A 9/11 Reflection

On Monday Sept. 11, 2000, I stood in front of One World Trade Center in Manhattan in search of Stephanie Blank, director of PR with an upstart dotcom venture located on the 84th floor.

I’d met Stephanie and her 1,000-watt smile the previous year as a reporter with AdWeek attending the magazine’s soiree near its corporate office on Times Square.

Those were heady times when lingering dotcom largess afforded me — then a news editor with Billboard — a second visit to the Big Apple. I was as much enthralled by the city’s energy as I was with the specter of meeting Stephanie again.

Of course I hadn’t called or emailed. Texting didn’t exist and more importantly, she probably had no idea who I was. That first night’s initial charm was likely more PR maneuvering than anything else.

As I stood amidst the bustling lobby of the World Trade Center tapping Stephanie’s business card, I turned around, exited the building and got vertigo staring skyward at the towering columns.

A year later on Tuesday, Sept. 11, 2001, a co-worker looked up from his computer at Billboard’s Mid-Wilshire office in Los Angeles and told me a plane had just crashed into the World Trade Center.

A short while later I was on the phone with a contact at Warner Music Group who informed me that Carolyn Beug, an award-winning music video executive with Walt Disney Records, had been on the American Airlines flight out of Boston with her mother that had just slammed into the north tower of the WTC.

He knew this because Carolyn’s husband, John Beug, an accomplished music DVD executive with Warner Music, worked down the hall.

I had a scoop and obit on the worst day in the nation’s history. Billboard’s fax newsletter (digital editions didn’t exist yet) carried the news, despite initial jitters from the deserted New York office.

Several years ago working for Home Media Magazine, I had a phone interview with Mr. Beug regarding a music DVD. I was warned in advance not to talk about 9/11 — the publicist obviously unaware of my previous connection.

On this, the 10th anniversary, I’ve never contacted Stephanie again, but kept her WTC calling card as a 9/11 reminder. I’ve seen her photo and mention online, so I know she didn’t perish when the Towers imploded, the irony being that when the dotcom bubble burst in early 2001 — temporarily sending the economy into a tailspin — it likely forced Stephanie and her nascent employer BePaid.com out of the symbolic Towers and fate’s grasp.

Title Contraction Paring Disc Sales?

DEG: The Digital Entertainment Group released first-half numbers last month showing packaged-media sales had dropped 3% in the second quarter which, after factoring in a steep first-quarter shortfall, resulted in a 7.1% drop in sales for the first half.

Certainly the economy is hitting disc sales, albeit less drastically than it did in Q1. But it may also be the title count that is hurting the sellthrough business. For the first half, the number of DVD releases fell by about 1,000 titles, according to The DVD & Blu-ray Release Report, put together by editor Ralph Tribbey. While half of that shortfall can be attributed to the special interest category, the rest includes core catalog and new-release titles. Meanwhile, Blu-ray title counts aren’t picking up enough to fill in that hole. The count of Blu-rays is up 18.4% for the first half, or a year-over-year gain of just 90 titles, according to the report.

“It appears that as long as the economic numbers continue to be dismal, so too will be the [inventory] counts for both Blu-ray and DVD as suppliers pick and choose what gets released,” reads the report.

The chicken-and-egg proposition is: Which is hurting disc sales more, consumers unwilling to buy or the fact that there are fewer titles from which to choose?

The picture gets clearer when looking at exactly which kinds of titles are in short supply. The theatrical catalog release pace slid 32.1% in the first half, according to the report. Many of the other categories either held their ground or grew in title count.

It seems apparent that consumers are not opting to replace their catalog DVDs with Blu-ray and that many already have collected those older titles they most desired. For many, DVD may be good enough for many titles in their collection.

I’ve written before the Blu-ray had a hard act to follow in DVD, which reaped the benefit of the first real shot at selling the studios’ rich catalog. VHS was never highly collectible in the way DVD was, and Blu-ray — while better still than DVD — is facing a tougher economy and DVD-library exhaustion.

Considering the headwinds, disc sales are pretty strong, showing consumers’ continued interest in owning the content they love the most.

Home Video: Bargain in Tough Times

It’s just our luck to schedule our third annual High-Definition Disc Conference on the same exact day the Hollywood Forum hosted a special dinner presentation, “Wall Street Meltdown’s Impact on Hollywood.”

If Wall Street is in panic mode, then Hollywood is not far behind, despite the entertainment industry’s historical resilience to troubled economic times. These past few weeks we have heard story after story of studio layoffs, marketing budget cuts, reduced picture outputs and overall malaise, as the down economy no doubt conjures up images of bread lines and soup kitchens among those whose parents, in many cases, weren’t even old enough to live through them.

Hollywood’s hype machine is running at full speed, and the “sky is falling” mentality that’s hit the mortgage and banking industries already is spreading like a dark cloud over the Hollywood Hills.

Whoa, everyone. Let’s rein in the doom and gloom for just a spell and take a look at what’s really going on out there. Yes, the nation is in an economic tailspin, but so far at least our industry hasn’t been hit all that hard. Consider the following:

DreamWorks’ Madagascar 2 busted even the rosiest projections to open with $63.5 million, beating even Disney’s Wall-E, which opened to $63.1 million over the summer — long before the economic smog settled in.

Wal-Mart, that great harbinger of middle America’s shopping habits, reported a more-than-respectable 2.4% gain in same-store sales during October, the terrible month of slashing and burning that affected everything from the Dow to our 401ks. The same day, the giant retailer announced a big expansion of its Blu-ray Disc inventories.

And Marvel Entertainment’s third-quarter net income rose more than 40%, boosted by the strong theatrical performance, and vibrant home video sales, of Iron Man.

These are challenging times, to say the least. But if you look hard enough there’s always that proverbial silver lining. Analysts were quick to attribute Wal-Mart’s strong financial showing — and a similar uptick in sales at McDonald’s — to consumers searching for bargains. The success of Madagascar 2, meanwhile, was chalked up to the desire for escapism through entertainment.

Hmmm. Bargain and entertainment. That’s got home video written all over it.
 

Digital and Disc Can Play Nice

I don’t subscribe to the false assumption that each digital delivery milestone means the death of disc. Digital content is certainly making inroads with consumers and, in the mobile world where picture quality isn’t terribly important, it serves a growing need.
Over the holidays, my 11-year-old daughter put digital copies (that came packaged with the discs) of some of her favorite films on her new iPod Touch. As we traveled from store to store, she enjoyed watching Coraline in the car. In the waiting room at the doctor’s office, she took a look at Horton Hears a Who!

But over the holidays, she and her sister also watched Pirates of the Caribbean: Dead Man’s Chest on our big-screen in Blu-ray quality. Many other families must have been gathering around the TV to view a disc this holiday season, judging by the record rentals at Redbox. For a communal, home entertainment experience, you just can’t beat Blu-ray on the big screen.
My 11-year-old — who is supposedly part of the generation that will shift the entertainment paradigm — doesn’t see digital and disc as an either-or proposition. She uses both — often while e-mailing her friends at the same time.

At this month’s Consumer Electronics Show in Las Vegas, we began to see how digital and disc can play nice together.

Announcements of cloud-content management, such as Disney’s KeyChest initiative, shared the headlines with the promise of 3D on Blu-ray Disc. Blu-ray is the best way to replicate the theatrical experience in the home, and it can bring the 3D phenomenon setting records in theatrical revenue home, too.

I like the idea of having high-quality copies of movies for the big screen, but on the road, I’d like to have a digital copy, too, rather than lugging around a cadre of discs. The combination of digital and disc has made Netflix a very successful retailer. The studios have put digital copies in their packaging because consumers value it.

Theaters, Blu-ray and digital delivery serve different needs, and they can and will coexist.

On another note, I was sorry to hear that Video Business, our worthy and vigorous competitor for nearly 30 years, printed its last issue Jan. 4. The editors and reporters at VB kept us on our toes, and we will miss their contributions.

 

Scribe Touts DVD’s ‘Strong Showing’

At last, a reporter who gets it.

I’m talking about Mark Dawidziak, the television critic for the Cleveland Plain-Dealer, who interviewed me recently for a column he did on the appeal of TV DVD.

For starters, Dawidziak is not drinking the Kool-Aid of the tech companies and their analyst shills that the whole world is fast migrating to digital downloading. No way.

The Midwestern scribe, if you can believe it, actually is a fan of DVD and packaged media, if for no more noble a reason than that it gives consumers optimum control over their home entertainment consumption.

“Although separated by 50 years, seven states and 2,400 miles, my brother in Redondo Beach, Calif., and my daughter in Cuyahoga Falls, Ohio, share the same view of cable and broadcast television,” Dawidziak writes.

“They don’t watch it. They don’t need it. They don’t like it.”

Instead, “my 62-year-old brother and my 12-year-old daughter are part of a growing segment of the population happily taking care of their own programming needs. DVDs, particularly boxed sets of vintage series, are filling the viewing hours once supplied by the networks.”

The columnist also opines that packaged home entertainment could be in for substantial future growth, given the surge in sales of HDTVs, which he correctly asserts are tailor-made for Blu-ray Disc.

And even though DVD sales are slightly off from last year, Dawidziak isn’t joining the chorus of reporters who believe — or, rather, want you to believe — that the sky is falling.

Instead, he puts things in remarkably clear perspective. “DVD sales through August were down just 2.5% from the same time last year,” he writes. “Factoring in higher-than-expected Olympic ratings in August and economic woes, that’s a very strong showing.”

Yes, Mark Dawidziak of the Cleveland Plain-Dealer — the daily paper read by my boss, by the way — understands our business. We could use more journalists like him.

 

 

Going Blu in Suburbia

The neighbors are turning Blu.

While this isn't by any means a scientific study, anecdotal evidence in my Orange County, Calif., neighborhood shows consumers are warming to Blu-ray Disc.

In the past month, two households have picked up players and, for the first time, started asking to borrow Blu-ray Discs instead of DVDs.

And they didn't buy the popular PlayStation 3 game console, either; they got standalone Blu-ray players, which do one thing and one thing only — play movies. Obviously, they are buying them for the Blu-ray capability and plan to buy Blu-ray movies.

Another indicator is the attitude of my children, who immediately ask if a title I bring home is Blu-ray or just plain-old DVD.

As we hold our breath waiting to see if consumers will embrace the new high-definition disc, it's comforting to me to see changes in my little section of the world.

When my neighbors started renting from Netflix, I began to believe in the staying power of the online DVD rental service (particularly since there was a Blockbuster Video less than a mile away).

Other indications also are good for Blu-ray.

A study from ABI Research found 75% of respondents planned on buying a Blu-ray player by 2009.

Also, an In-Stat survey reiterated the pull of packaged media, with more than half of respondents saying they preferred hard goods when buying movies or TV shows. Even younger viewers in the study preferred packaged media, with its cover art and extras.

“That bodes well for Blu-ray,” In-Stat analyst Gerry Kaufhold said.

Blu-ray disc unit sales in the first half of 2008 were up 340% from the first six months of 2007, according to Nielsen VideoScan data. And, looking at our weekly numbers since then, Blu-ray seems to be gaining momentum on a week-by-week basis as well.

Driving to work this week, I heard a commercial for Dish Network's “TurboHD,” which touted 1080p resolution “as good as Blu-ray.” That's not a bad thing. When big competitors start comparing themselves to Blu-ray, you know it's on its way to success.

Direct-to-Video Continues to Thrive

Universal Studios Home Entertainment is going all out with its next direct-to-video sequel, The Scorpion King 2: Rise of a Warrior, out Aug. 19. Studio president Craig Kornblau calls it the studio's “most ambitious” DVD original to date, with production values “that deliver theatrical-style action, adventure and excitement.”

What's more, the prequel to the 2002 theatrical hit comes with its own making-of documentary, gag reel and deleted scenes, along with several featurettes, including one on the visual effects.

The release underscores how serious studios are about their respective DTV initiatives. In Universal's case, DTV has been a goldmine, with three sequels to “American Pie” and another three to “Bring It On” selling a combined total of more than 10 million units, for nearly $200 million in consumer spending.

Kornblau says it's a natural: Thousands of people buy tickets to see movies in theaters, and then storm back to see theatrical sequels. “Clearly, consumers have a huge appetite for more stories from these franchises that they love,” Kornblau told me for a story in this issue (see story, page 30).

But think of how many popular movies do not spawn theatrical sequels, for whatever reasons. Maybe the franchise loses its flair just enough to no longer warrant an expensive theatrical picture; maybe when the film was produced, no one was thinking sequel — or prequel, as the case may be.

The latter was the scenario for Universal's successful Carlito's Way: Rise to Power DTV prequel, which premiered on DVD in 2005, 12 years after the original Carlito's Way opened in theaters. The film didn't attract many critical raves and featured a cast of mostly unknowns, but on home video it was a big success.

American Pie, on the other hand, spawned two very successful theatrical sequels before it went into DTV land.

The way things are going, it wouldn't surprise me at all if one day we see a Spider-Man 7 premiering on DVD and Blu-ray Disc instead of on the big screen. And you know what? My kids would love it.

The other day I brought home 10,000 B.C., and the three boys stayed on the couch after the final credits. “Daddy,” Hunter, the youngest, cried. “Can we see 10,000 B.C. 2?”

Comic-Con a Forum for Home Media

San Diego Comic-Con International has for many years been a forum for studios to try out the latest theatrical releases on the most avid moviegoers. In recent years it has become a platform for TV shows looking to connect with rabid fans as well. The line for the “Heroes” and “Lost” presentations in the massive Hall H stretched completely around the convention center into the Seaport Village area.

Lately it has become a place where retailers and studios can court fans of home entertainment.

Blockbuster took a spot in the Warner Bros. booth to promote its new digital kiosk being tested in the Dallas area. Consumers can download rentals of movies, rather than picking up the DVD, at the new kiosk.

Best Buy sold not-yet-released DVDs at the New Line Cinema booth, which sported an elaborate display for the direct-to-video Lost Boys: The Tribe, released July 29, after the show.

MGM and 20th Century Fox Home Entertainment hosted a red carpet screening for the direct-to-video movie Stargate: Continuum on the USS Midway aircraft carrier in the San Diego harbor.

Sony offered BD Live demonstrations at its booth.

And presentations on Fox's “Futurama” DTV movies, the Cinema Libre-distributed Indyfans, and Warner's “Charlie Brown” collection also highlighted home entertainment.

Certainly, many major home entertainment announcements didn't happen at Comic-Con. Iron Man's release on disc is still up in the air, as are plans for The Dark Knight and the fourth “Indiana Jones.” The much-anticipated Blu-ray Disc release of The Matrix Trilogy came after the show.

But for studios wishing to take the pulse of movie enthusiasts' interest in home entertainment, Comic-Con is proving to be an essential event.

Studios have found that if you can please the Comic-Con crowd, you're on your way to success.

Thus, I found it heartening that many in TheDigitalBits.com editor Bill Hunt's panel raised their hand when he asked how many had purchased a Blu-ray player. If Comic-Con attendees are the cutting edge of entertainment, the fact that so many of them have gotten on the Blu-ray bandwagon is indeed encouraging for the future of our business.

iPorn: The iPhone 3G Makes Adult Content Mobile

It was probably a safe bet the people in the line last Monday morning snaking around the Apple store in the upscale Fashion Island Mall in Newport Beach, Calif., weren't thinking much about adult entertainment.

Or were they?

While the majority likely wanted to snag — and brag about — Apple's white-hot second-generation iPhone 3G armed with twice the networking speed of its predecessor and at half the price, many coveted the new open-platform software that caters to 500 (including 125 free) proprietary and third-party applications, scores of them adult.

Apple said it sold 1 million iPhones in the first 72 hours after the July 11 launch. Only The Dark Knight is hotter. While there is one Bruce Wayne, there are countless users who will take their iPhones where no U.S. mobile phone has successfully ventured: adult videos and photos.

Indeed, words such as “sex” and “porno” ranked in the top 10 of search terms from more than 14 million mobile Web browsers, according to a survey by Crisp Wireless, a wireless mobile publishing network.

Why should you care? For better or worse, where porn goes, so does home entertainment.

Beset with shrinking DVD sales and excess supply (much of it electronic, free and pirated), the adult market believes the new iPhone and other “smartphones” (with Internet connectivity) can revolutionize the industry much the way VHS saved it in the 1980s.

“It's like going from dial-up to broadband,” said one industry expert.

Since U.S. cellular carriers won't distribute adult content directly due to age-verification issues and decency laws, consumers of adult content are left with third-party Web sites that require a credit card, heretofore tough to access due to limited networking capacity and browser speed.

The iPhone 3G changed all that.

Now, adult sites such as YouPorn, Phonerotica and PornAccess rank among the top destinations accessed by smartphone users, according to M:Metrics, a mobile media measurement company.

Home Video a Big Part of Our Lives

Warning: No serious stuff this week. I'm stepping down from my soapbox to write what we in the journalism business call a “slice of life” column, coming on the tail end of the Arnold family's 2008 summer vacation.

During our 11-day, nearly 3,000-mile roadtrip from our home in Carlsbad, Calif., to Yosemite, Sacramento, the Pacific Northwest and, ultimately, Vancouver, it became abundantly clear how ingrained we have become in the home video lifestyle.

• On the way up, we slipped Semi-Pro into the DVD player and watched for several minutes until we realized the abundance of bad language probably wasn't appropriate for Hunter, the 6-year-old.
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• Conner, the 10-year-old, suggested Alvin and the Chipmunks as an alternative. But when we put it in the player, nothing happened. Alas — we had accidentally packed the Blu-ray Disc version. “We don't even have it on DVD,” Conner remarked sadly. “I wish we had a Blu-ray player in the car.”
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• Driving into Oregon, I began seeing Hollywood Video signs all along the freeway but resisted the urge to take a picture. For some reason, I began thinking about Chris Roberts of Rentrak, which is based in Portland, Ore.
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• Somewhere along the way — it might have been in Washington, in a small town called Kalama — I saw a combination video store and candy shop. Again, I fought back the impulse to take a picture.
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• Entering Canada, we drove by the Peace Arch. I flashed back to this year's Home Media Expo in Las Vegas, where I spent some time with the executives from Peace Arch Home Entertainment. This time I did take some pictures.
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• Driving north out of Vancouver toward the Capilano Suspension Bridge and Grouse Mountain, I pointed out to the kids that we were crossing the Lions Gate Bridge. “Isn't that a studio?” Conner asked.
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• For the drive home I am going to have to break down and buy some DVDs for the kids to watch in the car. There's an HMV video store just down the street from my hotel I'm just itching to check out.
• Posted in: ,
  By: Thomas K. Arnold

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