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Warner to Bow UltraViolet Digital Locker With ‘Green Lantern’ and ‘Horrible Bosses’ Disc Releases

3 Aug, 2011 By: Erik Gruenwedel

Time Warner CEO Jeff Bewkes appears to be warming to Netflix but declined to comment on if a content deal is forthcoming

Warner Bros. will launch its first home entertainment discs to include cloud-based digital locker UltraViolet with the fourth-quarter releases of Green Lantern and Horrible Bosses.

In an Aug. 3 analyst call, Time Warner CEO Jeff Bewkes said the majority of home entertainment releases thereafter would include UltraViolet functionality. The virtual locker automatically gives buyers a digital copy of a new home entertainment acquisition that can be accessed on myriad compatible consumer electronics devices.

UltraViolet, along with Disney’s KeyChest platform, is projected to reinvigorate home entertainment content sales.

Bewkes believes the recent acquisition of movie recommendation service Flixster will help sell UltraViolet. He said an updated version of the platform this week will be “deeply integrated” with UltraViolet.

“We believe this could fundamentally change how people manage and watch their movie collection,” Bewkes said. “And it could significantly improve the value proposition of digital ownership.”

With Netflix and Amazon making news and fattening media companies’ bottom lines by licensing repurposed content, Warner Bros. Studio is considered the 800-pound gorilla in the digital delivery realm, having thus far limited its exposure to the subscription video-on-demand services.

Bewkes said he is amenable to Netflix’s emphasis on acquiring catalog fare as opposed to new-release movies and next-day TV programming, which he said are more lucrative in traditional distribution windows.

“We had thought that some of the sales we saw content owners make to various digital outlets actually undervalued or reduced the lifetime stream of earnings for those products,” Bewkes said.

The CEO said he believes subscription VOD is a legitimate business model to monetize deep library content that consumers previously had difficulty accessing.

“It may be filling a really functional thing for consumers, particularly in the case of serialized shows, which don’t traditionally play well on traditional nets or syndication,” Bewkes said.

The studio Aug. 3 reported second-quarter (ended June 30) revenue of $2.8 billion, up 13% from revenue of $2.4 billion during the previous-year period.

Warner Bros., which includes Warner Home Video, said revenue growth was led by video game sales, due to the releases of Mortal Kombat 9 and LEGO Pirates of the Caribbean: The Video Game, as well as a 21% increase in home entertainment revenue driven by the release of Harry Potter and the Deathly Hallows — Part 1 — the No. 1 home entertainment release.

Strong foreign home entertainment sales of the third season of “True Blood” contributed as well.

Studio quarterly operating income declined 11%, to $154 million from $173 million.

Operating income was hampered by pre-release print and advertising expenses, higher theatrical film valuation adjustments and increased overhead costs related in part to recent acquisitions, as well as higher restructuring and severance costs.

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