthrough and not transactional VOD. Bewkes said the data mirrors that of physical discs at retail. He said home entertainment has come to a crossroad whereby consumers seeking to purchase cannot do so with the ease of renting.
“We need to fix that and we should fix it quickly,” he said. “If we don’t we run the real risk of habituating consumers to rental when in fact they may prefer to own and build collections of movies.”
Indeed, Warner Bros. Home Entertainment Group and 20th Century Fox Home Entertainment Feb. 28 announced a new initiative called “Project Phoenix” aimed at expediting and easing ownership and access of movies and TV shows purchased on the Internet through a platform compatible with cloud-based UltraViolet.
In a continued about-face on subscription video-on-demand services such as Netflix, Bewkes cited the SVOD pioneer as an example of company that repurposes used content with an exemplary consumer experience. He said SVOD platforms have emerged as a complimentary source of demand for content creators and for TV networks to sell products when they choose. He said services such as Netflix are adding – not subtracting – value to TV programming.
Bewkes for years lambasted Netflix’s all-you-can watch menu as a scourge on the sellthrough and syndication of movies and TV programming in traditional distribution channels. With Netflix’s signing content deals over the next few year worth as much as $1 billion to Warner, the CEO has softened his stance.
“It’s on demand [content], which is a reality today,” Bewkes said.