Hey, Entertainment Industry, You Need Us Latinos

U.S. Latinos love watching movies, and they make up a huge portion of the moviegoing population. That’s pretty much what a panel of experts said June 8 at the Produced By Conference in Los Angeles, as reported in The Wrap ().

Part of me thinks, “Um. Yes, we’ve known this for a while already. Why are we still discussing this?” (See any of my coverage of this over the past 10 years.) But another part of me sees the continued relevance of this conversation. The current research showing the strength and influence of those numbers on the industry isn’t any less potent, and more importantly, it’s not just us Latinos having these conversations anymore. Rather, these discussions are now taking place more frequently among non-Latino executives and decision-makers in the overall mainstream industry.

Now, one thing the panel didn’t address much of was the packaged-media and digital slices of the entertainment pie.

Studies show that 75% of Latinos own high-quality home entertainment systems, and 63% of them rent DVD or Blu-ray movies, as reported in .

Again, this isn’t all that new. A report dating back to 2009 indicated that Latina women in particular are big DVD consumers and above-average consumers of online and mobile video as well, according to a study by Solutions Research Group Consultants Inc. And I can go back even further with similar research and figures.

And now that the industry at large is taking more notice of Latino buying power and influence, we’re starting to see a rise in higher-quality Latino movies and the marketing of it. In my opinion, this is the best part.

Lionsgate’s 2013 film Instructions Not Included, starring and directed by Mexican star Eugenio Derbez, broke a number of records at the box office, including becoming the No. 1 Spanish-language film in the United States. It was one of my favorite movies of the year, and probably would not have been made 10 years ago. In fact, it took Derbez 12 years to make.

Derbez also told me during an interview that he knew the film would also do well on home video, and his prediction was right. Upon its retail debut in January the movie, distributed by Lionsgate, landed at No. 3 on Nielsen’s VideoScan chart and remained in the top 10 sales chart for another week. The movie also appeared in the top 20 rental chart for three weeks in row.

Another studio that is taking note of the Latino market is Paramount, which pointedly made the decision to the include Latino characters and Spanish dialogue in the most recent “Paranormal Activity” film. To my surprise — and, I think, the surprise of other Latinos in the industry as well as audiences — they got it right. No stereotypes. No mixing up of Latino cultures. No incorrect dialogue. This film, too, showed up on Nielsen’s top sales and rental charts upon its debut.

Digital platforms might arguably be even more successful among Latino audiences.

Latinos are watching more videos online than the rest of the U.S. population, according to Centris Marketing Science’s July 2013 U.S. Communications and Entertainment Insights report.

The report also found that 33% of American Latino households subscribe to Netflix, versus 25% of U.S. households overall.

Another beacon in the digital entertainment market for Latinos is Hulu, whose site draws more than 1 million unique monthly Latino viewers, according to Rodrigo Mazon, content acquisition director for Hulu, as reported in . He said that number continues to grow in the double digits, month-over-month since the channel launched two-and-a-half years ago.

And Hulu has created quality original programming, such as “East Los High,” and also supports it as well as third-party content with the marketing dollars.

Now this is just consumption of Hulu Latino. I can only imagine how much regular Hulu content Latinos are also viewing.

Meanwhile, Netflix has it’s own content in the works, a new yet-to-named soccer series — just in time for the World Cup — as well as “Narcos.”

It's an exciting and interesting time for us. As the mainstream industry takes increasing notice of Latinos’ exploding purchasing power, I think we’ll see a rise more Latinos in front of (and behind) the camera, as well as better Latino content.

Warner Preorder Snafu Part of a Larger Amazon Push

On May 29 a fan of the anime series “Bleach” and “Naruto Shippuden” posted on distributor Viz Media’s Facebook page, asking why the latest DVD installments of those shows were unavailable for preorder on Amazon.

“Hi Sam, our products are distributed by Warner Brothers, and currently they're in contract negotiations with Amazon,” Viz Media replied. “Preorders are disabled while that goes on, but we’re hoping it will be resolved soon.”

That one-paragraph reply to a customer concern on social media offered insight into a dispute that reaches beyond a pair of fringe home entertainment titles. Since mid-May, Amazon has prohibited the preorder availability of nearly every Warner-distributed new-release disc title, including heavyweights The Lego Movie (June 17) and 300: Rise of an Empire (June 24). Notably, Amazon Instant Video early electronic sellthrough of new-release Warner titles has been unaffected.

A Warner spokeswoman told Home Media Magazine the studio had no comment regarding the preorder situation. Amazon did not respond to repeated requests for comment.

Amazon has some leverage here. It’s America’s No. 1 online retailer, and the loss of brick-and-mortar sellthrough outlets for disc can only embolden the company in contract negotiations, even when it comes to the biggest studio in Hollywood. Amazon has already shown it’s willing to play hardball with suppliers, evidenced by its well-publicized fight with book publisher Hachette.

While the Warner/Amazon dispute may seem troublesome to distributors, the retailer’s apparent hardline stance on disc — when so many other outlets exist — could backfire. There are no shortage of alternatives to Amazon for Warner’s discs: head over to Walmart.com and preorder anything the studio offers. Warner is happy to let consumers preorder titles via its own online store.

In Praise of Indies

Independent distributors have long been a crucial part of the home entertainment business, picking up films, TV shows and catalog titles that might have gotten lost in a market dominated by big-budget blockbusters. While many of these titles get some play at festivals, in theaters or on television, they often find their audience via home entertainment, either on disc or digitally.

The Entertainment Merchants Association’s Independent Product Market this month in Marina del Rey gathered top indie players who continue to support smaller films and other non-blockbuster product. The indies are facing many challenges in a multi-faceted entertainment distribution arena, and I salute them for continuing to champion good content that might be otherwise overlooked. I salute the EMA as well for recognizing top titles distributed by independents.

The EMA honored actor Haley Joel Osment with its Independent Career Achievement award. Osment, who many may remember for his breakthrough role in The Sixth Sense, stars in Well Go USA Entertainment’s Aug. 5 release I’ll Follow You Down. He noted that he was attracted to the film because it had a great script. That’s a refrain I’ve heard many times over the years when interviewing actors, actresses and other talent who have signed on to work on smaller films. These indie films and their distributors help filmmakers and performers hone their art.

Independent films have also provided a forum for young directors, actors and other talent to get their feet wet. Top talent — including Ron Howard, Peter Fonda, Jack Nicholson, Martin Scorsese, James Cameron and Peter Bogdanovich, to name just a few — polished their acting and directing skills in indie films produced by the legendary Roger Corman before they ever made their first blockbuster.

Like many people, I love a great blockbuster, but I also relish the opportunity to discover a new indie film or documentary. And I am grateful to independent suppliers for their contribution to this business.

 

Disc May Be Down, But It’s Far From Out

The home entertainment business is becoming increasingly polarized in its thought leadership. We have those executives who believe there’s still plenty of life left in physical media, particularly in the country’s less-tech-savvy heartland, and then we have the disc-is-dead folks who believe Netflix and subscription VOD have destroyed sellthrough, paving the way for the disc’s imminent extinction.

The former group seems to be throwing their lot in with the 4K crowd, believing there’s a growing market for even higher-quality viewing experiences than high-definition and that the industry needs to start offering consumers a 4K option with both physical discs and set-top players.

The latter crowd, meanwhile, dismisses quality as a secondary factor — citing the disaster that was DVD-Audio and Super CD — and maintains any investment in building a better disc, so to speak, is futile, since we’re all going to move over to electronic delivery before too long.

This contrast really struck me the other day when I had conversations with the presidents of two major-studio home entertainment divisions in the space of about an hour and a half. One president said he sees Netflix eating into broadcast TV, not disc sales, and maintained the disc market remains much healthier than many might think; the other president said disc sales are plummeting “because everyone’s gone over to Netflix.”

Black and white, folks — when, in truth, as with so many things, the real answer lies in the gray area in between.

Here’s my take: Yes, let’s forge ahead and keep improving the physical disc — all the while promoting it as the premier viewing experience when it comes to quality – but let’s manage our expectations. As we’ve seen with Blu-ray Disc, people are not going to rush out and rebuy their entire movie libraries again — it’s the law of diminishing returns, compounded by growing acceptance of the cloud, which presents us with a unique way of “owning” something without cluttering up the house.

The disc market, then, will be smaller, quite possibly a lot smaller. But it’s not going to disappear, either — simply because there will always be people who want the best possible viewing experience and for the foreseeable future, at least, the disc remains the best way to deliver on that front.

And yet at the same time, electronic delivery will continue to grow — although I’m not convinced EST will ever be as big as many in our industry hope. Even if building a movie library is cheap and easy and you can store it in the cloud instead of the hallway closet, the need to own is tenuous. Part of the success that DVD enjoyed came not from people wanting to own a bunch of movies, but from the collectability it inspired. And now that we’ve been there and done that (sorry for the cliché) it’s time to move on.

The fact is, subscription DVD, a la Netflix, is about as simple, easy and cheap as the average all-American couch potato could hope for. So I’m not surprised in the least by the new PricewaterhouseCoopers study that predicts electronic home video revenue will be the main moneymaker in all of filmed entertainment by 2018, driven by subscription VOD services, which generated $7.34 billion in 2013, but in PcW’s view will more than double to $17 billion by 2018.

That’s where the viewing future of on-demand home entertainment lies — I think we can all agree on that. But it’s not going to be an all-or-nothing proposition, and I have a hunch the physical disc, though down, won’t be out for a very long time.

 

I Rented a Disc From Redbox — for the First Time

When it comes to movies, I have never been a frequent renter. And when the retail rental stores in my extended neighborhood became extinct, I stopped completely. It’s been several years since I last rented a movie. Renting from a red vending machine just didn’t have the same appeal compared to my recollection of wandering the aisles of titles.

Recently I gave in and decided to give Redbox a try. My usual modus operandi is to buy Blu-rays I’m interested in at Amazon or a local retailer, but for some reason I just couldn’t do it with Elysium, despite the positive review at Home Theater Forum. I’m not sure if it was budget overload from the holidays or a feeling that it wouldn’t get a lot of repeat viewings, but I just couldn’t get myself to pull the trigger at the sellthrough price. After carrying it around Best Buy for 20 minutes while shopping, it hit me: I could check it out through Redbox. For $1.50 why not give it a shot? That seemed a lot more reasonable than spending $25 for a film I may not watch again.

I went home, set up an account online, reserved a copy at my nearest Redbox and picked it up. It was pretty painless. It was a bit annoying to become reacquainted with the “watch me now or pay more later” feeling that comes from knowing you need to have a title back in 24 hours to prevent additional charges. That, combined with the fact it took me a few tries to feed my return into the machine the wrong way (I’m not good with following directions), were the only things standing in the way of me considering the experience a complete success.

Does my first successful rental mean I will be a frequent customer? Not really. I plan on renting Ender’s Game, so my local Redbox will be seeing more of me, but I don’t think we will ever be on a first-name basis. There are a few things still preventing me from switching from retail to more rental. Vending rental has limited title selections, a lack of catalog and no 3D titles. Also, the studios are releasing rental versions with limited or no special features. The biggest obstacle for me, however, is the rental blackout window many studios have — normally I’m not willing to wait an extra 28 or so days to watch a movie, and considering the instant gratification, special features (including 3D) and the usual inclusion of a digital copy, a new-release Blu-ray is a pretty good value when you take into account retailer discounting.

So even though I’m going back for another rental, blackout windows and a lack of special features on some titles deter me from renting. I think it’s telling that I’ve already purchased or preordered nine titles this month that won’t be at my local Redbox until several weeks after retail release.

How Studios, Theaters and TV Manufacturers All But Killed 3D

When CES 2014 ended, I half-expected to see an obituary for 3D from the press. Some TV manufacturers (such as Vizio) eliminated 3D as a feature on their 2014 models, while others (such as Panasonic) reduced the number of models with this feature. Though the number of 3D movies being released to theaters hasn’t quite diminished, the number of screens and showings has, with some of the smaller exhibitors (Starlight Cinemas chain in Southern California) getting out of 3D altogether. Some say the nail in the coffin came when Disney opted to forego the release of a 3D Blu-ray edition of one of its most successful animated films in years, Frozen (although the title is available on 3D digitally). How did we get to this point and is 3D really dead?

■ 3D-Capable Televisions Arrived Too Late: Samsung and Panasonic debuted their 3D televisions in 2010. By then close to 65% of U.S. households had already upgraded to HDTV and didn’t plan on upgrading again for at least another five years.

■ High Cost of Active-3D Glasses With No Universal Standard: When 3D TVs first arrived at retail, most sets came with one pair of 3D glasses. Up until the 2013 model year, most Panasonic active-3D sets shipped without glasses. If a customer needed more, the cost was typically around $100 each. Costs have dropped considerably for some manufacturers (Samsung’s glasses sell for $19.99 for battery operated, $49.99 for rechargeable), but Panasonic’s are still quite high at $69.99. What’s worse is that when many of the manufacturers introduced new and improved glasses, they were not backward-compatible with prior-model year TVs.

■ Public Perception of Limited Content: When I tell people I have a 3D-capable TV, they often ask why I bothered, since there’s little content. If you look, you will find it. Most people are unaware that Netflix has many movies available in 3D on its streaming service. Walmart’s streaming service, Vudu, has several titles available in 3D, as does PlayStation Network. Many cable and satellite services offer pay-per-view movies in 3D. None of this is very well publicized, hence the public perception. One thing that did get a lot of public attention, though, was the announcement of ESPN 3D going off the air, with most 3D naysayers proclaiming it was the public’s rejection of 3D. My opinion is that most people didn’t want to watch that same old game over and over again.

■ High Cost of Content: It’s understandable 3D Blu-ray titles were around $50 when the format launched. Nearly four years later, most 3D Blu-rays still have an MSRP of $49.99.

■ 3D Surcharge at the Local Cineplex: I still do not understand the reason for this, although I used to think it was to pay for the glasses. What is even more confusing is the variance in this surcharge. Most Regal Cinemas locations charge $4 more, as do AMC and Cinemark. But the smaller chains charge a lot less, some as low as $2. This surcharge often brings ticket prices in excess of $19.

■ Too Many Bad 3D Conversions: I’ve seen some great 3D conversions of films originally shot in 2D. The Nightmare Before Christmas stands as one of the best. But other, poorer conversions, soured the 3D experience for many moviegoers. What the studios don’t understand is the public is rejecting bad 3D.

So, is 3D dead? It is definitely in a state of decline, but not down for the count. I prefer to say 3D is going into hibernation, waiting for James Cameron’s much-anticipated “Avatar” sequels to help give 3D its much-deserved comeback.

Déjà vu in the Digital World

Many years ago, during the maturing of the video industry, smaller video store chains consolidated to form behemoths such as the Blockbuster and Hollywood (later Movie Gallery) video chains. These big chains were able to garner more favorable terms from the studios on the titles they bought on VHS and, later, disc. Blockbuster, at one point, even had a content acquisition arm that picked up films for distribution in Blockbuster stores.

Now, I’m experiencing a bit of déjà vu in the digital arena. Phone behemoth AT&T is looking to acquire DirecTV, giving them access to more screens on which entertainment can be consumed. That comes on the heels of the announcement of a prospective deal between the Comcast and Time Warner cable companies. Meanwhile, Netflix is both lamenting the end of strict net neutrality — the FCC’s program making a level delivery field for online programming — and is making exclusive deals to make sure its content gets better treatment at the services that deliver it. Like Blockbuster, Netflix is also embarking on owning the content it delivers: “House of Cards,” “Orange Is the New Black,” etc.

I guess this is the digital business maturing, consolidating and jockeying for advantage in a developing digital world. But it also seems that what’s old is new again. The players and the format (digital) are different but the process seems similar. The content delivery players are trying to bulk up and gain advantages over their competitors, while also dabbling in the content ownership realm dominated by the studios that supply them with content.

And that’s why I’m getting déjà vu. What’s old is new again, as companies try to dominate the entertainment delivery highway. Blockbuster or Netflix, Hollywood —which at one time owned Reel.com, one of the first entrants in the digital realm — or Amazon Prime, the competitors change but the essential business is similar. And, judging by the past, we are in the era of consolidation.
 

Early Release the Way to Go

A new NPD study finds that UltraViolet users are 11 times more likely to have made an electronic sellthrough purchase in the past year, compared to other U.S. consumers, and four times more likely to own a connected Blu-ray Disc player or other streaming media device.

The research group calls Ultraviolet users “early adopters” who like early adopters of other technologies — most notably, DVD and Blu-ray Disc — tend to be voracious consumers of entertainment and much more tech-savvy than mainstream folks.

If the pattern holds true, we have nothing to worry about: The early adopters set the trend and everyone else follows, just like that.

The problem is, Ultraviolet isn’t a new product, it’s more of a concept — and selling people on a concept is significantly more difficult than pitching them something tangible.

And the concept we are selling here is buying movies electronically rather than physically — a much bigger stretch than getting someone to switch from a videocassette to a disc.

Compounding matters is that UltraViolet is really the means to an end. It’s a way of storing purchased content in the cloud and then accessing it anywhere, at any time, on any device. It’s designed to add value to physical discs and transition consumers to the end game, which is buying movies electronically, without any disc at all, with the same promise of ubiquitous access and availability.

In that sense, then, the other means Hollywood has employed to effect this transition — early release windows — is much simpler and easier to understand. You can buy The Amazing Spider-Man 2 on disc right before Christmas, but you can buy the film electronically two or three weeks earlier, for less money — and watch it just as easily on your home theater setup as on your smartphone.

Bingo. That’s the magic formula, and we as an industry need to promote the heck out of it.

As for UltraViolet, it’s a wonderful idea, but the execution has been miserable — we should have had a common, universal website from the get-go, and everyone should have been onboard from the start.

Given the countless obstacles and resistance from some quarters, it’s amazing that UltraViolet has been accepted as widely as it has been. But in the big picture, UltraViolet is small potatoes: The real trick is selling digital downloads, and hyping the hell out of early release is the way to go.

Why I Still Buy and Collect Discs

Despite DVD and Blu-ray sales dwarfing those of digital purchases, many see the writing on the wall for physical media. But the disc collector is a hardy breed. The slide into digital media feels inevitable, but the buying power and passion of the physical media collector remains. The collector is intensely loyal. Favorite films are snatched up upon release, then repurchased when new special features are created, or a new transfer struck, or when a new, higher quality medium is available. In all cases, the collector takes pride in displaying the movie on the shelf.

Why own all these films on physical disc when the world seems to be on an inevitable march into the cloud? Because there is nothing that comes close to holding the movie case in your hands, or seeing the new purchase sit in an endless run of shelves in all their resplendent glory. Each physical case or special package says a little something about the collector. And there is nothing like running your eyes over the spines and occasional awkward-shaped cases that contain trips into many and varied cinematic realms. Nothing can replace the joy of seeing the Alien egg cast a slight shadow over the Iron Man-head-shaped case, just below the shelf with the complete series of “Battlestar Galactica,” both the Cylon head containing the original and the bizarre cardboard creation of the reimagined series.

That’s an emotional connection that digital libraries simply cannot replace.

Even though they like physical copies, many collectors aren’t stuck in the past. The inclusion of a digital copy to store in the cloud is a nice bonus — a convenience that helps meet a need when flying, commuting on trains, or simply watching content anywhere the home theater can’t follow. Accessing a digital library is wonderful, but it’s a bonus, a nice feature, a handy convenience, but certainly no replacement for the quality and reliability of physical media. It is important for physical and digital delivery mediums to exist side-by-side, for the collectors to follow their passion and fill their shelves.

Disc Sales Far From Frozen

Just as pundits are praising the digital delivery revolution and the death of physical media, along comes a hot title called Frozen, which has topped disc sales charts nearly every week since its March 18 release, when it tallied sales of 3.2 million units on its first day.

Walt Disney Studios, which includes Walt Disney Studios Home Entertainment, reported a revenue jump of 35% ($462 million), due to higher disc unit sales (boosted by Frozen and Thor: The Dark World).

But Frozen isn’t the only strong title spurring unit sales. Even TV content — which has been the lifeblood of subscription websites such as Netflix and Amazon and the darling of the digital revolution — is selling on disc. HBO April 30 reported a first-quarter income jump of 11%, with content revenue increasing 13% largely from packaged-media sales of Game of Thrones: The Complete Third Season. Time Warner CEO Jeff Bewkes said first-month disc sales of the third season of "Thrones" were the highest of any previous HBO original content. Consumers want to own TV series as well as hit features.

While DreamWorks Animation CEO Jeffrey Katzenberg lamented the disappointing theatrical performance of Mr. Peabody & Sherman (a good movie, by the way, which may yet be discovered in the home entertainment market), disc sales continued to stream in for previous DreamWorks Animation titles. Turbo contributed revenue of $22.3 million for the first quarter, having reached an estimated 4.8 million home entertainment units sold worldwide. The Croods contributed revenue of $41.7 million, primarily from domestic pay-TV and home entertainment, reaching an estimated 7.1 million home entertainment units sold worldwide. Rise of the Guardians reached an estimated 5.5 million units sold, and Madagascar 3: Europe's Most Wanted reached an estimated 9.1 million units sold. There is hope for Mr. Peabody & Sherman yet.

Who is buying all those discs if packaged media is dead? The collector.

Even before the advent of DVD, consumers collected titles they really loved on VHS. It’s a habit that continues, even with all the digital offerings available. The collector still prizes — and wants to own on physical media — quality content.