Big Buzz About Paramount

Big industry buzz today about a Financial Times story that says Paramount Pictures is looking to merge its home entertainment division with that of another studio and is in fact in "advanced talks" with Sony Pictures and 20th Century Fox.  The Financial Times story quoted "several people familiar with the situation" but had no on-the-record comments from anyone at any of the three studios.

According to the story, "The talks have focused on combining DVD production, distribution and back-office functions. One proposal would see Paramount begin using Sony’s DADC DVD production system rather than Technicolor’s system, which the studio currently uses. ... Following the merger, Paramount and its partner would outwardly continue to operate as separate entities. The two studios would also keep their own marketing and sales operations."

My take: There's probably an element of truth to the story, although I think calling it a "merger" is a stretch. And I do have it on good authority, from someone who works on the Paramount lot, that a replication change may be coming down the pike. "I see the Sony DADC guys running around there practically every week," this person wrote to me in an email. "Since they replicate with Technicolor, there's no reason for Sony to be there unless some distribution discussions are going on."

Wagging tongues say a third studio may also be in talks with Paramount: Universal Studios.

The merger rumors follow by two weeks a report by Reuters that a leading investment firm thinks Paramount Pictures could itself merger with another studio. "Today there are seven or eight motion-picture studios. A round of consolidation will occur in the next six to 12 months because of the costs of financing, prints and advertising, the benefits of globalization and such,” Reuters quoted CEO Mario Gabelli of investment firm Gamco Investors Inc. telling Barron's. "We hear talk of something going on."

To see Home Media Magazine's coverage of the Reuters story, click here.

The Great Divide

Just What Exactly Is Wal-Mart Doing?

Harris Interactive Survey Gets Slammed

I thought I would pass on an email I just received from Corporate Advocates about a recent survey on high-definition packaged media. It reads as follows:
 
As you may have seen, there has been some recent reporting on the results of a Harris Interactive survey that arrived at some highly questionable findings on the number of Blu-ray Disc and HD DVD players currently in US households.  By way of background, the recent Harris Interactive poll asked consumers whether they owned an HD DVD player, a Blu-ray Disc player, a PS3, etc.  The survey has garnered some media attention despite the fact that, according to analyst groups that regularly track Blu-ray Disc hardware sales (as well as HD DVD sales before the format was pulled from the market), the survey results don't square with the actual shipping and sales numbers.
 
Given the grossly inaccurate results with respect to HD DVD sales (many times greater than those previously reported by the HD DVD group itself), and given that the sales-based numbers and the dramatic increase in Blu-ray Disc hardware and software sales clearly indicate that the format has in fact reached critical mass (surpassing even DVD penetration at the same point in DVD's lifespan), we thought it important to take a moment to provide you with actual data based on manufacturers' shipments and retail sales.
 
The 2008 sales data and the latest 2009 projections from Adams Media Research are as follows:

    * As of December 31, 2008, 2.7% of US TV homes had a Blu-ray Disc set top player, and by the end of 2009 that number will have grown to 6.2% of US TV homes (6.1% and 11.0%, respectively, of HDTV homes)
    * As of December 31, 2008, 5.6% of US TV homes had a PS3, and by the end of 2009 that number will have grown to 10.0% of US homes (12.5% and 17.6%, respectively, of HDTV homes).
    * As of December 31, 2008 7.8% of US TV homes had either a Blu-ray Disc set top player, a PS3 or both, and by the end of 2009 that number will have grown to 14.8% of US TV homes (17.5% and 26%, respectively, of HDTV homes).
    * As of December 31, 2008 0.3% of US TV homes had an HD DVD set top player, and by the end of 2009, that number will have shrunk to 0.2% of US homes (0.7% and 0.4%, respectively, of HDTV homes).

 
The estimates reported by Adams Media Research are based on its research into actual manufacturer shipments to retail and actual retail sales to consumers, and are significantly different than the survey-based numbers reported by Harris.  In fact, the Harris numbers don't even square with the numbers reported by the HD DVD Promotions Group toward the end of that format's lifespan.  As of the end of 2007, some 50 days before the announcement that the HD DVD format would be discontinued, the HD DVD Promotions Group was reporting set top sales of less than 1 million units….nowhere near the 9% of households that Harris claims based on its survey results.
 
As for the discrepancy between the survey results and the actual data, Tom Adams, president of Adams Media Research notes:

"The media industry has long known you can't trust the average survey respondent to correctly identify the high-tech devices in their homes; this finding suggesting that HD DVD player penetration grew from 6% to 9% in the period since the Blu-ray victory in the format war simply can't be right. Our research on shipments and retail sales of players suggests that some 340,000 homes had an HD-DVD player by the end of 2008 v. 3.1 million homes with a dedicated Blu-ray player, and 9 million homes with either a dedicated player, a PS3 or both. So far, despite the recession, sales this year put dedicated  Blu-ray players on track to be in 7.2 million homes by year's end, with the number of homes having a BD-Player, a PS3, or both growing to 17.1 million. Meanwhile, HD DVD machines are long gone from store shelves and household penetration is shrinking dramatically. By way of comparison to what had been the most successful format launch in consumer electronics history, at the same point in DVD’s lifespan (four years in, at the end of 2000), DVD-enabled homes (set-tops or game machines) numbered 13.7 million”

The More the Merrier

Toshiba to Go Blu?

Gardening or Gaming--Gee, That's a Tough Choice...

Stop the presses! Monday begins with the earth-shattering announcement from the Pew Internet & American Life Project that a new study shows that 97% of all teens between the ages of 12 and 17 play video games. Gee, who would have thought....

What I find interesting, though, is that while the study says 90% of gamer parents know what they're kids are playing, just 13% believe that video games have a negative influence on their children's behavior.

I'm definitely in that 90%--my oldest son, 13-year-old Justin, loves Call of Duty, while the two younger boys, 11-year-old Conner and 7-year-old Hunter, like Wii Fitness and anything SpongeBob--but I'm not quite in the majority who believe there are no negative ramifications. The principal of my sons' school, Denise Coates, has an interesting view that makes more and more sense the more I think about it. The problem with video games, as she sees it, is that the only way to gain something--to win a prize, gold coins, advance in the game, you name it--is by hurting someone else. This can be as benign as SpongeBob zapping some strange sea creatures, or as realistic as the Call of Duty soldiers lobbing a grenade into an enemy encampment. In any event, it doesn't exactly send a good message to our children.

I ran this by another parent and she nodded in agreement, but then added, "I don't know what's worse, though--when we were kids we didn't blow each other up in video games, we shot each other with toy guns."

She's got a point, but I can't help but feel too much exposure to violence does tend to desensitize kids. I'm not for censorship of any fashion, mind you--just some parental control. And that's the approach I am taking. I'm not banning my kids from video games, but I am limiting their time in front of the screen and encouraging them to read, ride their bikes, play in the pool, etc. And when I'm home, I make sure we engage in some form of physical activity, from going to the beach and swimming, surfing or paddle-boarding to hiking, biking and kayaking. I'm also taking the boys to museums, to the zoo, to the harbor--anywhere that's part of the real world, not the virtual one.

And you know what? All this extra exercise and mental stimulation--heck, we even drove up to the Ronald Reagan Library and Museum a few weeks ago--is making me feel better, as well, both physically and mentally. Why, the other day I even let a little old lady merge into my lane instead of speeding up and honking had she tried to cut in.

I wonder if the boys would like to try gardening?

Digital Delivery Not All It's Cracked Up To Be

'Gran Torino' Wins Triple Crown

Warner Home Video's Gran Torino, fresh off a $148 million box office rally, topped all three DVD/Blu-ray Disc charts its first week in stores: the Nielsen VideoScan First Alert sales chart, Home Media Magazine's video rental chart and the Nielsen VideoScan Blu-ray Disc sales chart. For the full story, click here.

For Blu-ray Disc watchers, here's some additional information not in the chart story: Of Gran Torino's total sales, 14% of all units sold were on Blu-ray Disc. For second-ranked The International, from Sony Pictures Home Entertainment, the ratio is higher, at 20%.

Warner's 40th anniversary edition of Woodstock, which debuted at No. 7 on the sales chart, generated 21% of its total unit sales from Blu-ray Disc.

Catalog Resurgence?

One of the most common refrains in home entertainment circles is that among our industry's many maladies is a dramatic slump in catalog sales. It's been going on for several years in the DVD arena, and has been attributed largely to the fact that most so-called "saleable" older movies were released on DVD years ago, so for the typical collector there's nothing left to buy. The sagging economy has only made matters worse, and now we're seeing valiant efforts by studios to release classic films on Blu-ray Disc also met with consumer indifference.

And make no mistake: studios are cranking out an admirable stream of great old movies on Blu-ray Disc, from How the West Was Won and Woodstock to more contemporary classics such as The Shining, Forrest Gump and Ghostbusters.

Sales, so far, have been marginal, but I sincerely believe we're in for a turnaround, and here's why.

There's the quality issue — do old movies really look better in high-definition? — that has led to some hesitation among Blu-ray owners, but that's becoming less and less of a factor, as the consensus is a resounding "Yes." Check out some of the forums and chat groups — there's a growing chorus of fans who say just about any old movie looks better on Blu-ray, simply because old movies were shot on film, which has a higher resolution than even modern HD cameras.

As one recent post said: "Basically you can get the catalog films that have been released on BD with no worry. It'll look as good if not better than when you or your parent/s saw it in theaters."

With the quality issue settled, then, it becomes more a question of need — and whether or not that need supersedes our growing propensity to pinch pennies.

Ultimately, it will. I have a friend who pulled out a copy of Monster, to watch again. The case, he said, has gotten shabby (my friend's DVD collection was moved several times and spent a few months in the garage during a family room remodel) and the disc has several scratches. It still plays OK, but he likes the movie so much he doesn't want to risk future disappointment and wants to buy a new copy. His first question to me: "Is it available on Blu-ray?" I told him it's coming out on Blu-ray Sept. 1 and he was ecstatic, saying he'll surely pick it up.

Another friend, who loves uniformity, now has several dozen Blu-ray Discs sprinkled among a library of some 1,000 movies. "When I put a Blu-ray Disc back on the shelf and pull out a DVD, it feels like a VHS cassette," he said. "Blu-ray looks better on the screen, but it also looks better on the shelf."

Let's all keep our fingers crossed my scenario holds true. Our business could use some good news.