Fighting for a Piece of a 24-Hour Pie

Traditional entertainment has taken a hit recently. First-half numbers for home entertainment were down slightly. TV ad “upfronts” (prebooked ad buys) were down. The box office take year-to-date is down. About the only thing going up is Netflix’s stock price.

It’s not as if consumers have stopped craving entertainment. It’s that during that 24 hours in a day, in which they must fit work, sleep, etc., there is only so much time for entertainment — and there are ever more and cheaper ways to spend that time, including viewing streaming on Netflix and other sites, as well as the antics of web stars that garner more and more of the younger set’s attention (see my last column). In this kind of competitive environment, marketers must keep on their toes to attract consumers’ attention.

Home entertainment marketers, both at the studios and at retail, are rising to the occasion. One tactic is tying in discs with theatrical marketing. Studios and retailers are increasingly preselling titles on disc around their theatrical bow. And conversely, in a longstanding tactic, discs of previous installments in a series are including discounts on theatrical tickets to the sequels. It’s a way to maximize both theatrical and home entertainment marketing muscle for a bigger punch with the consumer.

One prominent studio marketer noted that these tactics are “tapping into the consumer awareness from the theatrical campaign and converting that awareness into early sales of the Blu-ray, DVD or digital HD.” Conversely, the tie-ins also help the theatrical marketing team build consumer awareness for theatrical releases at retail, she noted.

Anything studio and retail executives can do to build a bigger bullhorn for traditional entertainment is welcome. Exploiting and promoting partnerships with retailers and other studio divisions must grow if content owners want to take a piece of consumers’ limited leisure time. There is an exploding list of hungry competitors looking to take a bite of that 24-hour pie.

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Best Buy's Final Destination

Best Buy’s amazing slide to a 45% drop in income in the second quarter of this year, and ominous warnings of further drops to come in quarters three and four, can’t be attributed solely to the lack of new smartphones and the continued migration of shoppers online.

The electronics chain’s makeover, putting discs, CDs and other software in a corner in the back and reserving its prime floor space for tablets and smartphones, has destroyed its character and made it a lot less fun to shop there. You’d think management would have learned a lesson from Radio Shack, whose death march began when it brought in the iPhone. Sales initially surged, but margins plummeted — and before long everyone was carrying the iPhone and Radio Shack had painted itself into a corner.

Best Buy not only followed the same strategy, but also mangled a great idea last fall through its “showrooming” counterattack. Stung by consumers checking out products at Best Buy but then buying online, the company commissioned a series of 11 ads under the "Your Ultimate Holiday Showroom" theme, touting its low-price guarantee and the ability to order online and pick up in store.

The trouble was, the campaign focused more on outdoing Amazon than it did on highlighting the benefits of shopping in-store at Best Buy — although, in retrospect, maybe that’s because those benefits simply aren’t all that pronounced.

It all goes back to how fun it used to be to shop at Best Buy, before the chain transformed itself into a physical portal for tablets and smartphones. And there’s the essence of what Best Buy needs to do if it is to survive, much less thrive, in this increasingly challenging environment.

The stores need to become destinations again. I agree with Jehan Hamedi, global market development manager at Crimson Hexagon, a social-media analytics company that analyzed Twitter and Facebook dialog on Best Buy’s ad campaign. He told Ad Age Best Buy should make the stores more of a "playground" destination with fun in-store events, group discounts and refer-a-friend programs. "There's such a huge opportunity for them to link their product showroom appeal with a social experience," he told Ad Age. “We found that the largest, the prime [consumer] expectations, had nothing to do with what I might expect, like touching or sampling the product. It's more about social gratification — having fun. You go with your friends and they are your pre-purchasing sounding boards. It's a destination.”

My last visit to Best Buy was not a fun experience. The local store is situated in a large strip mall, right next to Walmart. I got there at a quarter to 10 on Sunday, wanting to pick up some discs as a gift for a birthday party my youngest son was going to, but Best Buy didn’t open until 10 and even though there were more than a dozen people outside waiting to get in those doors didn’t open until exactly 10, on the minute. I went to Walmart instead, and that was a lost sale Best Buy could have had if there was some flexibility and awareness of the store’s retail surroundings.
After my purchase at Walmart, I went to Best Buy to check into getting a protective screen around my middle son’s new school-issued iPad. It took me 10 minutes to find an available clerk, and I found the screen protector before he did. It was also I who suggested the Geek Squad put it on, not him.

As I was walking out, I saw a refrigerator I had purchased on sale on the Fourth of July holiday for $1,799 was back up to $3,265 — “10% off the regular price, just in time for Labor Day.” I understand price fluctuations, but come on! It’s episodes such as this that build consumer distrust — and at this point that’s the last thing Best Buy needs.

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Home Entertainment’s 'Blu' Summer

At a time when subscription streaming and over-the-top video dominate the narrative in home entertainment, Blu-ray Disc remains an enduring format — despite media companies’ misguided efforts to embrace SVOD’s Trojan Horse.

Trans World Entertainment, which operates the 328-store f.y.e. retail chain nationwide, said double-digit sales increases of Blu-ray titles helped keep same-store sales declines to 1% in its most-recent fiscal quarter.

Hastings Entertainment, which operates 126 stores throughout the Southwest, saw revenue from new Blu-ray and DVD title sales increase 2% to 23% ($100 million) of total sales in 2013 from the same period in 2011, according to an April regulatory filing.

Industry wide, through the first half of the year, Blu-ray sales rose 10% in the second quarter alone, suggesting continued viability in a disc business many in the mainstream media have given up for dead. In fact, electronic sales of new releases — the format “du jour” — were less than 20% of total packaged-media sales in the quarter, according to DEG: The Digital Entertainment Group.

Alas, the DVD death spiral perception — perpetuated for years by the media — has now been embraced by media executives, many of whom openly gloat about the incremental revenue generated licensing content to SVOD stalwarts such as Netflix, Amazon Prime Instant Video and Hulu Plus.

Capitulation to streaming reached its zenith earlier this month when Time Warner CEO Jeff Bewkes — a perennial critic of SVOD — unabashedly lauded digital distribution.

“We're going to be up solid double-digits [this year]. And by that I don't mean 10% to 20%, I mean more,” Bewkes said.

Warner Bros. said it could expect to see a significant increase in the $400 million it generated in 2013 from licensing content to subscription streaming services. Nevermind that incremental revenue is dwarfed by the more than $1.1 billion the studio generated through June 30 this year selling movies and TV shows on disc, and to a lesser extent, digital platforms.

In the United Kingdom, a durable packaged-media market slowly but surely undermined by SVOD, Netflix now has more than 3 million subs. I have friends in Germany — a country with a strong economy that continues to support disc sales — who routinely ask about the latest American TV shows to buy on disc. Recent recommendation “Breaking Bad” was big hit. Now, its “Homeland.” I didn’t have the heart to tell them Netflix will open for business there next month.

To be sure, SVOD is a win for consumers, but it’s a loss to content holders and the home entertainment industry. Who makes a profit selling unlimited access for $9 a month? Just Netflix. Which is why its stock is in the stratosphere — valued nine times more than Microsoft; five times more than Walmart and Time Warner.

Lost among Wall Street’s brazen Netflix lovefest is the reality the service ended its most-recent fiscal period with $7.7 billion (!) in content liabilities, which some industry observers actually believe the SVOD service may outrun if it keeps adding subscribers.

Ever wonder why Netflix CEO Reed Hastings has that sheepish smile in photos? He’s laughing all the way to the bank.

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'Walking' for Exclusives

Walmart's 'Walking Dead: Season Four' with prison key

Anchor Bay’s Aug. 26 disc release of The Walking Dead: The Complete Fourth Season unsurprisingly received the significant amount of retail attention a monster-hit show of its stature deserves.

Walmart had the biggest exclusives, offering at least four different versions of the title on shelves. All of them came with a bonus Songs of Survival Vol. 2 CD.

In addition to standard DVD and Blu-ray editions, Walmart offered special DVD and Blu-ray boxed sets of the show containing a collectible prison key. This is a variation of the exclusive that was sold as a preorder from the Anchor Bay booth at this year's San Diego Comic-Con International.

Target offered the Blu-ray with steelbook packaging, while Best Buy offered it with lenticular cover art.

For Fox’s Sons of Anarchy: Season Six, Walmart offered the DVD and Blu-ray sets with a pack-in knit cap, while Best Buy offered access to six issues of a digital comic book based on the series.

Walmart also had exclusive availability of an animated film called The Jungle Bunch 2: The Great Treasure Quest, from Universal, offered at $9.96.

For the second week of The Amazing Spider-Man 2 Blu-ray ($24.99), Target offered an instant $10 savings when the title was purchased at the same time as a triple attack electronic Spidey action figure, priced at $15.

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New on Disc: 'Out of the Past' and more …

Out of the Past (Blu-ray)

Available via Warner Archive
Warner, Mystery, $21.99 Blu-ray.
Stars Robert Mitchum, Jane Greer, Kirk Douglas, Rhonda Fleming.
1947. This is just about everything a noir screen experience should be, even down to a title that really plays on the imagination (and the Blu-ray part of the experience really helps).
Extras: James Ursini, a name synonymous with noir reportage, does a commentary.
Read the Full Review

The Buddy Holly Story (Blu-ray)

Available via ScreenArchives.com
Twilight Time, Drama, $29.95 Blu-ray, ‘PG.’
Stars Gary Busey, Charles Martin Smith, Don Stroud, Maria Richwine.
1978. Before his 1959 death in a plane crash, Buddy Holly was a kid with a burning-lava kind of drive, which is exactly what an impossibly slimmed-down Gary Busey conveys in a powerhouse lead performance that got him an Oscar nomination.
Extras: Director Steve Rash joins Busey on a commentary track from 1998.
Read the Full Review
 

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Sí Se Puede

One of the biggest movies this year for Mexican-Americans was Cesar Chavez.

Starring Michael Peña, America Ferrera and Rosario Dawson, the film tells the story of civil rights activist and American farm worker Cesar Chavez and his rise as a labor leader. The film is available on DVD and Blu-ray from Lionsgate for about $20.

I won’t deny that the film failed to accurately portray many elements of the complex history of the United Farm Workers movement. I also won’t disagree all that much with the less-than-stellar reviews from critics and audiences alike.

However, I think it’s important to point out that Cesar Chavez is still a solid movie with a great message for filmmakers to make in highlighting an important Mexican-American leader AND portraying him by a talented Mexican-American actor. As with many biopics or historical movies, I hope that the movie encourages audiences to go out and research the real people and the real stories. In this Google age, a lot of information is easily accessible with a few keyboard strokes.

Of course, it would have been even easier if the home video releases included some sort of documentary or even a few featurettes about the real Cesar Chavez and Dolores Huerta.

But I do have to commend distributors Lionsgate and Pantelion and production house Participant Media for the socially conscious efforts to support Chavez’s cause, which sadly is still a struggle for farm workers.

As reported earlier in an article by my colleague Chris Tribbey, Participant Media and the Equitable Food Initiative (EFI) launched a new food label trust-mark that certifies produce is “responsibly grown and farmworker assured.” This will help shoppers identify, and hopefully purchase, equitably sourced food.

During the film’s theatrical run, Participant also gathered more than 30,000 signatures on in support of EFI’s efforts to provide training and fair wages to farmworkers and implement safe food practices. And among the trailers on the DVD is a PSA for farm worker safety standards and supporting the cause at Takepart.com/chavez. The TakePart petition is now at 34,016 of its 60,000 goal. I encourage you to visit the site and learn more about how you can take action and learn about the Chavez’s work, which is still being carried on today.
 

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Amazing 'Spider-Man' Deals

Amazon's 'Amazing Spider-Man 2' Electro Head

Sony Pictures Home Entertainment pulled out all the stops to promote the Blu-ray and DVD release of The Amazing Spider-Man 2 Aug. 19, with promotional exclusives available at every major retailer.

The biggest one came via Amazon.com, which offered an exclusive gift set of the 3D Blu-ray combo pack of the film with packaging in the form of a bust of the villain Electro. The set is listed at $149.99 but Amazon had it for as low as $74.99.

Target offered Blu-ray copies with a bonus disc containing the featurette "Something Sinister This Way Comes: A Look at Spider-Man’s Most Fearsome Foes.” In addition, Target’s exclusive sets had a coupon for free popcorn and soda at the Target Café.

Best Buy offered the Amazing Spider-Man 2 Blu-ray with a collectible Magno case and comic book. In addition, Best Buy offered $10 off ASM2 with the purchase of a TV title $14.99 or higher.

Walmart offered a Blu-ray two-pack of the new film with its 2012 predecessor.

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New on Disc: 'Elvis: That's the Way It Is' and more …

Elvis: That’s the Way It Is (Blu-ray)

Warner, Documentary, $27.98 Blu-ray, NR. (Original version ‘PG’)
1970/2007. In 2001, director Denis Sanders’ cut underwent a major overhaul, removing a lot of the fan interviews and even some of the songs, while adding more songs and table-setting rehearsal footage. The result is pretty electric. This documentary, along with 1972’s now mellow Elvis on Tour, represent the legend’s last two screen appearances.
Read the Full Review

Salvaje (The Wild One) (Blu-ray)

Sony Pictures, Drama, Import, NR.
Stars Marlon Brando, Mary Murphy, Lee Marvin, Robert Keith.
1953. Playable on Blu-ray machines of all regions, this is a Spanish import of The Wild One, the once notorious star-powered lark starring Marlon Brando as a motorcycle-garbed hipster.
Read the Full Review
 

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A New Generation of Stars

As I’ve noted before, my two daughters, 16 and 12, spend more time on devices such as tablets and cell phones watching amateur entertainers on YouTube than they do watching television or other professionally produced entertainment. And now a survey of teens ages 13 to 18 commissioned by Variety confirms the trend.

Well-known stars didn’t even make the top five in the survey that asked teens about the overall influence of well-known personalities. The top “celebrities” in the survey were the online comedy team Smosh, No. 2 The Fine Bros., No. 3 PewDiePie (my daughters’ particular favorite), No. 4 KSI and No. 5 Ryan Higa — all online stars. Among the top 10 celebrities on the list that most parents may recognize are Paul Walker at No. 6, the star of the “Fast & Furious” series who tragically died in a car accident last year; No. 7 Jennifer Lawrence; No. 8 singer Katy Perry; and No. 10 Steve Carell.

My first clue that my kids were watching more than mainstream programming (their mother’s entertainment) was their interest in the phenomenon “Fred,” an online nerdy character created and played by Lucas Cruikshank, who talked in a squeaky, childlike voice about life in the suburbs in short sketches. The YouTube channel spawned a feature based on the character that came out on disc after airing on Nickelodeon. “Fred” turned out to be a short-lived fad in my house, proving Andy Warhol’s 15 minutes of fame axiom, but not before “Fred” sold lots of DVDs.

Those same kids that propelled “Fred” into the limelight are making famous online performers such as PewDiePie. I don’t know if these new online stars are fads that, like “Fred,” will fade quickly as kids turn to someone new (Cruikshank, by the way, has moved on to a new channel sans “Fred”). Nevertheless, it looks as if Hollywood is starting to take notice. Fox’s Teen Choice Awards this year greatly expanded its Web categories to a total of 13 digital awards, including top male and female Web star. These stars even have their own version of Comic-Con, Vidcon, which recently attracted nearly 20,000 attendees to the Anaheim Convention Center and included an “industry track” featuring DreamWorks CEO Jeffrey Katzenberg.

Whether these online stars represent a promotional opportunity or will spawn a whole new home entertainment business seems to be a looming question for the industry.

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Bullying the Studios

The pricing dispute between Amazon and Walt Disney Studios is merely the latest skirmish in a 35-year battle between studios, who own the content, and retailers, who distribute it.

It also serves as an indictment of Amazon’s business tactics and, as the Washington Post observes, “power over the retail and media economy.”

Simply put, Amazon is putting pressure on Disney — as it did earlier with Warner Bros. — to get a better deal on Blu-ray Discs and DVDs. In a story Home Media Magazine broke, the giant online retailer is blocking preorders of several Disney titles such as Captain America: The Winter Soldier and Maleficent as a negotiating tactic for better pricing.

Amazon certainly has a big muscle to flex: Preorders typically account for up to 30% of “first day” sales, and Amazon is the biggest pre-seller in the business.

Amazon also happens to be one of the biggest retailers of filmed content, period, and also is poised to be a leader in digital distribution.

But as a matter of principle, what Amazon is doing, quite frankly, stinks. It also exposes one of the online retailer’s weaknesses and rare disadvantages to traditional brick-and-mortar retailers such as Walmart, Costco, Target and Best Buy.

To move huge quantities of discs, Amazon has to sell new releases at the same price as Walmart and the other physical retailers. But Walmart and crew can afford to lowball the price, even selling below their own costs, because they use discs as loss-leaders to drive traffic into their stores.

Amazon hasn’t yet figured out how to get those impulse sales in the digital world — but they have to be competitive, so now they are using their clout to beat up the studios in an attempt to get better margins.

My take, to Amazon: Stop being a bully and, instead, focus all of that misspent energy on figuring out how to snag impulse buyers online. Amazon’s efforts in that regard have been half-hearted and only moderately successful — otherwise, there’d be no squawking over price.

If Amazon could come up with a way to really captivate consumers and, say, through each Blu-ray Disc or DVD purchase, get them to buy a ton of other things, they'd rule the world.

But they’d have to match the disc sales price of Walmart and other brick-and-mortar retailers on their own, without any studio subsidy, even if it meant taking a loss — which, in reality, would be an investment. And Amazon just doesn’t want to do that.

It’s much easier, I suppose, to block studio product and try to get the studios to blink first.
 

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