At the Starting Line

As I nervously put my foot on the accelerator of a Ferrari to celebrate the Blu-ray, DVD and digital HD launch of Paramount Home Media Distribution’s Transformers: Age of Extinction, the home entertainment industry was also at the starting line for the most important season of the year, the fourth quarter. The adrenaline is likely flowing in home entertainment marketing departments.

As has been widely reported, the box office punch over the summer wasn’t as strong as it has been in past years, and that can affect performance on home entertainment. Still, what doesn’t take off with lightning speed at the box office can often make up ground in the home entertainment arena. Consumers distracted by vacations and summer pursuits often discover what they have missed at the box office on disc or digital.

The acclaimed Chef from Jon Favreau is a smaller-budget film about a man’s rekindling of his passion through cooking that many consumers will likely discover at home. Titles may become gifts to put under the tree, to stuff in a stocking or to offer up at the staff holiday party.

At the start of the fourth quarter, a lot is riding on the marketing acumen of home entertainment executives. In addition putting reporters in the driver’s seat of some very expensive and fast cars and staging cooking demonstrations by filmmakers (Favreau cooked up some Cuban sandwiches for Chef), marketers have designed an array of exclusive extras for retail clients. Look at any of our merchandising sections and you will see T-shirts, exclusive featurettes, toys and many other enticements rolled out at top retailers to draw consumers to buy discs or digital HD.

Home entertainment marketers are working closely with retail accounts to offer that something extra that will spawn an impulse buy. Here’s hoping their efforts help disc sales take off.

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Good News About Great TV

There’s a scene in the classic film All About Eve in which Marilyn Monroe, playing a young actress who’s just flubbed a Broadway audition, is advised by her mentor to try television, implying that the talent threshold for the small screen is much lower. That joke doesn’t pack as much of a punch in the current entertainment environment. It’s been widely acknowledged that the quality of TV content is often on par with, or superior to, feature films. Episodic TV is attracting top talent that used to be seen exclusively at the movies.

Many factors have created the new rise of TV, not the least of which is binge watching that began with TV DVD and continues on such streaming services as Netflix. The bad news for the home entertainment business is that consumers who watch episodic TV on Netflix aren’t buying as many movies on disc and funneling money into the sellthrough business, which is more lucrative for the studios. But the good news, I think, is that many of the new episodic series feature continuing storylines and play almost as if they are extended, gripping feature films as analyst Richard Greenfield has pointed out — and that makes them highly collectible.

While home entertainment executives at the studios may be bemoaning a poor summer box office, the bright spot is the enormous amount of collectible quality content coming from the small screen. The fact that The Wizard of Oz or the “Star Wars” films pop up on TV on a regular basis does not hurt their collectibility, and I don’t think that streaming on Netflix does as much damage to the sale of truly collectible TV content as we think. Fans of “Breaking Bad” or “Game of Thrones” want to collect those series, and that makes them a vital addition to the sellthrough business. When the hot series of the moment cycles off of Netflix or Amazon Prime to make way for newer content, fans will want to own their favorite series either digitally or on disc in the highest possible quality.

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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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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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A Whole New Virtual World at Comic-Con

Among all the ubergeek hoopla, cosplayers, stars and Hollywood marketing events at this year’s San Diego Comic-Con International was a virtual player that could prove revolutionary for the entertainment business.

Oculus VR, recently acquired by Facebook, powered several virtual reality exhibits both on and off the show floor, resulting in long lines and quickly maxed-out showings. HBO’s “Game of Thrones” exhibit across the street from the convention center featured a harrowing, but exciting, virtual reality ride up an elevator to the top of The Wall. As my virtual trip had me cresting The Wall and falling I grabbed the sides of the booth cage in anticipation of a drop, a testament to the effectiveness of the product. Other properties using the virtual reality device as promotion at Comic-Con were “Sleepy Hollow,” Pacific Rim, Into the Storm and X-Men: Days of Future Past, which provided a virtual reality experience on the show floor in which you are Professor X heading into Cerebro and looking for mutants.

Each of the virtual reality experiences was short, and you did have to wear a rather cumbersome headset that I confess I didn’t have time to adjust properly. I don’t know whether longer-form virtual reality entertainment will take off anytime soon. (Witness the disappointing falloff of 3D, in part due to the need for glasses.) But I didn’t get sick looking around in the virtual world for the few moments I was there, which makes this entertainment consumer and observer eager to see more.

Getting physical for a moment, I also noticed the many booths selling discs at Comic-Con. Fox created elaborate and exclusive disc sets for the Comic-Con crowd, and even a booth in the anime biz, which has gone more digital than other parts of the industry, featured disc sets that fans were eagerly picking over. The collector seemed alive and well at the Con.

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Netflix Heading for Global Domination?

You’ve got to hand it to Netflix’s Reed Hastings. He certainly has a vision and follows it. In spite of a misstep a few years ago in which Netflix disc renters balked at his plans for a brave new digital world, Hastings is sticking to his roadmap of creating original programming for his streaming service, expanding streaming internationally and slowly phasing out disc.

Witness just a few of the recent events involving Netflix:

• Netflix original shows “Orange Is the New Black” and “House of Cards” picked up multiple Emmy nominations, prompting observers to lump in the online pioneer with the cable companies that are eclipsing broadcasters at the annual awards show.

• Netflix and The Walt Disney Co. July 17 announced an agreement giving the subscription streaming pioneer exclusive pay-TV access to first-run Disney movies in Canada beginning in 2015.

• According to new data from IHS, sales of DVD and Blu-ray Disc movies in Norway and Denmark have fallen more than 50% over the past few years — the fastest rate of decline anywhere in the world — in part because of the rapid growth of Netflix.

• Even though it created the by-mail disc-rental business, Netflix stopped processing disc shipments on Saturdays in June.

Netflix executives’ laser focus on the company’s three key objectives is yielding undeniable results, and any observer certainly has to credit Hastings and his executive team for their determination and success.

Where that leads the industry at large is another question. The shrinking disc business, in part hastened by Netflix’s streaming service, has been a blow to studios, and Netflix’s cord-cutting customers have shaken up the cable and broadcast businesses in the TV sphere, which may eventually result in lower income for TV content producers. Netflix has shown a willingness to fund content — Emmy-lauded content — but is that enough to make up for the loss of income to other content creators who have built our entertainment industry into the envy of the world?

Will struggling content companies merge to save costs, putting the control of media into even fewer hands? Fox’s bid for Time Warner this month is an ominous sign.

Netflix’s quest for global domination is off to a good start. I hope its disruptive business model increases strong content, rather than shrinks it.
 

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Finding That Personal Touch

I recently watched First Run Features’ documentary Anita, and I actually sat through an entire lecture by professor Hill that was among the extras. I’m kind of a nerd, so my viewing habits aren’t all that surprising, but I’m always shocked — in this media saturated world with all of its distractions — that my kids like to view disc extras.

Recently, we watched the Blu-ray Disc of Warner Home Video’s The Lego Movie. Believe it or not, as they always do, my kids ran through all of the extras on the disc.  Their favorite bonus wasn’t the commentary or other standards. What they most liked was the section on Lego shorts produced by amateur fans.

When I thought about it, their preference was not surprising. Amateur online entertainment often dominates their attention, rather than the slick productions on television or in movie theaters. While my generation preferred to sit in front of the TV, my kids spend hours watching YouTube stars on tablets, cell phones or computers. In addition to a variety that even dozens of cable channels can’t supply, it’s the personal touch, my kids say, that draws them to the Web. They feel as if they know online performers, who answer fans’ questions, often give their fans a nickname and talk directly to the camera like a friend.

Having grown up in a media world full of digital effects and retouching, kids, perhaps not surprisingly, seem to crave authenticity — unexpected and spontaneous entertainment. While they certainly like those popcorn flicks filling theaters, the younger generation has a unique relationship with the media they consume. Media is more personal. Heck, whole friendships are cemented online rather than by talking on the phone or in person, as with my generation. Marketers who hope to appeal to the younger set may hit their target if they emphasize a closer, more authentic relationship with the movies or television shows they are promoting.

In addition to that blockbuster saturated with digital effects, kids may respond to homemade, interactive elements that don’t have all of the rough edges smoothed; extras with a personal touch.

 

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Fritz Friedman: A True Class Act

Fritz Friedman

This month’s news that longtime Sony Pictures publicist Fritz Friedman would be leaving the company at the end of the summer called to mind how many times I have depended on Fritz’s unerring class and expertise in this industry.

One of my first contacts when I joined the magazine 20 years ago, Fritz helped me navigate the changing home entertainment landscape with sage advice, praise, and polite, constructive criticism — always delivered with the utmost poise. While publicists and journalists don’t always see eye to eye, I could always count on Fritz to treat me with respect and kindness, both personally and professionally.

During his 34-year career at the studio (which spans most of this 35-year-old magazine’s existence — and indeed the home entertainment industry’s), Fritz has been a welcome fixture as the business changed. Whenever I attended an industry event, I looked for his familiar presence. He was always dapperly dressed and often had a gleeful smile on his face; it was apparent he loved this industry and the people in it. Whether at the yearly VSDA show (since transformed into the Los Angeles Entertainment Summit), the annual Wine & Wisdom event, the Hall of Fame, San Diego Comic-Con International or any of the many expertly choreographed Sony events, I relished catching up with Fritz and getting his take on the happenings in the industry.

I’ve often referred to the home entertainment industry as a small town in which everyone knows each other very well. Expanding on that metaphor, I would say that Fritz is one of our honorary mayors. The students at the University of Southern California, where he is a lecturer, couldn’t ask for a better guide to publicity and Hollywood. I can attest that he is a great teacher. His instruction has been invaluable in my career as an entertainment journalist.

If the home entertainment industry were to have a town meeting, I’m sure we would bestow upon him some sort of honorarium or medal.  Thank you Fritz. You are a true class act.

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Online Giants Quietly Flexing Their Muscle, Using Consumers

One spat started with a warning that Verizon consumers allegedly got while trying to stream Netflix video: “The Verizon network is crowded right now. Adjusting video for easier playback.”

Another came to light when an anime fan, who couldn’t preorder disc titles on Amazon, complained online to supplier Viz Media and got this response: “Our products are distributed by Warner Brothers, and currently they’re in contract negotiations with Amazon. Preorders are disabled while that goes on, but we’re hoping it will be resolved soon.”

Netflix and Amazon, twin online Goliaths of the home entertainment business, are using their enormous customer bases to put the squeeze on companies that supply them with bandwidth and product.

In the middle are consumers, who have so far benefitted from the low prices provided by Amazon and Netflix — some say gained unfairly by pushing the costs of doing business onto other companies. While consumers who bought items from Walmart, the top brick-and-mortar disc retailer, had to pay state sales taxes, consumers buying from Amazon were exempted from those taxes for much of its life as a company. That, many belief, allowed Amazon to offer lower prices and build itself into a behemoth that controls a good part of the retail business that chains such as Walmart used to dominate. Netflix used infrastructure built by Verizon and other companies to deliver streaming to its customers without paying for the online streaming company’s — some say — outsized domination of that bandwidth.

Netflix and Amazon will contend that they are merely part of a long line of disruptive technologies that change the world for the better. Those on the losing side of this change say they are freeloaders or monopolists that exploit unfair competition.

While some of these issues may end up before government agencies, legislatures or in court (Verizon sent a cease-and-desist letter to Netflix, for instance), these new online behemoths are quietly trying to gain an advantage in the court of public opinion — by upsetting their customers. It may be a risky strategy.

 

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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.

 

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