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Craig Kornblau: A Legacy of Vision

26 Feb, 2014 By: Thomas K. Arnold

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It must be gratifying to go out on top. Craig Kornblau’s sudden and unexpected departure from the presidency of Universal Studios Home Entertainment, after 16 years at the helm, was part of a bigger strategic move by the studio in which he was nothing more than collateral damage.

Universal, you see, was the last of the majors with separate domestic and international divisions, and with globalization being the mantra of corporations everywhere his higher-ups were faced with a pickle: They had to meld the two units into one, and yet each was headed by a top-notch executive — smart, savvy and shrewd — the company could ill afford to lose.

And yet one had to go, and one can only surmise that Eddie Cunningham, the international president, stayed on as head of the new worldwide home entertainment division because his learning curve was a lot lower: He had to learn the ropes of just one market, a market that despite its size is really quite simple, and one where Universal, thanks to the team that Kornblau put together over the past 16 years, was cresting on top. In a way, Kornblau was a victim of his own success: The former Universal Studios Home Entertainment was a smooth, well-oiled machine with some of the industry’s most respected executives, a clever marketing team, and an unparalleled supply chain apparatus. It was also coming off one of its best years in history, with the division laying claim to the top-selling DVD/Blu-ray Disc of the year (Despicable Me 2), the No. 1 EST title of all time (also Despicable Me 2), the No. 1 catalog title of the year (the original Despicable Me) and two of the top five rental titles (No. 1, Identity Thief, and No. 5, Ted). Identity Thief was also the No. 1 VOD title of the year.

Kornblau also left on a personal high. Just five months earlier, Kornblau was given expanded duties at Universal, as his division assumed responsibility for all of NBCUniversal’s digital distribution and marketing, including VOD and EST. Kornblau also won industry kudos for working closely with NBCUniversal sister division Comcast Cable to launch a digital storefront to sell digital copies of its movies to 25 million subscribers, and for crafting a fulfillment contract with Paramount Home Media Distribution to capitalize on Universal’s supply-chain strengths.

He also finalized renewal of an agreement with Open Road Films to handle all marketing, sales and distribution services for Blu-ray Disc, DVD, EST and VOD platforms of Open  Road Films' theatrical titles through 2017.

Kornblau leaves behind not just an extremely efficient, and successful, domestic home entertainment operation, but also a legacy of leadership and vision. The son of a retailer, Kornblau arrived at Universal Studios 16 years ago to take over the ship from Bruce Pfander, a former 20th Century Fox executive who briefly ran home entertainment after the ouster of longtime head Louis Feola.

He was not yet 40, and an alumnus of the legendary home entertainment empire at Walt Disney assembled by Bill Mechanic — and honed to what many consider perfection by his successor and former lieutenant, Ann Daly, now at DreamWorks. It was an empire built on the concept of selling movies directly to consumers rather than retailers. In an era dominated by the rental cassette, the revolutionary sellthrough model worked at Disney for two reasons: The studio is the only one with a genuine brand that means something to consumers, and its executives were smart enough to figure out a way to exploit it through such strategies as placing hot titles on moratorium after a specific period of time to build consumer excitement — and demand.
Kornblau was a key member of Team Disney, back in those days: As SVP of worldwide operations and logistics, he pioneered Direct Account Management, and served as the chief architect of this system, which set a new standard within the home entertainment industry, particularly after the advent of DVD and the explosive growth of sellthrough.

During his 16 years at Universal Studios, Kornblau quickly established himself as one of the home entertainment sector’s true thought leaders. He saw the threat to sellthrough posed by new rental models pioneered by Netflix and Redbox and led the industry charge in establishing unprecedented, critical windowing agreements to minimalize cannibalization. He clung to HD DVD during the next-generation format wars because he thought it made more sense to retool an existing product rather than introduce something completely new; when it became clear HD DVD was a lost cause he became one of rival Blu-ray Disc’s most enthusiastic supporters, although in hindsight he may have been right. The revolutionary nature of Blu-ray prompted a hiccup on the manufacturing as well as the retail end, and the format never quite rose to the heights of DVD.

More recently, Kornblau has been a key driver in industrywide initiatives to promote consumer and retail adoption of digital content, including the aggressive push to early electronic sellthrough (EST) windows and the standardization of Blu-ray combo packs. He also influenced the development and promotional rollout of the pioneering digital storage offering, UltraViolet.

To say Kornblau had a good run is a vast understatement. To twist an old saying, he may be out, but he’s certainly not down.

 

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