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2014 Year in Review

21 Dec, 2014 By: Erik Gruenwedel

The industry’s move toward digital delivery became even more pronounced in 2014, with the rise of several competitors to Netflix, including new SVOD services from HBO and CBS, and major digital forays from Amazon.com. Eschewing UltraViolet, Disney introduced its own cloud-based movie service. And the net neutrality debate boiled over thanks to court rulings, peering deals and the pending merger of Comcast and Time Warner Cable. Meanwhile, studios began a series of major reorganizations.


»  UltraViolet starts the year with 15 million registered accounts, including 2.3 million new users signed up during the Christmas holidays, according to DECE.
» Home entertainment consumer spending finished up slightly in 2013 at $18 billion, with disc sales down 8% to $8.78 billion, according to DEG: The Digital Entertainment Group.
» Samsung partners with Paramount Home Media Distribution and 20th Century Fox Home Entertainment to include preloaded movies on its Ultra-HD video pack hard drive. Samsung also pairs with the M-Go VOD service to stream 4K content on select TVs.
» Man Jit Singh, an executive at Sony Pictures Television, is named president of Sony Pictures Home Entertainment, replacing David Bishop who steps down from the position he had held since 2006.
» A U.S. District Court of Appeals for the District of Columbia rules against the Federal Communications Commission’s (FCC) efforts to afford all Internet streaming traffic equal status — a policy known as net neutrality.
» Despite a surge in subscription streaming, a Harris Poll finds that a majority of consumers (47%) would rather buy a DVD or Blu-ray Disc title than rent (37%) or stream (31%) on a service such as Netflix.


» Comcast announces it intends to purchase Time Warner Cable for about $45.2 billion — a merger that would combine the two largest domestic cable operators with more than 30 million subscribers collectively.
» Comcast’s Xfinity movie store signs a distribution deal with Warner Bros. Home Entertainment.
» Cinedigm and Universal Studios Home Entertainment expand the companies’ packaged-media distribution agreement to include so-called “backroom services” such as shipments and billing.
» Just months after expanding his duties, longtime Universal Studios Home Entertainment president Craig Kornblau leaves after 16 years. The new president of the newly minted Universal Pictures Home Entertainment is Eddie Cunningham, previously president of Universal Pictures International Entertainment.
» Walt Disney Studios launches its digital platform called Disney Movies Anywhere, including apps for the iPhone, iPad and iPod touch, with access through Apple TV. By the end of the year, the cloud-based DMA service, a rival to UltraViolet, would be offered through Google Play and Walmart’s Vudu.com.


» Netflix announces it is raising the base $7.99 monthly subscription fee $1 for new subscribers. Existing subscribers will be grandfathered in following a “generous time period.” The price hike will be cited months later by Netflix management in part for not achieving projected subscriber additions in the third quarter.
» Walmart-owned Vudu bows software that lets users share their UltraViolet movie files with registered Vudu friends, in addition to select email friends not registered on Vudu.
» Entertainment One (eOne) announces it will acquire Phase 4 Films for $27 million in stock and cash — a transaction that combines two of North America’s biggest independent distributors.
» Netflix ups the rhetoric on peering agreements it feels have been forced upon it by the nation’s largest ISPs, including AT&T, Comcast and Verizon. The FCC takes note and pledges to investigate them, among other issues regarding net neutrality.


» The U.S. Supreme Court strikes down an appeal by Aereo TV, effectively ending the New York-based service’s hopes of becoming a subscription-based over-the-top live TV video service. Subsequent attempts by Aereo to reclassify itself as a pay-TV channel are denied.
» Amazon debuts its Fire TV streaming device, joining Roku, Apple TV, Google Chromecast and others in
the growing marketplace.
» Veteran publicist Fritz Friedman announces he is leaving Sony Pictures Home Entertainment after more than three decades with the studio.
» Ingram Entertainment acquires Video Products Distributors, effectively ending a 34-year run for the venerable home entertainment distributor based in Folsom, Calif.
» Redbox says a weak second-quarter release slate undermined kiosk rentals, resulting in a 22% drop in operating income. In fact, management says June represented the lowest theatrical box office in Redbox’s history.
» Amazon and Walt Disney Studios Home Entertainment engage in a protracted distribution negotiation — first reported by Home Media Magazine — that sees the e-commerce behemoth halt preorders on the studio’s new-release discs. It’s a strategy Amazon employed earlier in the year with Warner Bros. Home Entertainment. 


» Sony Electronics, Sony Pictures Home Entertainment and Best Buy collaborate on an industry-first cross promotion to increase consumer awareness of Ultra-HD 4K televisions and 4K content.
» Lionsgate’s home entertainment division reports the strongest operating margins in five years as sales of Blu-ray Disc and digital content surge, says Steve Beeks, co-COO and president of Lionsgate Motion Picture Group.
» UltraViolet users buy 11% more digital media than non-registered UV users, according to The NPD Group. More importantly, more than 50% of survey respondents who hadn’t made an EST purchase prior to registering an UltraViolet account, do so thereafter.
» Millennium Entertainment CEO Bill Lee and an investor group partner to buy the distributor’s assets and film delivery platform. Financial details of the transaction are not disclosed.
» Anchor Bay Entertainment emerges as the No. 1 packaged media distributor of fitness DVDs, the first time either Gaiam Inc. or Lionsgate have not been atop Nielsen’s tracking charts since the data started being monitored.


» Overall U.S. spending on video entertainment — covering pay-TV, VOD, theatrical, online video and packaged media — will hit $123 billion in 2015 — or $1,000 by every household, according to Futuresource Consulting.
» Lionsgate sues 10 unnamed defendants who operate a series of illegal file-sharing websites offering pirated digital content. The studio claimed more than 100,000
illegal digital copies of The Expendables 3 were downloaded within 12 hours of being made available online.
» Sony announces it will launch PlayStation TV, a $99 streaming media device that connects to a TV and comes preloaded with 700 video games, among other content.
» Home entertainment veteran Tom Lesinski launches a multimedia content company called Energi Entertainment, which inks two first-look development deals with Legendary Television and Digital Media — the latter where Lesinski headed operations until the previous month.


» Home entertainment retailer Trans World Entertainment, operator of the f.y.e. (For Your Entertainment) chain and Second Spin used product stores, reports a second-quarter loss of $5 million on revenue of $72 million, which was down 11% from the previous-year period.
» In a landmark deal, Viacom licenses 22 of its networks to Sony’s pending over-the-top TV service (dubbed PlayStation Vue). The agreement marks Viacom’s first-ever pact to provide its networks for an Internet-based live TV and video-on-demand service.
» Walt Disney Studios president Alan Bergman tells an investor group  that overall sales of DVD and Blu-ray Disc titles are expected to reach $8 billion in 2014, despite an 8% year-over-year sales decline. Driving home entertainment sales is the studio’s animated hit Frozen.
» Redbox Instant by Verizon, the joint venture hybrid disc and digital platform launched by Redbox and Verizon, shuts down after little more than a year of operation and posting ongoing quarterly losses.


» Following a soft theatrical box office, Netflix seizes the opportunity to announce it is partnering with The Weinstein Co. to co-produce the 2015 theatrical sequel to Crouching Tiger, Hidden Dragon, which will be released simultaneously for streaming and on Imax screens at launch. The move is the brainchild of CCO Ted Sarandos, who has long criticized theater operators for what he claims is a near monopoly on new-release movies for more than three months.
» Theater operators renounce the decision, vowing not to screen Crouching Tiger, Hidden Dragon: The Green Legend at launch or on Imax theaters under their operation.
» Netflix adds to theater operators’ ire days later when it inks comic Adam Sandler to an exclusive four-movie deal that will see the films streamed exclusively at launch. The news coincides with Warner Bros. announcing it is dropping plans to produce Sandler’s Western comedy The Ridiculous Six and denying the move is due to the Netflix deal.
» Amazon reportedly is in talks with three major studios about selling digital movies with UltraViolet functionality.


» Universal renames its home entertainment unit Universal Pictures Home Entertainment under the direction of new leader Cunningham, with Canada operating separately. The studio will maintain nine existing international offices.
» Walt Disney Studios Home Entertainment new releases returned to preorder status on Amazon after the two companies came to distribution terms. The resolution followed a similar series of negotiating ploys earlier in the year when Amazon halted preorder sales of Warner Home Video new releases.
» Lionsgate ups Jim Packer and Ron Schwartz to co-heads of worldwide home entertainment operations, reporting to Steve Beeks, co-COO and president of the motion picture group.
» HBO and CBS separately announce plans to launch standalone subscription streaming services. HBO’s unnamed service, which is reportedly slated to launch in April 2015, could offer the first significant original programing competitor to Netflix and Amazon Prime Instant Video. Meanwhile, CBS bows CBS All Access, a $5.99 monthly service featuring catalog content and live TV access to local station affiliates. A standalone Showtime SVOD service is in the works as well.
» Walmart, together with its Vudu.com digital streaming service, launches InstaWatch, whereby consumers of packaged media can automatically access digital copies simply by scanning their store receipt through a special mobile phone app.


» Netflix reports softer-than-expected third-quarter subscriber additions, which sends the company’s stock tumbling 25%. Indeed, of Netflix’s 3 million net additions, less than 1 million were domestic — prompting the stock selloff. The stock rebound about 7% thereafter when Dallas Mavericks owner and tech billionaire Mark Cuban announced a significant stock purchase plan.
» U.S. consumer home entertainment spending in the third quarter was essentially flat at $3.92 billion, according to DEG: The Digital Entertainment Group.
» The owner of Southwest-based Hastings Entertainment is acquiring Atlanta-based MovieStop, a 44-store chain selling new and used DVDs, Blu-ray Disc titles and trend merchandise.


» Warner Bros. begins cutting 10% of staff across the studio, in a move intended to offset declining box office and retail sales, according to an internal memo from CEO Kevin Tsujihara.
» Netflix announces it will launch service in Australia and New Zealand in March 2015 — bringing the number of countries with official access to Netflix to more than 50.
» Nielsen says it will begin tracking audience data of original programing on Netflix, Amazon Prime Instant Video and Hulu Plus by monitoring audio components of TV viewing in the home, not mobile devices.
» Amazon reportedly is eyeing an ad-supported subscription streaming service separate from Amazon Prime Instant Video — the latter including free two-day shipping on e-commerce purchases.
» Redbox and Paramount Pictures Home Media Distribution renew a distribution agreement for the studio’s new-release discs on street date through Dec. 31, 2015. Under the deal, Paramount gets 50,000 shares of Redbox parent Outerwall common stock.
» Foreign hackers infiltrate Sony Pictures’ computer systems and post five upcoming films online for illegal downloading, as well as release scores of internal documents and memos, to discourage the studio from releasing The Interview, a comedy about the assassination of the leader of North Korea.


» Redbox raises the daily prices on DVD, Blu-ray Disc and video games 25%, 33% and 50%, respectively, after months of testing in select markets.
» Following service launches in six European countries in September, Netflix is projected to end 2014 with about 17 million international subscribers, according to data from Digital TV Research.
» Consumer traffic over the Black Friday weekend beginning Thanksgiving evening through Nov. 30 dropped more than 5%, with total shopping trips dropping 6.5%, according to the National Retail Federation.
» Global shipments of Ultra-HD televisions capable of screening 4K-resolution content reach 6.4 million units, according to research firm DisplaySearch.

About the Author: Erik Gruenwedel

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