The Irony of SVOD

On the surface, it appears more than a little counter-intuitive: The same studios that a few years ago got into a tangle with Netflix and Redbox over renting new releases, a practice they said cannibalizes sellthrough, are now creating content specifically for Netflix and other subscription streaming services, which many see as the biggest threat yet to home entertainment sellthrough.

Not only that, but now Netflix will be getting The Interview, the controversial film about the assassination of North Korean leader Kim Jong-un, three-and-a-half weeks before Sony Pictures Home Entertainment releases the film on Blu-ray Disc and DVD.

Meanwhile, the subscription streaming juggernaut continues to snare consumer eyeballs. The latest numbers released by DEG: The Digital Entertainment Group show that consumer spending on Netflix and other subscription streaming services rose an estimated 25.8% to $4.01 billion, while discs sales fell nearly 11% to $6.93 billion.

Is our industry feeding the monster that threatens to devour it? Will producing content for a $9 monthly all-you-can-stream service ultimately undermine all existing distribution channels, including home entertainment — physical as well as digital sellthrough?

Studio executives say that’s a wrong assessment. Even though subscription streaming numbers are included in the DEG’s quarterly release of consumer spending on home entertainment spending, services like Netflix are much more like networks in that they buy TV content — a channel the studios have been feeding for years. Networks live off commercials; Netflix, off subscriber dollars. Both depend on viewership to keep the money flowing. TV production studios are in the business of creating, selling and marketing content, and Netflix, Amazon and the other streaming services are merely a new type of customer, now that they are scrambling for original content to keep their subscribers satisfied.

Are Netflix and Amazon luring viewers away from home video? No more so than a network with a hot new series everyone’s watching and talking about the next day at work. And as one studio executive pointed out, consumers are used to watching TV shows broadcast first and then being able to buy them, either on disc or as a digital download. The difference, of course, is the “on demand” angle — once, say, “The Sopranos” ran its course on HBO, that was it, whereas “Breaking Bad” can still be viewed in its entirety on Netflix, minimizing the need to rush out and buy the complete series on disc.

But from a truly big picture standpoint, these are all nuances. Any losses to the home entertainment divisions are more than offset by gains to the TV division — and in the end, it all goes into the same big studio pot.

If selling shows to Netflix and Amazon brings in huge wads of cash, studios would be foolish to not follow the money.

The bottom line, after all, is the bottom line — and a bottom that is then used to finance the next wave of content and keep the overall entertainment business healthy.

 

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The Digital Wild West

“It’s the Wild West,” a top digital executive told me during the Consumer Electronics Show as we discussed what was happening both domestically and abroad with content distribution. Recently, the digital shootout with traditional Hollywood has resulted in more broken windows and online series lassoing some of the industry’s top awards.

Amazon has followed Netflix into the theatrical realm through its Amazon Original Movies, planning to produce and acquire original films for theatrical release (and release on Amazon Prime Instant Video subscription video-on-demand four to eight weeks later). Netflix made its own deal with The Weinstein Co. to debut the Crouching Tiger, Hidden Dragon follow-up simultaneously in theaters and via streaming. Amazon has inked a deal with legendary filmmaker Woody Allen, Netflix with Adam Sandler. Both Sandler and Allen previously had been theatrical heavyweights.

Sony’s The Interview, plagued by controversy after terrorists threatened harm, hit the VOD market early, stepping on the theatrical window, and will be released on Netflix before its traditional window on disc.

Meanwhile, among the Golden Globe nominees and winners were several from Netflix and Amazon original series. Amazon Prime's critically lauded "Transparent," a comedy starring Jeffrey Tambor as a family's transgendered patriarch, won two major awards — Best TV Comedy or Musical Series and Best Actor for Tambor —a first for Amazon. Netflix’s “House of Cards” earned a Best Actor in a TV Drama trophy for Kevin Spacey.

Exercise programming started with home video — Jane Austen in fact got her start in exercise videos with our magazine’s founder Stuart Karl — but is now moving further into SVOD. Comcast Cable and Gaiam have unveiled Gaiam TV Fit & Yoga, a subscription-based video-on-demand service enabling Xfinity TV subscribers access to yoga and fitness training. Lionsgate is planning its own fitness SVOD service under the BeFit brand, which has more than 1.3 million subscribers to its ad-supported YouTube channel.

If this were a poker game to dominate Hollywood in an Old West saloon, there would be a lot of deck shuffling. And, to really push this Western metaphor, the real question is: “Is there gold in them thar hills?” Will digital models ever be able to rival the kind of money that Hollywood has earned with the traditional window system? Or will the digital players get a bigger part of a shrinking pot? So far, indications are fuzzy.

The release of The Interview — which is an unprecedented case — has earned plaudits for its revenue on VOD, but I’m fairly sure the traditional release schedule would have generated more profit. We will never know, but those who say this Hollywood Western is in the final showdown are wrong. I think we have only seen the first few scenes.

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Retailers Love 'Lucy'

Universal Pictures Home Entertainment’s sci-fi actioner Lucy took retail by storm Jan. 20, with exclusives offered by each of the three major brick-and-mortar chains.

Two of them offered special packaging options for the Blu-ray — Target offered a steelbook case and Best Buy offered a lenticular cover.

Walmart offered a version of the Lucy Blu-ray with an interactive screenplay of the film accessed at LucyScript.com/Walmart using a code found in the packaging.

Another Universal title, The Boxtrolls, came with character cards in Target’s special edition of the Blu-ray combo pack.

Walmart offered a DVD of the football drama 23 Blast for $12.96, the story of high school football star Travis Freeman, who must decide whether or not to keep playing after going blind.

Looking at preorders, Walmart is offering a preorder exclusive for the Blu-ray The Hunger Games: Mockingjay — Part 1. The $19.96 purchase includes access to the film on Vudu.com two weeks before the disc streets, plus a behind-the-scenes featurette on Vudu and a preview of the Divergent sequel, Insurgent.

The Disney Store is offering a preorder on the Feb. 24 Big Hero 6 Blu-ray with an exclusive lithograph set.

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New on Disc: 'The Boys From Brazil' and more …

The Boys From Brazil (Blu-ray)

Shout! Factory, Drama, $24.97 Blu-ray, ‘R.’
Stars Gregory Peck, Laurence Olivier, James Mason, Lilli Palmer.
1978. The only movie, pretty sure, to claim both Laurence Olivier and Police Academy’s Steve Guttenberg in its cast, this one’s about as preposterously trashy as it’s possible to be and still be worth a look. Gregory Peck plays the unfathomably queasy Nazi butcher Dr. Josef Mengele, pursued in the 1970s by a famed Nazi hunter played by Laurence Olivier.
Read the Full Review

Frenchman’s Creek

Available via Universal Vault Series
Universal, Drama, $19.98 DVD, NR.
Stars Joan Fontaine, Arturo de Cordova, Basil Rathbone, Cecil Kellaway.
1944. Dramatically clumsy but a visual stunner that took the art/set decoration Oscar, the film stars Joan Fontaine, at her screen peak of beauty and certainly glamour, playing the dissatisfied redheaded wife of a debauched fop — quickly absconding solo to an oceanside mansion with two small kids in tow, only to become brazenly spellbound by a French pirate conducting business with his crew in the very vicinity.
Read the Full Review
 

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'Gone Girl' Deal Found

None of the new releases Jan. 13 had any special exclusives attached to them at the major retail chains. But Target did offer a promotion for Fox’s new Gone Girl DVD and Blu-ray.

Shoppers could save $5 when they bought the film on disc in conjunction with the paperback of the original Gone Girl novel, priced at $12.

Target also offered several $5 Fox DVDs with exclusive covers, plus a deal to buy one and get the second for 50% off.

Walmart had a few direct-to-video DVD titles, such as Christian Mingle: The Movie, based on the dating website and starring Lacy Chabert, for $12.96; a DVD double feature of Universal’s The Best Man and The Best Man Holiday for $14.96; and Arc Entertainment’s Zarra’s Law.

 

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New on Disc: 'River's Edge' and more …

River’s Edge

Street 1/13
Kino Lorber, Drama, $19.95 DVD, $29.95 Blu-ray, ‘R.’
Stars Keanu Reeves, Crispin Glover, Ione Skye, Dennis Hopper.
1987. Even by the seen-it-all standards of the past quarter-century, this Generation X creep-out that should have done more for director Tim Hunter’s career than it did remains unsettling.
Read the Full Review

The Fortune (Blu-ray)

Available via ScreenArchives.com
Twilight Time, Comedy, $29.95 Blu-ray, ‘PG.’
Stars Warren Beatty, Jack Nicholson, Stockard Channing.
1975. A huge flop in its day, The Fortune is mildly amusing all the way, with a great Jack Nicholson performance. Set in the 1920s, it’s a farce about the Mann Act and the onetime ramifications of taking even an adult woman over the state line for sex.
Read the Full Review

American Experience: Cold War Roadshow

PBS, Documentary, $24.99 DVD, NR.
2014. Boasting footage from presumably the only time Nikita Khrushchev and Eddie Fisher found themselves in the same room, this chronicle of the “career-best” story for a lot of the journalists who covered it looks back at the time the Soviet Premier visited the U.S. in 1959.
Read the Full Review

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3D Eclipsed by 4K

One overwhelming trend at the Consumer Electronics Show in Las Vegas, at least for the home entertainment industry, was the shift to 4K, a resolution standard that promises roughly four times what HD can offer.

And yet, just a few years ago, the number three — as in 3D —was everywhere on the show floor. This year 3D was hard to find in the TV-heavy Central Hall of the Las Vegas Convention Center, while 4K (or its other moniker, Ultra-HD) was plastered on all the big booths, from LG to Sony.

In a very interesting panel put on by our colleagues at , and moderated by its editor, Daniel Frankel, representatives from Comcast Cable, Samsung Electronics Smart TV Services, Qualcomm, MLB Advanced Media and Arris pondered the shift to 4K. Notably, they addressed the squelched 3D push, as well as format ghosts, such as (from the not so distant past) HD DVD. They said 4K stood a better chance of adoption, if only because the hardware will be everywhere at a consumer-friendly price. Pretty soon, every new TV will be 4K whether consumers desire it or not. And then, they said, the content will come, pushed by OTT (over the top) services such as Netflix.

The transition is inevitable, but is it truly a step forward? Can the human eye really see the difference of the higher resolution, especially on small screens such as cell phones? Panelists noted that the difference in visual quality isn’t just the higher resolution, but the more vivid color and sound quality. Also, 4K allows for a more complex graphics presentation. One panelist noted that, as with HD versus standard-definition, "It's one of those things that once you see it, you can never go back."

That may well be, but I reminisced on the show floor by trying to find good old 3D, especially without those pesky glasses, which I think proved to be the format’s downfall. And — low and behold — I finally saw a presentation, from Stream TV Networks that presented glasses-free 3D that didn’t make me sick and looked pretty good from different angles. They can even upconvert classics such as It’s a Wonderful Life. It’s just too bad that 3D technology, which finally seems to be overcoming those glasses, is a day late and a digit short.

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4K Synergy Offers Refreshing Change

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

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

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

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

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

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

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

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

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

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Deals Not 'Left Behind'

Target's 'Left Behind' Blu-ray combo pack

As the magnitude of new releases begin to pick up after the holiday season, the first retail exclusive of 2015 comes in the form of the latest Nicolas Cage Thriller, eOne's Left Behind.

The only special promotion for the title, however, came at Target, which offered a special Blu-ray/DVD combo pack with bonus features. The wide release is just a Blu-ray-only edition.

Otherwise, retailers are still burning off surplus inventory after the holidays.

Best Buy had a buy-one-get-one-free deal on $9.99 fitness titles.

Walmart offered preorders for the Jan. 27 release of Downton Abbey: Season 5 on DVD ($29.96) and Blu-ray ($34.96), with immediate access to the first episode on Vudu.com.

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A Post-Holiday Retail 'Equalizer'

Coming off the holidays, the big retail chains were more focused on clearing inventory than pushing a relatively small slate of new releases spearheaded by Sony Pictures’ The Equalizer.

Best Buy offered $5.99 movies on DVD and Blu-ray and $9.99 TV seasons on DVD and Blu-ray.

Target offered $5 DVDs and a buy-3-get-1-free deal.

Walmart introduced the Vudu Spark,  its own HDMI dongle that plugs into a TV’s HDMI port to allow viewers to use their HDTV to view Vudu content. The $24.96 device includes $20 in Vudu purchases.

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