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Bewkes: Warner Not Opposed to Early Releases for UltraViolet Titles

8 Feb, 2012 By: Erik Gruenwedel

Jeff Bewkes

CEO said studio also is working to extend embargoes to kiosks and video stores

Time Warner CEO Jeff Bewkes Feb. 8 said Warner Bros. wouldn’t be against releasing UltraViolet titles earlier into the retail chain, provided there were safeguards in place with digital televisions against piracy.

During a fiscal call with analysts, Bewkes was asked whether offering movies with UltraViolet functionality ahead of other home entertainment channels would help jumpstart consumer adoption of the industrywide cloud-based digital locker platform. UltraViolet is seen as means of reinvigorating sellthrough of physical and digital content at a time when lower-margin rental (kiosks) and subscription video-on-demand flourish.

Bewkes said he believed an early UV release window could fit within the theatrical window to satiate consumer demand for on-demand digital access to content across multiple devices in the home. He said that as the industry becomes more confident in the security of digital distribution regarding piracy, tweaking distribution windows would be an ongoing process.

“As the ability to secure the early releases [arises], and we get more confident in that, then I think the whole industry will move toward earlier sellthrough,” Bewkes said. “We don’t see any reason that has or will cannibalize theatrical. And we think it can fit in correctly with the current retail distribution system for physical.”

The CEO did not say when, or if, such a UV window might occur.

Warner Bros., which includes Warner Home Video, will release all DVD and Blu-ray Disc titles in 2012 with UV compatibility.

Meanwhile, Warner is looking to extend delays of new releases on street date access to rental kiosks and brick-and-mortar video stores.

Bewkes said the studio would follow up on last month’s 56-day embargo agreement with Netflix’s by-mail disc rental service with other distribution channels. He did not elaborate on when those extensions would occur. Indeed, Redbox and Dish Network-owned Blockbuster have stated publically intentions to ignore expanded windows through workaround content acquisition programs.

“We’ll keeping working to extend the window of kiosk providers and for brick-and-mortar retailers,” Bewkes said.

He said Warner’s leadership role in creating the original 28-day embargo has contributed to the studio generating its best fiscal year in history with more than $1.1 billion in profit.

“That enabled our titles last year to significantly outperform comparable titles released by other studios without a window,” Bewkes said. “In 2012, we’ll keep pushing to define the next generation of business models for home entertainment. As part of that we are using windows to advantage our higher contribution, distribution channels.” 

Indeed, video-on-demand and electronic sellthrough of Harry Potter and the Deathly Hallows — Part 1 and Part 2 contributed to Warner Bros. reporting fourth-quarter (ended Dec. 31) operating income of $427 million — identical to the operating income reported during the prior-year period.

Revenue increased 7% ($254 million) to $3.9 billion, due to stronger home entertainment and video game release slates and an increase in subscription video-on-demand content agreements, including Netflix and Amazon Prime. The growth partially was offset by lower theatrical film revenues and lower television license fees.

Specifically, Warner generated more than $1.1 billion in home entertainment and electronic delivery revenue from theatrical releases, up 25% from revenue of $927 million last year. Home entertainment and electronic delivery revenue of Warner TV programming jumped to $411 million, a 42% increase from $289 million last year.

Warner produces more than 30 programs for primetime TV networks.

For the fiscal year, home entertainment revenue from Warner movies topped $2.8 billion, compared with $2.7 billion in 2010. Home entertainment revenue from Warner TV programming reached $830 million, up 5% from $790 million in 2010.


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