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Insights from home entertainment industry experts. Home Media blogs give you the inside scoop on entertainment news, DVD and Blu-ray Disc releases, and the happenings at key studios and entertainment retailers. “TK's Take” analyzes and comments on home entertainment news and trends, “Agent DVD Insider” talks fanboy entertainment, “IndieFile” delivers independent film news, “Steph Sums It Up” offers pithy opinions on the state of the industry, and “Mike’s Picks” offers bite-sized recommendations of the latest DVD and Blu-ray releases.

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19 Sep, 2000

TK's MORNING BUZZ: The Fall of Rentrak Founder Ron Berger Is More Than a Company Coup -- It's an Indictment of Revenue-Sharing

Today's the day Rentrak shareholders meet and decide whether to dump Ron Berger from the company he founded.

It ain't over until the shareholders sing, but from the looks of things, the dissidents will win. Already, Berger on Friday announced his resignation as c.e.o., and observers predict he will be removed as board chairman as well--along with his cronies.

The fall of Ron Berger is a much bigger story than that of a company founder who is given the boot due to a corporate squabble. It's an indictment of revenue-sharing.

It was Berger who unleased the revenue-sharing genie many moons ago, after having experimented with it on his own chain, National Video.

After selling out to West Coast Video, Berger began pitching his Pay-Per-Transaction system to other chains as a marketing tool, enabling them to bring in significantly larger quantities of select titles, in select markets, on the cheap to one-up the competition. Hollywood Entertainment Corp. used this approach in the late 1990s to build market share against Blockbuster. Blockbuster cried foul and found plenty of comforting shoulders in Hollywood.

The rest, as they say, is history--sad history, sordid history. Today, more than 50% of rental product is channeled through revenue-sharing, mostly through direct deals between the major chains and the studios. And Rentrak has been caught in the middle, along with many of its retail clients.

A "marketing tool" loses its effectiveness when everyone's doing it, and the fate of Rentrak's core PPT business is what was ultimately Berger's undoing.

Last April, Rentrak began exploring the sale of all or part of its PPT business. Too little, too late, critics said, and the assault on Berger was begun.

If revenue-sharing were, indeed, the great white hope of video rental, then why have thousands of independents gone out of business in the last two years? Why have two public video chains gone bankrupt in the last month? And why is total rental spending down from what it was two years ago, with three times as many copies of the hits flooding the market?

Berger's original concept of revenue-sharing as a marketing tool may have been valid, at one time, but the beast it's evolved into has turned on him and on practically everyone else in this business.

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18 Sep, 2000

TK's MORNING BUZZ: The Rapidly Dropping Price of DVD Players --- a Double-Edged Sword for Hollywood Studios

The rapidly dropping price of DVD players is a double-edged sword for the Hollywood studios.

On the one hand, players selling for less than $200 are fueling the already-exploding DVD sellthrough market. Priced not much more than VCRs, these cheapo DVD players are well within the budget of the average American family and provides them with a ready excuse to take the DVD plunge--an affordable techno toy the whole family can enjoy.

The number of DVD households is soaring, and that means the studios stand to sell a lot more discs than they did a year ago, when the penetration rate was a fraction of what it is today--and what it will be by the time Christmas comes around.

But on the other hand, $156 DVD players are also fueling the DVD rental market, which the studios grudgling accept, but have never embraced. The people who are buying these inexpensive DVD players aren't going to want to plop down another $20 every time they want to watch a movie; unlike the early adopters, who didn't mind spending $500 or $600 for a DVD player, they're not aficionados. They're just regular Joes who are buying DVD players the way they bought VCRs a decade ago--and they're much more likely to rent because while they are eager to feed their new machine, they don't have the money or the inclination to build the huge DVD libraries that their wealthier, high-tech predecessors did.

While studio executives have kept surprisingly mum about the DVD software pricing issue, perhaps because they don't want to rain on anyone's parade at the moment, you can bet it's foremost on their mind. It's simply a matter of economics that the studios can't afford to let DVD rental cannibalize the VHS rental market--not with DVDs selling for less than half what videocassettes are wholesaling for, even under the most generous copy-depth or revenue-sharing terms.

Privately, many studios would like to see Warner Home Video president Warren Lieberfarb's revenue-sharing plan for DVD succeed. So would smart retailers--because if it doesn't, what happens next is a wild card. Talk of a two-tiered pricing structure, mirroring that of VHS, has all but died down, because studios don't want to risk killing the sellthrough market by channeling most hot new releases into rental first.

The only alternatives are to introduce a VHS rental window of maybe three or four weeks--which several studios are already effectively doing by pulling back from their previously aggressive day-and-date stance because of "delays in recording the director's commentary," "replication problems," or other such flimsy excuses--or let the market dictate the terms.

The problem with that is, if the market dictates the terms and it's not what the studios want to hear--if demand for DVD rental continues to grow, to the point where it seriously cannibalizes the VHS rental market--then Hollywood, faced with a dramatic drop in revenues, may do something drastic, like go day-and-date with pay-per-view.

That'll kill the DVD rental market--and the VHS rental market, along with it.

Sound ridiculous? Never happen?

Don't forget, this is Hollywood.

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15 Sep, 2000

TK's MORNING BUZZ: Is the 'Chaining of America' in Home Video a Chaining of Consumer Choice?

Much has been written about the so-called "chaining of America," in which big chains fat with public or investor money roll out cookie-cutter storefronts and put the little guys out of business.

We're seeing it happen in virtually every market, from coffeehouses (Starbucks) to video (Blockbuster).

But while the results are the same, there are two vastly different approaches, and, sadly, in home video, we appear to be on the losing end.

While it's sad, to champions of individualism like me, to see Starbucks put the neighborhood coffeehouses out of business, they're doing it, in large part, by giving the customers what they want.

Simply put, Starbucks has better-tasting coffee than many of the mom-and-pops it's putting out of business, and the pastries are similarly top-notch (I recently sampled a donut at one of the few Starbucks that carry them, and let me tell you--even Tasty Kreme's got nothing on them!).

Blockbuster, on the other hand, is putting independent video specialists out of business by giving customers what they THINK they want: more copies of the hits, guaranteed to be there.

The fundamental difference is that in Starbucks' case, consumers really like the product and while I haven't seen any figures, are probably spending more on coffee, overall. It's quality that keeps them coming back and makes them ultimately spend more than in the past.

At Blockbuster, meanwhile, consumers have grown accustomed to getting the hits right away, and their video rental habits have narrowed away from the eclectic, off-the-beaten-path "second choices" they used to rent. That's why, in my mind, overall video rental spending took a nosedive over the summer, and is flat, at best, for the year-to-date. It's quantity that draws them to Blockbuster, but also makes them spend LESS than in the past, when the flavor of the week was out of stock and they left the video store with two or three alternatives.

The threat to the future of video rental is very real. By reinforcing the public's natural propensity for the hits, and nothing but the hits, instead of trying to get them to rent other stuff, and more of it, we're setting the stage for pay-per-view and other forms of electronic delivery, which also revolve around a narrow selection of high-profile titles.

In home video's case, the chaining of America is, quite literally, a chaining of consumer choice.

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14 Sep, 2000

TK's MORNING BUZZ: NARM Retailers Are Jumping on the DVD Bandwagon--Even at the Expense of Music CDs

NARM chief Pam Horovitz with Gil Wachsman of the Musicland Stores Corp. at the opening reception to the trade association's annual fall conference at the Coronado Marriott in Coronado, Calif., Sept. 13. (Hive News Photo)

Forget about DVD-Audio. Music retailers, at least at this point, are either skeptical or disinterested.

DVD-Video is what commands their attention, and at the annual fall conference of the National Association of Recording Merchandisers (NARM), now underway in Coronado, Calif., some of the nation's biggest music retailers are talking openly of beefing up their DVD inventories even if it means cutting back on music CDs.

Interest is so high that Universal Studios Home Video president Craig Kornblau took a cadre of top sales and marketing executives to this resort town just west of San Diego to participate in Universal Music and Video Distribution's gala product presentation last night.

After huddling with top clients like Best Buy's Joe Pagano and Musicland Stores Corp.'s Gil Wachsman at an elaborately catered reception, Kornblau took the stage to excite the retail troops about his studio's fourth-quarter DVD lineup, which includes 12 titles with a collective boxoffice gross of $1.9 billion.

"We're on a tear," Kornblau told retailers, and there are few who would, or could, disagree.

Kornblau's DVD marketing assault on the music confab isn't surprising, given the aggressiveness with which music retailers are jumping on the DVD bandwagon. Recent numbers show that while Best Buy is still the nation's No. 1 retailer of DVD software, Wal-Mart is a close second.

But music retailers I spoke with all agree there's an opportunity, with DVD a natural extension of their existing product line--and a much better fit than VHS. As one said, "We've been selling 5-inch discs for 15 years now. Why should DVD be any different?"

They further question whether Wal-Mart or any of the other mass merchants, for that matter, have the demographics to sustain their momentum-of-the-moment. They see music retailers as the dominant force in DVD sales, and their going to work their tails off to make this vision happen.

I do see a fit here. If you remember back to the middle 1980s, it was music retailers who took an early lead in laserdisc sales. My guess is the primary reason the laserdisc never really took off was timing. The 12-inch laserdisc came around at the same exact moment that the 12-inch vinyl LP was being phased out; even the packaging was the same size. No wonder consumers were skeptical.

But with DVD, it's a different story. CDs are still the dominant music format, and its eventual (theoretically, at least) successor, DVD-Audio, doesn't look materially different.

The 5-inch disc rules on all fronts, and music retailers are wise to take what for them is really a very small step.

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13 Sep, 2000

TK's MORNING BUZZ: The Essence of Marketing Packaged Home Entertainment in the Convergence Era--Selling 5-inch Discs to Young People

Convergence affects people, too. I spoke last night with Mitch Koch, the president of Buena Vista Home Entertainment who is resigning next month to assume the vice presidency of Microsoft Corp.'s home and retail division.

Among his chief duties will be to oversee the launch of Microsoft's new X-Box, the much-ballyooed videogame console scheduled to launch in the fall of 2001.

While at Disney, Koch was a big supporter of DVD and other things high-tech. It was under his auspices that Buena Vista began issuing its animated classics on DVD, and stepped up its efforts to use the Internet to market to retailers through one of the most advanced studio Web sites I've seen.

While Koch maintains the move is a good one for him--he noted, with a laugh, that while his kids were little, he worked for Disney and lived less than an hour away from Disneyland, and now that they are a little older he's moving into the video game and computer sector--the hire also makes sense for Microsoft.

No one markets to kids better than Disney, and with Koch having pushed the pedal to the metal in the studio's drive to DVD, Microsoft is getting one shrewed cookie with plenty of experience in selling 5-inch high-capacity discs to young people.

And that, my friends, is the essence of marketing packaged home entertainment in the Convergence Era--selling 5-inch high-capacity discs to young people.

The video side is already well on its way toward a DVD-dominated universe. Already, studios are reporting that as much as 20% of their sales volume on hot sellthrough titles comes from DVD, and that ratio is going to soar, particularly if what DreamWorks did with Chicken Run--listing both the VHS and the DVD at the same suggested retail price--becomes the new industry standard.

On the rental side, a new report from Centris shows that the number of DVD households renting discs has gone up a whopping 333% in the last two years.

On the music side, the rapid development of DVD-Audio is causing lots of experts to predict the 5-inch high-capacity disc will eventually dominate there as well.

Retailers are anxious for something new and better that will rekindle consumer excitement, now that the CD is a rapidly maturing teenager and more and more of their customers are downloading music over the Internet.

The videogame sector is also moving to the 5-inch high-capacity disc, led by the PlayStation2 and the Microsoft X-Box, both of which will be able to play movie discs as well as dedicated game software.

And while Koch appears to be jumping from one industry into another, if you get right down to it, it's all rapidly evolving into the same sport:

The disc throw.

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12 Sep, 2000

TK's MORNING BUZZ: A Video Is a Video, Whether It's on a VHS Cassette or a DVD

I just lost an argument with my 4-year-old. I asked Justin this morning whether he wanted to watch a movie, and when I pulled out the Rugrats feature on DVD, he gave me a dirty look and said, "Daddy. That's not a movie. That's a DVD." I tried to explain that this was a movie on a DVD, but he yanked out a VHS cassette and said, "THIS is a movie. That's a DVD."

Our industry is facing a similar battle of words. For a long time, anything you could pop into a set-top box on your TV and watch was called a video.

With DVD, the line has been drawn--people consistently refer to cassettes as "videos" and DVDs as, well, "DVDs."

That's wrong, and it's something we're combatting in our magazine. Videos is a generic term that applies equally to cassettes and discs, as long as there is, well, "video" on it.

There are two formats for video currently in use: VHS cassettes and DVDs. If you're a video store, you don't exclusively rent or sell VHS; you also rent or sell DVD, because it's simply another format.

The whole thing reminds me of the mid-1980s when CDs first arrived on the scene. At the time, I was covering the pop music beat for the San Diego County Edition of the Los Angeles Times, and I frequently referred to an artist's new "album."

That was wrong, my editor informed me. An album is a 12-inch vinyl record, also known as "LP" (short for "long-playing album).

Well, then, what was I to call a new body of work by a musical act? My editor instructed me to call a CD a CD. But what if the artist's "CD" was also available on audio cassette? He didn't have an answer.

Eventually, I won this argument. My editor saw the light and grudgingly accepted that CD, cassette, LP are nothing more than different formats on which a record company issues an artist's RECORD ALBUM, which is merely a collection of songs, just like a photo album is a collection of photos.

Today, "album" is a generic term for a collection of songs that have been previously recorded and can be purchased in packaged form by consumers.

It's also being used for music downloads, and no one blinks twice when someone says, "Hey, I just downloaded a really cool old album by Elvis Costello."

Hopefully the home video industry will also come around in time. A video is a video, regardless of whether it's on a VHS cassette or a DVD--or, for that matter, a Beta cassette or a laserdisc.

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11 Sep, 2000

TK's MORNING BUZZ: Blast the FTC Report--You Can't Blame Hollywood for Irresponsible Parenting

What a way to start the work week!

The FTC releases its long-awaited report, blasting the entertainment industry for allegedly marketing violent movies, video games and music to young adults.

And then we're hit with another press release from that relentless hype machine, Kanakaris Wireless, bearing the headline, "Founding Father of Home Video, George Atkinson, Touts Kanakaris Wireless' CinemaPop.com and Predicts That Internet Will Replace Home Video as the Largest Source of Distribution Revenue to Hollywood."

Ah, where to start. In regard to the latest "Hollywood is responsible for the decline of Western civilization" missive, I tend to side with Jack Valenti, the longtime head of the Motion Picture Association of America.

Valenti immediately issued a response to the FTC report, arguing that the entertainment industry is the "only segment of our national marketplace" with voluntary guidlines as to what's suitable and what's not for those impressionable young minds.

Let me add to that: The object of marketing is to sell something, and young people constitute a significant chunk of the consuming public. Of course they're going to find out about new movies and new video games. When I was 12 I knew all about "Last Tango in Paris." But I didn't watch it. That movie was rated "X," and even if I could have somehow snuck into the local movie theater to watch it, my parents would have given me a sound thrashing had they caught wind of such a move on my part.

Like Valenti, I happen to believe our existing movie and video game ratings systems are fine. They tell us exactly what's suitable and what's not. If there's a problem, it's on the enforcement end. I don't have a problem with films like 8MM, which everyone knew up front contained a lot of violence--and which bore an "R" rating.

But I do have a problem with the young couple who brought their toddler with them to a theater near my home to watch the movie.

The entertainment industry has done its part. You can't blame Hollywood for irresponsible parenting.

As for the latest Kanakaris release, jeez, give me a break. I've written about CinemaPop.com's less-than-front-line cinematic offerings before, none of which I've been able to watch because I can't figure out how to download the player.

Yes, eventually, the Internet may very well "replace home video as the largest source of distribution revenue to Hollywood." Then again, it might not.

It's sort of like predicting that public transit will become the dominant transportation mode. Well, maybe one day it will--but for that to happen, a lot of variables are going to have to fall into place, and in the meantime, the vast majority of people still get around in their own cars.

In the far-off future, should this planet ever get so crowded that virtually every major freeway is a parking lot, public transit may very well be the way to go. Then again, everyone might just opt to stay home and watch movies on their computers.

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8 Sep, 2000

TK's MORNING BUZZ: After Curbing Violent Video Games, Wal-Mart and Kmart Should Take the Next Logical Step: Stop Selling Guns

The announcement that the nation's two biggest mass merchant chains, Wal-Mart and Kmart, will tighten restrictions on violent and other "mature" video games deserves kudos.

While I'm a staunch opponent of censorship of any kind, I also don't believe any material of an excessively violent or sexual nature should be readily available to children. Video games that, according to the Kmart press release announcing the move, "may include imagery of intense violence, language or mature sexual themes" aren't exactly suited for 10-year-olds.

And yet, there's a certain amount of hypocrisy in the Two Marts' move.

Many of the same stores that are now going to restrict access to video games that show cartoon guns killing cartoon characters continue to sell real guns that can kill real people.

Wal-Mart and Kmart will undoubtedly reap tons of goodwill for their bold stand against violent video games. With kids bringing guns to classrooms, and school shootings no longer once-in-a-lifetime occurrences, the two big chains have certainly struck a chord with concerned families across America.

On behalf of the home entertainment industry, let me now ask Wal-Mart and Kmart to take the next logical step: stop selling real guns, especially since the gun departments in at least two Wal-Marts I've been in are just across the aisle from the toy departments.

There are some who blame the rash of school shootings we've suffered through on violent video games, movies and song lyrics.

I disagree. I happen to believe access to real guns had something to do with it.

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7 Sep, 2000

TK's MORNING BUZZ: MP3.Com Ruling May Not Affect Home Video Today, But Its Impact Will Be Noticed in Years to Come

It was with a keen eye that the video industry watched yesterday's federal court ruling against MP3.com that found the Internet music file-sharing service guilty of copyright infringement and slapped the San Diego-based company with a staggering $250 million penalty.

The ruling cast a pall on the entire practice of downloading copyrighted material via the Web for free, a practice MP3.com and its brethren--Napster and other new-media upstarts--defended on the grounds that "sharing" isn't the same as "selling."

Regardless, U.S. District Judge Jed Rakoff's ruling seemed to say, it's piracy.

Technology hasn't yet progressed to the point where consumers can easily download entire movies. It's going to be awhile before we get there. And yet the ruling against MP3.com, barring any reversal on appeal, is sure to chill the enthusiasm of online entrepreneurs who are already making plans to take Internet file-sharing to the next level.

Video suppliers and retailers can breathe a little easier. Selling downloadable music over the Internet has already proven itself a formidable threat to brick-and-mortar retailers, some of whom, like Albany, N.Y.-based Trans World Entertainment, have shrewdly begun to sell music electronically themselves, both on their Web sites and at in-store kiosks.

But giving it away for free, well, there's simply no way any existing retailer can compete.

Not only that, but the MP3.com way of getting music to consumers hurts everyone else in the recording industry's food chain as well, from the studios, who get no licensing fees, to the performers, who get no royalties.

The landmark federal ruling may not affect home video today, but you can bet your Web browser its impact will be noticed in the years to come.

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6 Sep, 2000

TK's Morning Buzz: How Far Can DVD Producers Stretch the Special Features Envelope?

Since DVD was officially launched in March 1997, special features have gone from a nice extra to a driving force.

Early advocates of adding commentaries, deleted footage, and other DVD exclusives, like New Line Home Video's Stephen Einhorn, are not only vindicated, but are being hailed for their vision and foresight. And consumers who still remember the days when the only special features on most discs consisted of subtitles, language tracks and the original theatrical trailer are now feeling short-changed if their discs don't include detailed cast bios, made-for-DVD music videos and at least one commentary track and "making of" featurette.

Looking at extras-packed discs like Artisan Home Entertainment's Terminator 2: Judgment Day, which includes more minutes of added goodies than the original film, makes you wonder where it's all going to end up. How far can DVD producers stretch the special features envelope? How high is the bar ultimately going to be raised, and in which direction will it lean?

I have to admit, when I first began getting DVDs, the movie came first. If I had time, I'd watch a few deleted scenes. Now, the extras are required viewing--and not just for me, but for other members of my family.

The other night, I watched Universal's excellent Creature from the Black Lagoon with my 4-year-old. Knowing it was a DVD, as soon as the closing credits came on the screen, he turned to me and asked, "Is that all?" I clicked onto "Back to the Black Lagoon," a historical look at the film that includes interviews with surviving cast members and mock-ups of alternative Creature costumes, and we both sat mesmerized for another 20 minutes or so.

Special features are changing our home entertainment viewing habits. We're no longer content with watching the movie--we want more. The only question, at this point, is how much more--and of what type?

I already see a trend developing--more and more, special features are taking the ROM route. Consumers watch all the extras on their disc on their TVs, and then stick it into their computer for more fun.

Columbia TriStar Home Video's innovative Men in Black disc is a harbinger of things to come--special features are going interactive, and involve the Web.

When Sony and Microsoft come out with their respective DVD-playing game machines, the PlayStation2 and the X-Box, I expect this trend to accelerate.

There will soon come a day when watching a movie is an all-day (or all-night) pursuit.

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