4K Synergy Offers Refreshing Change

During a Digital Hollywood panel on which I participated, about the future prospects of OTT, the moderator asked each us how this year’s Consumer Electronics Show was different from past years’ events.

I was up first, but my prognosis easily rattled off my tongue: If you look at this year’s spotlight attraction, 4K Ultra-HD, there’s more cohesion and unity, and a greater focus on the whole consumer experience, than there’s been in years.

And that explains why studio executives are so optimistic about the future of home entertainment, despite DEG numbers that show disc sales fell 11% in 2014 and the continued dominance of subscription streaming in the electronic distribution sector of the business.

Everything seems to be coming together for 4K, and one reason is that consumer electronics companies are working not just on one aspect of the new technology but on the whole enchilada. It’s not just about a better picture, it’s about partnerships with content providers — a concerted outreach to make 4K available on all devices, from the most elaborate home-theater TVs to tablets and smartphones — and an all-out effort to make the 4K viewing experience quick and easy, despite the much-bigger size of the files and greater bandwidth requirements.

Everyone’s working together on home entertainment’s “Next Big Thing” — and I honestly feel we’ve learned a lot from past mistakes, from the bruising format war that dirtied the launch of high-definition discs to the disaster that was 3D. The year, not so long ago, when 3D was the show floor rage, all I remember is a plethora of incompatible formats — including those horrid Toshiba TVs with frames that reminded me of dog scratch collars — and mass confusion about eyewear. And then there was that nasty little problem about consumers maybe not wanting to watch everything in 3D, which no one seemed to have taken into account.

With 4K, it’s full speed ahead — and the alluring consumer promise to finally be able to replicate the movie-theater experience in their own home appears to be resonating. I was up in Arcata a week ago, renting an apartment for my oldest son, Justin, who attends Humboldt State University, and ran into a retired ranch hand who now works behind the counter at the Days Inn (yes, I’m living the life).

We got to talking, and when he found out I was in the entertainment business he just had to tell me how excited he was to get a 4K TV. “My friend has one, and it’s like a whole new world,” he said. “It’s a completely different viewing experience — much more so than Blu-ray over DVD.”
That’s not Mike Dunn or one of our other industry thought leaders talking. That’s Rich the ranch hand, your everyday, average Joe.

This year’s CES, much more so than past shows, was truly an invigorating, enriching experience. I left the show Thursday morning with the feeling that our business is back on track, and that we’ve not only developed a great new product that consumers genuinely will want, but we’re also bringing it to market in the right way.

It’s all about the consumer experience, you see. And if we keep that notion at the top of our minds and let everything we do be guided by it, I honestly believe we are destined to succeed.

The End of the Road

I wonder, sometimes, when we’re going to hit the end of the road in various product types. I thought we had hit the end of the road with high-definition TV, but then along comes 4K. Is this the end? Is this as good as it gets? Or will there be an even sharper image down the road — and down the road from that, until we get to ... a difference only a microscope can detect?

Seriously. Think about it. A generation ago, we reached a point where record players — oh, I’m sorry, hi-fi systems — got as good as they were ever going to get. It was in the early 1970s, I seem to recall, when the vinyl-playing machines reached their ultimate state of the art. Needles were as tiny as they could be; cartridges (those things that held the needle) were as sophisticated as they were ever going to get; tone arms were as light as a feather, minimizing damage to the fragile disc, which lost a little of its substance each time it was played.

Of course, when record players reached their zenith and consumer electronics manufacturers realized they could no longer build a better mousetrap they turned their attention toward building something different — and thus was born the compact disc, which relied on a laser beam, a “virtual” needle, if you will, with no weight and no damage to the disc.

Typewriters — same thing. The IBM Selectric, with its ability to instantly “erase” characters by striking over a letter with a magical substance that seemed to pull the ink right off the page, was the standard for years and years — until typewriters, no matter how good, were rendered obsolete by word processors and computers.

Musical instruments? We hit the end of the road there many years ago. Pianos and violins have remained fundamentally unchanged for hundreds of years, while electric guitars peaked in the 1950s and ’60s.

Back to TVs. As with so many products near the end of the road in terms of quality, we have seen lots of experimentation in recent years — as though manufacturers know we’ve about hit the wall in terms of picture quality and are desperately searching for some other reason to get people to buy new TVs.

The short-lived 3D hype reminded me of Quad Sound in the final days of vinyl — a grand concept, but horrible go-to-market execution and a small, niche audience.

And now we have Sony Electronics all excited about a “curved-screen” TV that has me scratching my head and wondering, wasn’t it just a decade or so ago that we got away from the old bulky curved-screen analog TVs and were all wowed by flat-screens?

Ah, the end of the road. Sometimes it seems more like a loop.

4K Should Be the ‘New Normal’

There’s an old saying: Once bitten, twice shy.

I hope that doesn’t apply to the home entertainment business.

Yes, we got burned pretty badly on 3D for the home, which sputtered and ultimately failed — not so much because consumer demand wasn’t there but because consumer demand wasn’t great enough for people to put up with all the hassles of actually watching movies on 3D in their home.

The blame for that, as I’ve written about previously, rests squarely on the shoulders of the consumer electronics industry, which rushed out a parade of incompatible formats with constantly changing specs. They also tried to sell the public on the notion of high-priced glasses that run on batteries — an expensive, arduous proposition no one could quite grasp, given the simplicity of the cheap plastic glasses handed out in theaters.

But the 3D-for-the-home debacle is no excuse to sit on our hands and watch the 4K juggernaut take off with no one from our industry on board. As one reader, a veteran video retailer with whom I’ve corresponded off and on for the better part of 20 years, said in a recent email, “If you have not see the 4K sets … you should. They are the real deal. … I was blown away. If you don’t want one, it’s because you haven’t seen one.”

I’ll admit, when 4K first came on the market I was skeptical, since for all these years we’ve been led to believe that high-definition in its purest form — 1080p — was the clearest picture you could possibly imagine. Heck, that was the whole premise for Blu-ray Disc: DVD, as good as it looked on our old TVs, was no match for the new breed of thin high-definition widescreens that hit the market like a clap of thunder in the middle 2000s. Thanks to high-definition, you could see every pore, every freckle, on a human body; I remember when The Wizard of Oz was restored and issued on Blu-ray Disc the picture was so clear technicians had to remove the suddenly visible strings holding up the flying monkeys, while Dorothy’s unblemished face all of a sudden looked much more like that of a normal teenager.

But as my friend, Dan Crider, writes, 4K is the real deal. It’s the new normal in movie theaters, and as of last month consumers could finally buy 4K TVs for less than $1,000.

Amazon is already selling a 4K “Ultra HD Media Player” from Sony for $700. The device has 2 terrabytes of internal storage and comes preloaded with 10 4K movies, as well as the capability of using the soon-to-be-launched 4K Media Streaming Service, which will allow consumers to “rent” 4K movies for $7.99 or buy them for $29.99. The size of the movie files is surprisingly small, thanks to revved-up compression technology from a company called EyeIO.

As Crider notes in his email to me, “20 to 50GB is very doable. For starters, it fits on a standard two-layer Blu-ray Disc. Even at 100GB, three-layer BDXL discs can accommodate them, so there is no need for a new format.”

I know packaged media is passé and old school, but despite the bruising format war when high-definition first burst on the scene in 2006 it can be argued that Blu-ray Disc extended the lifespan of the physical disc by at least 10 years.

4K could be another life-extender — but we have to take action and soon.

Studios Holding Back 3D Releases? Of Course They Are!

I'm generally quite a fan of Nikki Finke and her "Deadline Hollywood" tip/gossip sheet. She breaks stories and isn't afraid to give us the real dirt on what's going on behind the scenes in Hollywood.

But her latest "scoop" makes me wonder.

In today's "Deadline," one of the top stories is headlined, And the lead really sucks you in: "There's an accusation that Hollywood studios are holding back their hottest 3D Blu-ray releases, including Avatar 3D and Toy Story 3, until they see how much demand there is for the new format." The story is based on a for the home and concludes with a quote from the research company's analyst, Richard Baxter: "Our research shows that all the studios support 3D BD but many of them are unwilling to release their strongest 3D titles before the installed base of home 3D hardware is large enough to generate serious returns."

Duh! Of course studios want to hold off releasing their marquee titles until there's a bigger installed base. That's what studios traditionally do when there's a new format being rolled out. Remember DVD? Heck, when that format first launched, only a handful of studios were even releasing any product — and Universal Studios' entry into DVD consisted of licensing 100 catalog titles to an outside supplier. Uni simply didn't want to be bothered. It also took studios several years before they came to market with some of their true classics, including the "Star Wars" movies. And in each case, the explanation was the same: "Why waste a marquee release on a small audience? We're going to wait until DVD is more mainstream. There's much bigger upside."

We saw the same thing happen with Blu-ray Disc. So why is Screen Digest coming out with a report with the ominous title, "Studio Caution May Stymie 3D, Blu-Ray’s Potential Killer App" — particularly now, just months (not years) after the first 3D TVs hit the market?

And, perhaps more importantly, why is Nikki Finke, the Mother Theresa of Muckracking, making such a big deal out of it?

Honestly speaking, there's other data in the report I find a lot more compelling, a lot more newsworthy. What about the prediction that within three years, 75% of U.S. households that have 3D-enabled TV sets will be able to show 3D Blu-ray Discs?

That's a tremendous vote of confidence in our business. But I guess it's just not nasty enough to warrant a Deadline headline.

The Key to Blu-ray Disc's Success: Built-In Obsolescence

I was on my daily run the other morning when a lightbulb went off in my head — or, rather, thoughts of lightbulbs made me think of DVD and what's in store for Blu-ray Disc.

Back when I was studying business at San Diego State University, one of my professors introduced me to the concept of built-in, or planned, obsolescence, which is the process of a product becoming obsolete or nonfunctional after a certain amount of time, by design of the manufacturer. My instructor used the ordinary lightbulb as an example, noting that lightbulbs theoretically could last forever. But if they did, manufacturers wouldn't sell very many lightbulbs, which is why lightbulbs are made in a way that they burn out in a year or two, thus forcing us to buy more lightbulbs. According to Wikipedia, planned obsolescence "has potential benefits for a producer because the product fails and the consumer is under pressure to purchase again."

According to the book Industrial Strength Design: How Brooks Stevens Shaped Your World, the concept of planned obsolescence was popularized in the 1950s by Brooks Stevens, an industrial designer who frequently spoke on the topic at advertising and marketing conferences. According to Stevens, the objective behind planned obsolescence was to instill in the consumer "the desire to own something a little newer, a little better, a little sooner than is necessary."

The consumer electronics industry is a hotbed of planned obsolescence. What's new at one Consumer Electronics Show is passe at the next. And it is precisely because of this that I believe there is no longer any question that Blu-ray Disc will succeed, and succeed big. DVD players, in accordance with the principle of planned obsolescence, are not designed to last forever. In fact, based on the historical application of planned obsolescence in the CE industry, DVD players should be breaking down after five to seven years. It's now been that long since the peak of DVD player sales, so it stands to reason that we're on the cusp of seeing millions of DVD households in desperate need of replacing their player. And with advertising and marketing in the CE industry firmly lined up behind Blu-ray Disc — when was the last time you saw an ad or a commercial for a standard DVD player? — I find it highly unlikely that anyone whose DVD player dies is going to rush out and buy another DVD player. Instead, they're going to buy a Blu-ray Disc player, in accordance with Brooks Stevens' contention that the reason those DVD players died in the first place was a carefully orchestrated move by the CE industry to instill in the consumer "the desire to own something a little newer, a little better, a little sooner than is necessary."

The same goes for DVD software. Manufacturers could have put a protective layer on DVD to prevent scratching or other damage, but failed to do so, citing the extra cost. How many of DVDs purchased 10, seven, even five years ago are still playable, particularly in households with children (or adults who like to have a cocktail or three while watching classic film noir)?

Factor in the psychological aspect that is a byproduct of planned obsolescence and Blu-ray Disc's success appears even more certain. Over the weekend I took my oldest son to his high school entrance exam. I ran into one of his friends who came up to me, dad in tow, and said, "Mr. Arnold, will you please tell my dad to buy a Blu-ray Disc player? Everyone has one and we just got this great home theater setup and I'm feeling so behind the times."

Of course I gave the dad a stern talking to. I made it abundantly clear that if didn't get a Blu-ray Disc player RIGHT AWAY, on the way home from the entrance exam, he would, indeed, be behind the times — and risk subjecting his poor defenseless son to all sorts of embarrassment at the hands of his tech-savvy peers.

Then I got into my 10-year-old Mercedes and drove away, wishing I could afford a newer model — not because there's anything wrong with my car, but because, well, I'm feeling a little behind the times myself.

Random Thoughts, Observations and Musings....

Ah, technology! I am listening to a CD of Christmas songs that includes a rare 1971 rendition of "Oh, Holy Night" by Gary Puckett, the 1960s pop star I once managed (1979-1981). I found the song on YouTube, downloaded it for my RealPlayer, transfered it to iTunes and ultimately burned it onto a CD.

But hey, we're not here to read about me boasting about my technological prowess, are we? As the Christmas tunes play on I am reading a surprisingly thoughtful update on Blu-ray Disc in the Wall Street Journal, by Sarah McBride (to see the story, ). The story details the studios' big push of Blu-ray Disc in the holiday season and skillfully avoids using any industry jargon to explain such elements of said push as price reductions, combo packs and flipper discs. McBride also quite accurately describes Blu-ray Disc as "potentially a critical bulwark against the plunging DVD market, now in its third year of decline."

It's a good story, an accurate story, and a far cry from the "disc is dead" stories we've come to expect from the mainstream media. McBride notes that while Blu-ray Disc sales are on track to account for about 14% of packaged media sales this year, half what DVD was doing compared to VHS in year four of its existence, the big push could realize significant gains in the coming year, beginning in January, when the studios will target new Blu-ray Disc households drawn to the format by the cheapo players we began seeing in Wal-Mart and elsewhere in the days leading up to Black Friday.

I did find it a little ironic that the only studio president quoted in the story, talking up Blu-ray Disc, was Craig Kornblau, who during the format war was the chief cheerleader for the rival (and ultimately vanquished) HD DVD format. But hey, he's a smart guy, and he went Blu in a big way as soon as HD DVD backer Toshiba threw in the towel back in February 2008.

On another note, let me throw some kudos toward 20th Century Fox Home Entertainment for throwing a spectacular party Saturday night at Seth MacFarlane's Beverly Hills home for the DVD and Blu-ray Disc premiere of the latest "Family Guy" feature, Something, Something, Something Dark Side, a sequel to the animated sitcom's Star Wars spoof. The unexpected downpour proved no challenge for Fox SVP James Finn and his team — MacFarlane's backyard was tented and plastic-sheeted and the party went on as scheduled, complete with a 50-piece orchestra and a guest list that included Paris Hilton and Alyssa Milano. (see story here)

Clearly, event marketing hasn't fallen by the wayside. And I've got a hunch when other studios see how much press Fox got for this little shindig, we should start to see more of these events again, regardless of the economy — or the weather.

Redbox Deal Points to Blu Skies Ahead

One of the reasons Redbox has waved the white flag in its fight with the studios is because it is turning Blu.

Redbox executives said one of the motivating factors in making this week’s deal with Warner to accept a 28-day window on new releases was access to the studio’s Blu-ray titles.

The kiosk company plans to roll out Blu-ray rentals, which it has been testing for some time, by the middle of the year, likely at a higher rental price, according to executives. Netflix already offers Blu-ray rentals at a premium, charging customers $1 to $3 more on their monthly subscription for renting titles in the high-def format.

Blu-ray’s detractors — often digital delivery backers and Wall Street analysts who invest in that new technology — have long called it a dud, but last time I checked, getting customers to pay more for a product meant it was doing pretty well. Redbox consumers commenting on various discussion boards have indicated that they’d pay $1 more a night for Blu-ray rentals. Netflix’s Reed Hastings recently commented that the premium on Blu-ray rentals has helped the by-mail rental company grow the average profit per customer.

Blu makes more green, and one of the fastest-growing companies in the rental business adopting the format is a sign that its is gaining traction in the mainstream market, and will likely see great growth in the years to come.

The signs of adoption are all around. Consumer spending on Blu-ray purchases topped $1 billion in 2009, according to DEG: The Digital Entertainment Group. Just about everyone on my block has a Blu-ray player following the recent holiday season. Most members of my family have gone Blu. And — perhaps the biggest indication of all — I no longer have to explain to aquaintances what Blu-ray is.

There are still a few hurdles. For instance, one of my neighbors didn’t realize until last October that her PlayStation 3 played the format. (I’m sure she’s not alone.) Hopefully, Sony’s ad blitz will right that perception. Also, my mom hasn’t adopted Blu-ray, but she still has a 15-year-old TV and didn’t get a DVD player until they were $29.

Blu-ray is finally stepping into the spotlight, and, thanks to Redbox’s new deal with Warner, will soon be available at a kiosk near you.

Blu-ray’s Penetrating Questions

Blu-ray Disc format penetration is growing, despite competition from old stalwart DVD. The format’s penetration has doubled since July 2008, with 17% of U.S. households owning at least one Blu-ray device in July 2010, according to research from Centris Market Intelligence (see story, cover). I’d say that’s a pretty good run so far for a high-def disc that only won the format war in February 2008 and then faced a brutal recession.

Unfortunately, Blu-ray still can’t catch a break, even while gaining significant ground. Industry pundits are still pointing out that it’s no DVD. But I think that was clear from the beginning. Blu-ray always was destined to be different from its predecessor. I didn’t expect it to match the pattern of the first disc format to be sold directly to consumers in breadth. DVD had the advantage of the first crack at truly selling catalog directly to consumers, in addition to the inception of the TV DVD business. No one bought much TV product on VHS.

In comparison to DVD’s advantages in the marketplace when it debuted, Blu-ray has a harder row to hoe. What may make Blu-ray a bigger star is 3D.

In the 3D arena, Blu-ray has a clear advantage over video-on-demand and Internet streaming options. Those two distribution avenues cannot possibly match the quality of 3D on Blu-ray. The application could in fact offer a new dimension to Blu-ray sales.

At first, I admittedly was a little skeptical about the 3D wave, and it’s potential for the high-definition format. I’d seen a few bad versions of the new 3D technology (one film actually gave me a headache), and I couldn’t see how that would possibly be an engine for growth in the home.

But now I’ve noticed growing studio and hardware support behind 3D — even in hard economic times. 

Anecdotally, 3D in the home seems to be fascinating consumers as well. At a recent Costco, I noticed an older man comment to his wife that the picture on a flat-screen TV on display looked blurry, which sounded like a bad sign for 3D. Then, he noticed the glasses in front of the TV, and looked through.

“Oh, wow!” he said.

That same “wow” factor may be the ticket to more Blu-ray growth.

3D Bundling a Smart Move

One of the most difficult hurdles to overcome with the launch of HDTV — due to the HD DVD versus Blu-ray Disc format war — was the confusion about high-definition disc content. Certain content wouldn’t play on certain players. By avoiding that problem with Blu-ray and 3DTV, the industry seems to have gotten it right this time. Content, instead of confusing the issue, can be a major boost to the adoption of a new dimension in TVs.

By bundling major 3D theatrical hits with 3DTVs, studios and consumer electronics manufacturers are offering buyers an instant “wow” factor. Consumers can go home with their electronics purchase and immediately get the full benefit of 3D without the worry that they’ve got a disc that may soon become obsolete.

Walt Disney Studios Home Entertainment and Sony Electronics are partnering for consumer and retail education, promotion, and marketing support of in-home 3D devices, including bundling 3D Blu-ray versions of recent box office hit Alice in Wonderland and family favorite Bolt with the electronics. Meanwhile, Panasonic is reportedly partnering with 20th Century Fox Home Entertainment  to bundle its 3DTVs with the 3D Blu-ray release of box office sensation Avatar in December, and Samsung is collaborating with DreamWorks Animation to bundle How to Train Your Dragon and select “Shrek” films with 3DTVs this fall.

I’ve already seen enticing and reasonably priced displays of 3DTVs with the whole setup, including the 3D Blu-ray player. Add a movie such as Alice in Wonderland, Avatar or How to Train Your Dragon to the bundle, and it’s even easier to close the sale.

But the studios aren’t doing this merely to help out their friends in the electronics industry.

While electronics companies are obviously benefitting from studio content, the studios ultimately may be the bigger winners. As was often noted during the high-definition format war, sell the razor and make money for years to come on the razorblades. Content in 3D plays on any of the 3DTVs out there. This time around, the studios’ “razorblades” work with any of the “razors” out there.

With the hits the studios are bundling with 3DTVs, it looks like the format’s electronics may start moving off retail shelves this holiday season despite the bad economy. And that will mean studio sales of 3D Blu-rays for many seasons to come, and a new lease on life for a Blu-ray format increasingly facing competition from high-definition digital delivery. Blu-ray’s advantage has always been its high quality of sound and picture. The new 3D format will again show off the fact that Blu-ray is the best way to watch movies.

Feelin’ Blu Over Disc Issues

Blu-ray Disc was soaring in popularity in the Arnold household, with the three boys telling me as recently as December that they no longer want to watch DVD.

But then the bad things started happening.

On a recent rainy weekend, we watched several movies with what seemed like abnormally long “load” times. “Our DVDs never did that,” Justin, at 13 the oldest, observed.

One, Mirrors, never did finish loading. “Can’t you get the DVD?” asked Conner, 10.

I looked through the pile of movies I had brought home from work and remembered giving the DVD of Mirrors to my assistant. Thinking quickly I pulled out another Blu-ray Disc, Sony Pictures Home Entertainment’s new double-disc release of Capote and In Cold Blood.

Neither disc would play with sound on my Panasonic BD-35. I searched the Web and found that many other people were having similar problems with Dolby TrueHD discs.

I grabbed Unsolved Mysteries, a two-year-old TV DVD release from First Look Home Entertainment, and stuck a disc into the Blu-ray player. It worked fine. Breathing a sigh of relief, I waited until the disc “took” with my kids — they wound up watching the entire four-disc set — and e-mailed the guy who had installed my home theater system a year ago. I explained my predicament and he e-mailed me back: “You need a firmware upgrade.”

I’ll make an appointment somewhere down the road. The economy being what it is, I don’t need any extra expense of a house call.

Last night I watched Changeling on Blu-ray. It mysteriously froze at 16:45.

I’m about to call Universal and ask for the standard DVD.