The New Way to Collect - The Digital Entertainment Group

DEG
The Digital Entertainment Group
®
Quarterly
Spotlight on Sony DADC
Profiling the company’s New
Media Solutions group. Page 16
Consumer Consciousness
Executive Lori MacPherson
shares her thoughts on adapting
to the new consumer. Page 10
Diving Into a New Era
of Retailing
DEGQ examines the changing
retaill landscape. Page 18
Letter from the Chair
Sanders congratulates Smith on
promotion. Page 4
Fall 2013
The New Way
to Collect
Hollywood joins
together in
an innovative digital
branding
and consumer
awareness
campaign
DEG
The Digital Entertainment Group
®
DEGQ Contents
Quarterly
I nside . . .
DEG Chair’s Message Page 4
DEG Industry Calendar of events Page 5
DEG Faces Scene at DEG Page 6
COVER STORY:
Digital HD – The New Way
to Collect
Major motion picture studios unite to
align messaging to encourage consumers
to build their digital collections. Page 12
DEG President’s Desk Page 7
DEG Group Reports Page 22
DEG Group Directory Page 25
DEG Interview: The Mouse House’s Lori
MacPherson shares the ways that the studio
is adapting to expand on the immersive
entertainment experience. Page 10
Diving Into Digital: Retailers
DEG: The Digital Entertainment Group is a Los Angeles-based, industry-funded nonprofit corporation that
advocates and promotes the many consumer benefits
associated with various home entertainment products,
including both physical and digital media on a variety
of platforms. The DEG helps provide information and
perspective about the home entertainment industry.
The DEG also offers a forum for member companies
to engage in ongoing discussions concerning various
opportunities related to promoting established categories,
evaluating and discussing new entertainment platforms
and investigating supply chain efficiencies.
The DEG can be reached at 424-248-3809, via
e-mail at getinfo@digitalentertainmentinfo.com or through
its Web Site at www.degonline.org.
share their varied strategies for meeting
the needs of the multi-channel consumer to capitalize on the crucial 4th
quarter holiday selling season. Page 18
DEG Q-Tips: Analysts on
the new models for theatrical
and home entertainment
windows. Page 27
Portrait of Lori MacPherson by Cara Garcia.
Lori MacPherson, pg 11
DEGQFALL2013
3
DEGQ Chair’s Message
BOARD OF DIRECTORS
Fiscal Year 2013-2014
Chair
Ron Sanders
Warner Bros. Worldwide
Home Entertainment Distribution
W
elcome to the third
issue of the DEG Q
magazine, and the first
edition of the DEG’s 2013-14 fiscal
year.
I’m happy to report that the
home entertainment category
saw a two percent increase in
overall consumer spending in the
first half of the year. Blu-ray Disc sales also
rose by 15 percent over mid-year 2012, while
electronic sell-through surged 50 percent.
We’re hoping this positive growth pattern
will continue for the balance of the year,
inclusive of the all-important fourth quarter
holiday selling season. With many theatrical
blockbusters coming to retail soon, including
Iron Man 3, Despicable Me 2, Man of Steel and
Fast & Furious 6, we are optimistic about the
balance of the year.
The DEG continues to re-shape the way it
supports the home entertainment industry,
recently promoting Amy Jo Smith to President, from her previous position of Executive
Director. The much-deserved promotion
reflects Amy’s increasing responsibilities as
the industry accelerates its
transition to emerging technologies that further enhance
the consumer entertainment
experience. She has always
been the driving force behind
the DEG, and we continue to
entrust her with leading the
industry’s many initiatives now
and for the foreseeable future.
In that same vein, the DEG has also
re-aligned its working Committees for the
new fiscal year to better uphold the DEG’s
primary objectives. An overarching Marketing Steering Committee will drive the
activities of four Task Forces – on Digital
HD/UltraViolet, Ultra HD 4K, Blu-ray and
Sound Technology. The DEG also now has
a dedicated Retail Task Force, which aims
to support the various Committees’ many
projects and place them at retail channels.
Please see the DEGroups updates later in
this issue for more details on their many
initiatives.
We appreciate your continued support of
the DEG. n
Ron Sanders
President,
Warner Bros.
Worldwide Home Entertainment
Distribution and Chair,
DEG: The Digital Entertainment
Group
Vice CHAIR
David Bishop
Sony Pictures Home Entertainment
Vice CHAIR
Craig Kornblau
Universal Studios Home Entertainment
Vice CHAIR
Mike Dunn
Twentieth Century Fox Home Entertainment
Chief Financial Officer
Steve Beeks
Lionsgate
BOARD MEMBERS
Bill Sondheim
Gaiam Vivendi Entertainment
Sofia Chang
HBO Home Entertainment
Tom McDonough
Intel
Tim Alessi
LG Electronics USA
Blair Westlake
Microsoft
Gene Kelsey
Panasonic
Dennis Maguire
Paramount Home Media Distribution
Marty Gordon
Philips Electronics
Eric Anderson
Samsung Electronics
Mike Lucas
DEGQ
DEG
President
Amy Jo Smith
smith@degonline.org
Technical Director
Marc Finer
finer@degonline.org
Manager
Joanna Sulakhyan
joanna@degonline.org
General Counsel &
Corporate Secretary
Robert Rose, Esq.
rose@degonline.org
Director
Lyndsey Schaefer
schaefer@degonline.org
Office Manager
Meegan Andes
meegan@degonline.org
Contributor
Marcy Magiera
Art Director
Heidi Antman
Sony Electronics
Darren Stupak
Sony Music Entertainment
Ron Smith
Toshiba America Information Systems
Jim Belcher
Universal Music Group
Lori MacPherson
Walt Disney Studios
DEGQFALL2013
4
DEG Industry Calendar
SEPTEMBER
DEG Salutes 2013
Variety Hall of Fame
Inductees
The DEG would like to congratulate the
2013 Variety Home Entertainment Hall of
Fame inductees, including DEG Board
member Lori MacPherson, Executive
Vice President, Home Entertainment,
Walt Disney Studios and Janice Marinelli, President, Disney-ABC Domestic TV.
: Others who will be honored during the
annual awards and gala dinner on December 10 at the Beverly Wilshire in Beverly
Hills include inductee Comcast Cable and
Target Corp., which will be presented with
the Hall of Fame Innovation Award for its
merchandising of Blu-ray Disc and other
home entertainment formats.
Target will be represented at the Hall of
Fame by James Elasky, Senior Buyer for
Home Video, and others. Comcast Cable’s
induction will be accepted by Marcien
Jenckes, Executive Vice President, Consumer Services.
The 33rd annual Variety Home Entertainment Hall of Fame gala dinner and
awards show will benefit City Year
(www.cityyear.org).
For more information and to reserve
a seat at the DEG’s table, please reach
out to the DEG office. For details about
tables, congratulatory ads or sponsorship
opportunities, please contact: Andi Elliott
301-774-6874, or andi.elliott@variety.com
DEG Board & Committes Meeting
September 25
Luxe Hotel on Sunset, Los Angeles
www.DEG.org
HITS Digital Marketing & Analytics
Summit
September 27
Four Seasons Hotel, Los Angeles
www.hollywooditsociety.com/
dmasummit2013
NOVEMBER
CES New York Press Preview
November 12
Metropolitan Pavilion, New York
www.ce.org
MIPCOM
October 7 – 10
Cannes, France
www.mipcom.com
DAM LA
November 14 – 15
Hyatt Regency Century Plaza,
Los Angeles
www.henrystewartconferences.com/dam/
damla2013
CEA Industry Forum
October 20 – 23
Hyatt Regency Century Plaza, Los Angeles
www.ce.org/events
Digital Hollywood New York
November 14 – 15
New York
www.digitalhollywood.com
OCTOBER
2013 Entertainment and
Technology Summit Fall
October 21
Ritz Carlton
Marina Del Rey, Calif.
www.variety.com/events
Digital Hollywood Fall
October 21-24
Ritz Carlton
Marina Del Rey, Calif.
www.digitalhollywood.com
CEA CEO Summit
October 23 – 25
Terranea Resort
Rancho Palos Verdes, CALIF.
www.ce.org/events
DECEMBER
Variety Hall Of Fame Dinner
December 10
Beverly Hills, Calif.
www.variety.com/events
JANUARY
DEG Annual Reception at CES
January 7, 2014
XS at Encore Hotel, Las Vegas
424-248-3809
International CES 2014
January 7 – 14, 2014
Las Vegas
www.cesweb.org
Finer’s CEDIA EXPO Report Coming Soon
The 2013 CEDIA Expo is being held September 25-28 in Denver. DEG Technical Director
Marc Finer is set to attend alongside nearly 17,000 custom electronics dealers, installers, designers and vendor partners, in addition to 450 exhibitors spanning the globe.
At the 2013 show, Finer expects the hot topics to be 4K Ultra HD, high resolution audio,
home automation and mobile integration. Keep an eye Inside the DEG DEN for the full
tour report post-CEDIA.
DEGQFALL2013
5
DEG Faces
UltraViolet Academy Europe:
The Roadmap Unfolds
The DEG, DEG: Europe, DECE, MESA and MESA Europe hosted
the UltraViolet Academy Europe on September 11 in London,
where more than 250 attendees gathered to hear about the progress made in the U.S. and UK, as well as updates to prepare for
the European launches of UltraViolet in France and Germany.
2
3
1
1
1. DEG President Amy Jo Smith welcomes attendees
to the Academy on UltraViolet Europe.
2. The Academy on UltraViolet attracted hundreds of
executives from across the globe.
3. DECE General Manager Mark Teitell provided an
UltraViolet status report.
4
4. Regional retailers and studio executives (L-R)
Emmanuel Rochedix, Carrefour; David Morgo, Sony
Pictures Home Entertainment France; Tristan Du Laz,
TF1 Video; Eric Legay, Universal Pictures Video and
moderator Yves Caillaud, DECE discussed their plans
for launching UltraViolet in France.
5. Panelists discussed the launch of UltraViolet in
Germany on a panel featuring (L-R) Kai Marner, Warner
Home Video Germany; Hans Henseleit, Videocity;
Konrad Best, MaxDome; Andreas Bork, Sony Pictures
Home Entertainment GmbH and moderator David
Milar, MESA Europe.
5
6
6. Rich Marty of Sony Pictures Home Entertainment
introduced the panel on Marketing UltraViolet.
7
7. The closing panel discussion explored the UK and
U.S. perspectives on marketing UltraViolet, moderated
by Rich Marty and featured (L-R): Rob Salter, Richard
Benson, Sony Pictures Home Entertainment UK; Sarah
Craig, Warner Bros Home Entertainment Group UK &
Eire; and Dorinda Marticorena, Warner Home Video &
Warner Bros. Digital Distribution.
DEGQFALL2013
6
DEG President’s Desk
A
s we wind up the third quarter and
enter the holiday selling season, the
DEG continues to evolve to meet the
needs of the industry and our membership.
I’ve just returned from a trip across the pond
to London, where I attended the Academy
on UltraViolet Europe, alongside a pan-European audience of more than 250 retailers, technology service providers, senior
executives from U.S. and European studios
and broadcasters. The day-long workshop
covered the key learnings from the U.S. and
UK, where UltraViolet has gained significant traction, and how to apply those best
practices to the launches of UltraViolet in
France and Germany. The DEG is looking
forward to seeing the continued expansion
and global success of UltraViolet.
In conjunction with the Academy on
UltraViolet, our sister organization, the DEG
Europe hosted a supply chain session on
digital standards, where Thomas Stilling of
Twentieth Century Fox, who chairs the Standards Task Force, shared the U.S. progress
with our European counterparts.
Our Member Advisory Council (MAC)
is the DEG’s internal institute, where we
aim to further educate the membership on
new and emerging technologies. See more
details on MAC in our DEGroups section of
this issue of the Q.
We are very excited to announce that the
new DEG Web site is ready and available to
members, who can now access the site on
mobile platforms like tablets and smartphones, so the latest news from DEG will be
at their fingertips. Please explore the site
and let us know your feedback.
We look forward to seeing you
at our Fall Membership Meeting
September 25 to further advance the
future of home entertainment.
Amy Jo Smith
DEG: The Digital Entertainment
Group
DEG Debuts New Web site
The DEG is excited to debut its newly launched revitalized Web site at www.degonline.org. Now, DEG
members can access the site 24/7 from tablets and
smartphones, in addition to their desktops.
The Home page features the weekly top-selling
Blu-ray and digital titles, the latest news from DEG,
and access to information on upcoming DEG meetings and events.
The Resources page includes links to all current
and historical DEG working documents, from white
papers to Finer’s floor tour reports, DEG research
and more, all at the click of a button or swipe of a
finger. Please register there to network with other
DEG members.
The DEG Directory is a new feature exclusively for
DEG members to connect via a secure internal DEG
network.
We hope that DEG members find the improved
site to be a beneficial resource for them. We’d appreciate if you take some time to explore the new site
and send any feedback to schaefer@degonline.org.
Special thanks to our friends at Cinram/1K for their
hard work in polishing the site to make it shine for
the DEG membership.
DEGQFALL2013
7
DEGazette: Japan
DEG Japan Outlines Objectives
for Balance of 2013
The DEG Japan has
three primary objectives for the rest of the
year: 1) Reinforcement
of Blu-ray Disc promotion; 2) Investigation/Research of digital
distribution business; 3) Discussion about
the activities aiming for further growth of
digital. To achieve these objectives, we established two new committees. One is the
“Cloud Business Study Group” which will
explore the feasibility of new content cloud
business for the Japan market with both
content companies and device companies.
In this discussion, we will study UltraViolet,
inclusive of investigating and researching
UltraViolet’s potential as one of the choices.
The second new committee is the “Statistical Survey Committee” which will try to
grasp the market size in digital distribution
industry in cooperation with Japan Video
Software Association. We aim to support
the digital distribution business through
these two new committees.
With regard to the organization, Mr. ShiTaichi Fukuda
DEG Japan Chairman &
Walt Disney Studio Japan
General Manager
ro Kawai of Twentieth Century Fox Home
Entertainment Japan and Mr. Masami
Nishida of Mitsubishi Electric Corporation
were assigned as auditors (see the organization chart). The head of each committee
is assigned as follows:
Mr. Takeshi Yasuda of Kadokawa Corporation: Digital Distribution Committee
Mr. Taichi Fukuda of Warner Entertainment
Japan: Blu-ray Disc Committee
Content Software Company
Members: 26
The Walt Disney Company (Japan) Ltd.
Amuse Soft Entertainment Inc.
Asmik Ace Entertainment, Inc.
Avex Entertainment Inc.
Bandai Visual Co., Ltd.
Geneon Universal Entertainment
Happinet Corporation
Imagica TV Co., Ltd
Kadokawa Shoten Co., Ltd
King Record Co., Ltd
NHK Enterprises, Inc.
Nikkatsu Corporation
Paramount Japan G.K.
Pony Canyon Inc
Shochiku Co ., Ltd.
Sony Pictures Entertainment (Japan) Inc.
Sony Music Distribution (Japan) Inc.
SPO Inc.
Toei Company, Ltd.
Toho Co., Ltd.
Twentieth Century Fox
Home Entertainment Japan K.K.
VAP Inc.
Victor Entertainment, Inc.
Vicom Inc.
Warner Entertainment Japan Inc.
Yoshimoto R&C Co., Ltd
Mr. Akio Maeda of Bandai Visual: Statistical Survey Committee
Hardware Manufacturing
Company Members: 5
Panasonic Corporation
Sharp Corporation
Sony Corporation
Pioneer Corporation
Mitsubishi Electric Corporation
DEG Japan consists of five hardware
manufacturing companies, 26 content
software companies, and eight supporter
companies, totaling 39 companies.
We strive for continuous leadership in
the Japanese digital entertainment business not only in the area of package media
such as BD/DVD, but also the digital distribution. We would appreciate your continued
support! n
Supporter Company Members: 8
Kinema Junposha Co., Ltd.
Gfk Lifestyle Tracking Japa KK
Sony DADC Japan Inc.
Daikin Industries , Ltd
dts Japan Inc.
Dolby Japan K.K.
Memory-Tech Corporation
Rovi Corporation
Mr. Yutaka Komai of Sony Corporation:
Communication Committee
Mr. Masayuki Kozuka of Panasonic Corporation: Cloud Business Study Committee
DEGQFALL2013
8
DEGazette
News From Across the Pond
I
t’s been a very busy quarter for the DEG
Europe. Members this month received a
comprehensive update surrounding the
Digital Supply Chain. Thomas Stilling (DEG
Media & Content Operations Committee) and
Larry Wilk (DEG Digital Ambassador) hosted
the session on 12th September, which aimed
to explore the DEG’s progress in areas such
as reporting, standards, and the Universal
Media Identifier.
Also, our CAR and EP groups are hosting
the latest in the series of learning sessions
on 2nd October. The session will focus on
Content Marketing and is being hosted by
Outbrain. Experts from Outbrain, the leading
content discovery platform, will share insight
on content marketing and how it can be
used to drive engagement with audiences
and, ultimately, support sales – drawing on
impressive experience from high-profile
theatrical campaigns.
Another learning session has been
planned for the 2nd December focusing
on technology. This will be hosted by
Microsoft and zones in on the ‘living room
of the future’ with Xbox One.
Other learning sessions are currently
being arranged for members including
a session surrounding audio specifications for Europe, particularly focusing on
R128. Industry experts from the European
Broadcasting Union, Digital Production
Partnership, Channel 4 and BBC will be
taking part in this session (date TBC).
The Academy on UltraViolet Europe also
took place in London on 11th September.
The DEG Europe worked hand-in-hand with
the DEG U.S., MESA and MESA Europe to
support the event, which aimed to de-mystify UltraViolet and tackle recent scepticism
surrounding it. The European Academy addressed the unique needs of industry players
across Europe, including retailers and independents. We will provide a comprehensive
review of the event in our next update.
We look forward to providing an update
on all committee initiatives for the next
quarter and wish you all a successful Q4.
Nicola Pearcey
DEG Europe Co-Chair and
Managing Director of Home
Entertainment and New
Media, Lionsgate UK
DEG Debuts Member Advisory Council (MAC)
T
he DEG is pleased to announce the Member Advisory Council (MAC) which will serve as an “internal institute” within the DEG to help the membership make informed business decisions planning
out 12-36 months. MAC evolved from the Developing
Platforms and the Digital Supply Chain Committees which collaborated regularly to bring information on emerging platforms
and services to their groups.
MAC will function in a more high level and will serve the membership-at-large. MAC will bring information to the membership
in the form of conferences, panels and intimate discussions so
that members may come together to learn about emerging opportunities and discuss them candidly.
Spearheading MAC are: John Crosier, Cinram; Mark Turner,
Dolby Laboratories; Andrew Fry, Intel Digital Media Services;
Steve Nickerson, Millennium Entertainment; and Danny Kaye, Twentieth Century Fox Home Entertainment. The Chairs will meet quarterly
to discuss and review topics and create focused MAC events throughout the year to help the industry better plan for emerging platforms
and services. n
DEGQFALL2013
9
D E G Q I n t e rv i e w
Always Conscious of Consumers
One-on-one with Lori MacPherson, Executive Vice President,
Home Entertainment, Walt Disney Studios
In more than 20 years as part of the brand marketing, business development and product management teams at Walt
Disney Studios, Lori MacPherson has learned more than a bit about consumer behavior around entertainment consumption. As Executive Vice President, Home Entertainment for the studio, her top priority is evolving content ownership to drive the growth of both Blu-ray Disc and Digital HD. As Disney prepared to join with the other DEG member
studios in a messaging campaign to raise awareness and collectability for Digital HD, MacPherson spoke with DEG Q
about her belief that the formats will continue to grow together for more than the next five years.
MacPherson and her colleague Janice Marinelli, President of Disney-ABC Domestic Television will be inducted into
the Variety Home Entertainment Hall of Fame in December. (Please see page 5 for more details).
Q: As Executive Vice President, Home Entertainment for Walt
Disney Studios, it looks like you have a very broad area of responsibility. Will you describe your job and how it’s different from your
previous role as Executive Vice President and General Manager of
Walt Disney Studios Home Entertainment (WDSHE)?
A: The change is reflective of the fact that we really wanted our
structure to acknowledge the changing entertainment landscape.
So we did away with the silos of WDSHE, and of Buena Vista Theatrical, for example, and we went to somewhat more of a functional
orientation where we have an operations team that works on operations for films getting to theaters, operations for films getting
to retailers, operations for films getting to digital partners. We
have a finance team that works across the windows, etc. My job
is largely unchanged because I’m still responsible for the physical
home entertainment P&L and working with and leading all of those
different functional areas in maximizing that P&L now. I also have
a global product management team under me that really works to
maximize the consumer-facing aspects of our products across the
lifecycle. So the job is largely the same but it acknowledges the
fact that the industry’s converging and our responsibilities have
converged.
Q: How do you work with Janice Marinelli, president of Disney-ABC
Domestic Television, who heads the studios Digital efforts?
A: It’s interesting because I have the P&L for physical, Janice has
the P&L for digital, and yet we have different focuses. Janice’s
focus is the partnership relationships and the deals that she does
with the digital providers. My focus is more consumer-facing. Of
course there are all these aspects of the business that really cross
formats, whether it’s windowing, business models, pricing. Those
are things that we all get together as a distribution team and
work on very seamlessly as a group.
Q: What are your top priorities for Disney’s home entertainment
business right now?
A: I have three main priorities that I’m focused on. The first is
evolving content ownership — continuing to drive the growth of
both Blu-ray and Digital HD. The second priority is continuing to
strengthen our consumer touch points, so that we are deepening our engagement with consumers on our key brands and
franchises. And the third is continually taking a fresh eye to the
business and innovating based on changing consumer behavior
and tastes.
Q: Consumer spending on Blu-ray Disc grew a healthy 15
percent in the first half of the year, according to DEG, while EST
jumped 50 percent, albeit from a smaller base. For how long do
you think these two formats will continue to grow in tandem?
A: We think they’re still going to grow in tandem for well over
five years. Blu-ray is a $3 billion business domestically right now
and we expect it to get at least 20 percent bigger over the next
five years.
We think Digital, while smaller right now – it’s about half of the
size of Blu-ray at the moment – over the next five years is going
to double. So we think they’re both going to experience strong
growth for five-plus years.
DEGQFALL2013
10
D E G Q i n t e rv i e w
Portrait by Cara Garcia
“Blu-ray is a $3 billion business
domestically right now and we
expect it to get at least
20 percent bigger over the
next five years.”
Q: You have a lot of experience observing consumer behavior
around entertainment consumption. What is the home entertainment industry giving consumers now that they really, really love?
A: What we’ve found is that consumers really love the combo
packs and the supersets. When we first started it, with the combo
pack, I can tell you personally I was somewhat skeptical. My
bias was that they would probably rather spend less and buy the
format that they used the most. It’s actually been the opposite.
We found that consumers really gravitate toward something that
gives you multiple formats because that really fits their lifestyle. If
we can bundle these different experiences together and give them
a good value, that’s something that they love.
Q: And what are they not so crazy about?
A: I won’t say they don’t love it, but I think what had more barriers
in the beginning was digital ownership. The nice thing is that over
time, those barriers are going away. With streaming you don’t
have to worry about the download times, and with cloud storage
you don’t have to worry about the storage space. More and more
people are figuring out solutions to get content to any screen
that they want with things like Apple TV or Chromecast or all of
the tools and devices that are coming out. That’s something that I
think was complicated in the beginning but is on track to becoming a lot more robust.
Q: You have led the development of many initiatives, like Second
Screen experiences, Disney Zoom, Disney Intermission and others that strive to increase consumer engagement and interaction
with Disney movies. Why is this increased engagement important
and how much more valuable is an actively engaged customer
than a passive one?
A: For a company like Disney that has these strong brands and
franchises, a deep engagement with the consumer is really critical
because we want to form that two-way relationship where we understand what the consumer value is and we can create new things
to deliver on needs that they have that have been unmet. So, looking at something like Second Screen, for example, came out of the
idea that we knew a lot of consumers were sitting there watching
movies with a tablet close by and that all of a sudden we had this
new opportunity to deliver content to them on that second screen.
We just want to understand our consumer better and know what
the barriers are for them: why are they not watching a movie that
they could potentially be watching. The more that we can farm
those relationships, the more that we can understand those things
and the more that we can also introduce them to things we think
they’d like based on what we know about them.
Q: In a digital environment there is the potential for unlimited
shelf space and the ability for consumers to discover new and
Continued on page 26
DEGQFALL2013
11
The New Way
to Collect
Hollywood joins
together in
an innovative digital
branding
and consumer
awareness
campaign
By Marcy Magiera
DEGQFALL2013
12
coverstory
Major motion picture studios unite to align messaging that simply
describes the digital version of movies and TV shows and encourages consumers to
build their digital collections.
T
his fall, Blu-ray and DVD boxes — as well as TV spots,
press releases and social media — will reflect a consensus
among DEG member studios around the terms “Digital
HD” to describe digital rights to a high-definition movie and “Digital” to convey digital access to a standard-definition film. When
consumers see a box with the banner Blu-ray + Digital HD they
will know immediately that they are purchasing a high-definition
disc with the movie as well as access to a high-definition digital
version.
“The DEG studios thought coming together and agreeing on a
common term to refer to a high-definition, electronic sell-through
movie would be beneficial,” explained Dorinda Marticorena, Senior
Vice President, Worldwide Marketing and New Technology, Warner
Home Video and Warner Bros. Digital Distribution. “The reason we
thought that was important was that studios were referring to their
digital copies in a variety of ways.”
The adoption of consistent industry-wide messaging across all
DEG member studios — is an effort to focus entertainment lovers
on buying and collecting digital content.
Before deciding on the Digital HD messaging, DEG studios gave
close consideration to consumers’ understanding of advanced
home entertainment options.
“Research has shown that consumers have a growing understanding of “Digital” as a home entertainment product and service
offering, and the proliferation of retailer services and digital
storefronts has reinforced those behaviors and knowledge,” said
Rich Marty, Vice President, Emerging Platform Development, Sony
Pictures Home Entertainment. “Additionally, consumers are very
comfortable with the term “HD” and appreciate the value and
benefits that it brings to their entertainment. Combining these concepts to convey high definition digital ownership is a compelling
offer and we feel that consumers will respond positively.”
Walt Disney Studios is not part of the UltraViolet consortium,
but found uniting with other studios behind “Digital” and “Digital
HD” as standard messaging an important step in encouraging
Digital consumption.
“Making sure consumers understand the value and functionality of digital content and ownership is important to the continued
success of the home entertainment industry,” said Susan McLain,
change to Senior Vice President, Global Product Management,
Walt Disney Studios.
“To that end, the collective use of simple, clear communication by all involved is critical to continued consumer education
and adoption.”
It is important to have Disney, the only major studio that does
not support UltraViolet, on board to achieve true consistency
in messaging across all major home entertainment marketers,
studio executives said.
“The consistent marketing and packaging approach to both
DVD and Blu-ray helped drive those formats into the mainstream,
and the same will be true of Digital,” said Sony’s Marty. “Consumer research has clearly shown that consistency is critical and the
studios are adapting based on those results.”
Consumers get the message this fall
The Digital and Digital HD positioning will begin to appear around
titles released from all DEG member studios in the fourth quarter,
with the messaging appearing prominently on Blu-ray and DVD
combo packs, and in all marketing materials. DEG also is developing creative for online retailers of Digital HD movies that will give
them the opportunity to integrate the Digital HD positioning into
their user interfaces as well.
“We’re incorporating the Digital HD messaging across every
consumer touch point,” said Hilary Hoffman, Executive Vice President of Marketing, Universal Studios Home Entertainment. “This
fall, you’ll start to see the message tagged across all of Universal’s and other studios’ broadcast spots. We continue to emphasize the digital message in our social media campaigns, publicity
materials, online media, and much more. By uniting our message
across the entire industry, we are harnessing our collective power
DEGQFALL2013
13
7/2013: NEW tEmplatE hEadEr
7/2013:
lINE lOOK
DEGNEW
Coverstory
7/2013: rOuNdEd COrNErs
7/2013: NEW sIzE
WHV MASTER
DIGITAL HD ULTRAVIOLET
BD &the
3D BDvalue
STICKERand
– USA ONLY
consumers
understand
Making sure
7-2013 INDESIGN
TRIM DIMENSIONS: 1.445”W x 1.357”H
functionality of digital content and
is
CODE: ownership
US-2
MAGENTA - BLEED
CYAN - SAFETYimportant to the continued success of the
BLACK - TRIM
home entertainment industry
INCLUDED WITH PURCHASE
entertainment even more powerful,” said UniWATCH IT ANYWHERE!
to really drive excitement behind Digital
versal’s Hoffman. “It gives consumers the ability
HD.”
to watch on any device, share with 5 additional
This positioning will impact Universal’s
members in their household, and much more.”
TV
Computer
Tablet
Smartphone
titles beginning in November, she said.
REDEEM CODE BY: MONTH DAY, YEAR.
Marty said the updated message will
The symbiosis of Blu-ray
SEE PACKAGE BACK FOR TERMS AND CONDITIONS.
appear on all of Sony’s upcoming titles,
40000XXXXX
There is encouraging evidence that consumers
including the Oct. 1 release of This is The
are beginning to develop digital content collecEnd. Disney’s TV campaigns will begin to
tions.
incorporate the Digital HD messaging in the near future and
Consumer spending on electronic sell-through grew 50 percent
soon thereafter the messaging will appear on disc packaging,
4-Color Process
in the first half of 2013, according to DEG’s mid-year statistics.
McLain said.
While EST is the smallest format measured — at about $490
million for the first half — it posted a significantly faster rate of
UltraViolet to support Digital messaging
growth than any other format.
For those studios in UltraViolet, the UV brand will serve as an
During the same period, the much larger Blu-ray sales category
enhancement to the primary Digital HD messaging. The
also grew a healthy 15 percent.
UltraViolet logo may appear to the right of Digital or Digital
The two formats are closely intertwined, with many digital movHD on disc packaging, and the word UltraViolet might appear
ielEGal
owners adding
to their collections as a result of buying a
FONt
FOr
Is 6.9 Digital
pt lINOtypEuNIvErs
beneath the words Digital or Digital HD.
Blu-ray combo pack.
BOld.
“We know from our research that the UltraViolet logoCONdENsEd
on its
“Simply, the combo pack is the gateway to creating digital
own doesn’t have enough substantive and accurate meaning
for
dO NOt ChaNGE
sIzE
consumers,”
said Disney’s McLain. “They are comfortable with
the consumer yet,” said Warner’s Marticorena. Awareness of the
physical media and this allows them an easy way to experiment
word UltraViolet, however, is very high, she said.
and experience digital offerings anytime, anywhere – and on their
Hence, in addition to the UV logo, the word “UltraViolet” will
own terms.”
be spelled out under “Digital HD” on some packages, including
Nielsen research shows that among active home entertainment
Warner’s Nov. 12 release, Man of Steel.
purchasers, a growing number are buying both discs and digital.
Thirteen million consumers registered for UltraViolet
According to Nielsen statistics gathered in July, 68 percent of the
accounts through the first half of 2013, which they can use to
general population reported buying at least one movie in the past
access more than 10,000 Digital film and TV titles.
six months. That breaks down to 54 percent of purchasers buying
“UltraViolet is still an important part of our message to conBlu-ray or DVD only; 1 percent buying Digital only, and 13 percent
7-30-13
sumers, because it’s a platform that makes owning Digital HD
buying both physical and Digital formats. The percentage of people
buying both physical and digital format more than doubled from a
Marcy Magiera
year earlier, when only 6 percent of customers bought both.
Marcy Magiera is a writer and editor with 20
Further, the most tech savvy consumers tend to spend more on
years’ experience covering the business of media.
discs, according to Nielsen. In the year ended March 30, among
She was formerly editor-in-chief of Video Busiall disc buyers, those who also purchased digital movies spent 44
ness and is also known for her work with Variety
percent more than the average disc buyers, while consumers who
and Advertising Age.
used UltraViolet spent more than double the average. n
DEGQFALL2013
14
Where Home Entertainment
Meets at CES
DEG Annual Reception at CES 2014
January 7, 2014 – XS Nightclub at Encore, Las Vegas
The DEG’s annual reception is the
only premiere event of its kind at
International CES where
Hollywood’s most influential leaders
show their support of the DEG and
the home entertainment industry
It’s the place where 450 senior executives,
retailers, journalists, industry insiders and analysts
come together in the spirit of collaboration of the
business. It’s the right place at the right time to
meet the right people at CES.
Mark your calendar and keep an eye out for invitations soon.
Reach out to the DEG for details on our high-profile sponsorship opportunities.
For more details, please contact Lyndsey Schaefer at schaefer@degonline.org or call 424-248-3811.
w w w. deg o n l i n e . o r g
D E G Q S p o t l i g h t:
Frey Leads the Way for Sony DADC’s
New Media Solutions
Sony DADC is known for its disc and digital supply chain operations and media replication services.
But over the past several years, Michael Frey and his team have been quietly developing a New Media
Solutions group within DADC to help content owners create engaging consumer experiences and reach
more fans throughout the entire content lifecycle.
B y Ly n d s e y S c h a e f e r
A
s President of Sony DADC’s New Media Solutions
(NMS) group, Frey is responsible for the development,
implementation and execution of innovative Digital
Supply Chain solutions for customers across the media and
entertainment industry. Drawing on his vast supply chain
expertise and knowledge of the global media marketplace, Frey
leads a team focused on developing uniquely advanced digital
solutions that allow content owners and distributors to capitalize on surging consumer demand for music, video, games,
software, and other emerging media content around the world.
“The market is a global one – we’re delivering to 245 territories – including islands that aren’t even inhabited,” Frey said.
“Physical isn’t going away. Look at music – it only hit 50 percent
of digital in the U.S. this year, so physical won’t be gone tomor-
row. But I think the definition of how to engage a consumer is
absolutely changing. Physical and digital need to co-exist.”
The New Media Solutions group’s services are finding a way
to help complement Sony DADC’s end-to-end digital media
supply chain solution, from upstream and downstream marketing to manufacturing of discs to digital supply chain and
direct sales – providing more value to that content through
immersive fan experiences and experience driven supply chain
solutions.
Sony DADC is in a unique position due to its overarching
ties to the Sony Corporation and its respective divisions. Frey
was tasked with working with content companies to build
solutions using Sony’s network of partners. So NMS tapped
Sony Pictures Entertainment and Sony Music technology
gurus to develop extensive video post-production and mobile
capabilities.
“We’ve got our groups playing well together. We learned
how to do that with Blu-ray, but we’re starting to make it a
core competency,” Frey said. ‘A few years back, Sony had a lot
of major digital initiatives across all of the different divisions.
Teams are now driving joint solutions, like making 4K cameras
and tools to capture terabytes of data. We’re trying to leverage
the combined strengths of several of the Sony groups. What
it’s allowing us to do is get it right, make sure it’s working and
make it available to third party customers. It’s allowed us to
get a lot more traction faster and leverage capabilities that
already exist.”
So why has Sony DADC kept its New Media
Solutions so under the radar?
Sony’s New Media solutions home page touts its many capabilities.
“We were focused on building a foundation of our business
DEGQFALL2013
16
“Physical isn’t going away. But I think
the definition of how to engage a
consumer is absolutely changing.
Physical and digital need to co-exist.”
that could support our vision for the new end-toend media lifecycle. We wanted to show our customers we were ready to deliver,” Frey explained.
“It’s no longer just about the disc or the digital
delivery anymore. You’ve got to think of the experience. You’ve got to have immersive mobile and the
ability to purchase. The opportunity to engage fans
needs to start at pre-theatrical. A couple years
ago, I could say that, but now, we actually have a
way to execute it.”
New Media Solutions recently worked behind
the scenes of a music competition show, operating its digital ecosystem. With the NMS solution,
viewers had access to four times the amount of
content available than while watching the show
live. Frey said that more people watched the show
online than live on TV, and they also got up to 70
percent of the audience purchasing music from
the online ecosystem.
“We had all the capabilities the show needed under one
roof to help them upsell purchases and increase the volume
of goods sold which, in turn, drives revenue,” Frey said.
“That’s an incredibly compelling service model.”
While these solutions were built for specific music
programs, the NMS marketing and commerce platforms
can power nearly anything for a brand, TV show, movie,
sporting event or more.
“Half of the things that we are doing today couldn’t be
done a few years ago,” Frey said. “We have been a startup
inside of a big corporation – We’re at that convergence
point between device, consumer experience and content.
I feel really good about the fact that we’ve pulled in six
different groups and have gotten these folks from very
different backgrounds coming up with solutions quickly.
Historically, nobody thought of DADC as creative, and
we now have some pretty impressive creative chops. Part
of that is protecting and nurturing that and having them
co-exist and feed off of each other. I’m very proud of that.”
“At the heart of it, we’re trying to help our media customers create more immersive experiences for their consumers
and maximize the revenue they can generate on that content.
To do that does require supply chain excellence in digital,”
Michael Frey
President of Sony DADC’s
New Media Solutions (NMS) group
Frey said. “The physical side of the DADC business is still a big
chunk of it, but this started as digital versus physical and now it’s
expanding into the far more immersive consumer experience. This
group is about where the business is going.”
For more information on Sony DADC’s New Media Solutions,
visit www.newmedia.sonydadc.com n
Sony DADC’s relentless GENERATOR team built a destination
eCommerce site for After Earth to engage fans and drive promotion for
the theatrical release.”
DEGQFALL2013
17
D iving
I nto D igital
The country’s largest retailers are heading into the fourth quarter with
modest overall sales expectations. These merchants, who in many cases also
represent the biggest sellers of home entertainment, are setting strategies
to take into account both the continued caution and multi-channel shopping
behavior of consumers, who are seeking out deals and buying more online.
The transition to Digital may fit right in.
By Marcy Magiera
DEGQFALL2013
18
retail goes beyond new releases
E
ntertainment retailers are heading into the final quarter
of the year, with a strong slate of titles that
pushed the summer box-office to a record $4.76 billion–
including Iron Man 3, Despicable Me 2, Fast & Furious 6, Star
Trek Into Darkness, Monsters University and Man of Steel—
and a renewed consumer interest in videogames, fueled by the
November introduction of next-gen consoles from Microsoft
and Sony. Moderate growth expectations persist for retail overall, nevertheless, amid continuing sluggishness in consumer
spending.
Walmart, the nation’s largest entertainment retailer, in
reporting its second quarter earnings last month scaled back
its forecast for net sales growth to between 2 and 3 percent for
the full year, from its previous forecast of 5 percent to 6 percent
growth. The National Retail Federation has forecast 3.4 percent
growth for retail industry sales in 2013.
“The retail environment remains challenging in the U.S. and
our international markets, as customers are cautious in their
spending,” Walmart Executive VP and Chief Financial Officer
Charles Holley said when the retailer released its second quarter
earnings in August.
any kind bodes well for the sales of software to go with it.
“Entertainment is actually going to do pretty well” during
the holidays, Blischok predicted, based on the relatively low
price of Blu-rays and DVDs. “You can get a lot of enjoyment
for $10.”
Home items hot for the holidays
Where consumers buy DVD and Blu-ray
“America has bifurcated into 2 groups,” said Thom Blischok,
Chief Retail Strategist and a senior executive advisor with
consulting firm Booz & Company’s Retail practice in San Francisco, in explaining consumers’ continuing reluctance to spend.
About two-thirds of consumers are “survivalists,” he says,
meaning they live paycheck-to-paycheck. The other third are
what he calls “selectionists” – folks who have more discretionary
income but still carefully consider each expenditure.
“The way retailers in general are going to have to get people
in stores are deals, deals, deals, intense deals,” Blischok said.
Blischok sees two major retail trends for the holiday season:
kitchen aids to advance home meal preparation and home entertainment, driven by falling prices on big screen TVs and the
devices to go with them, including Blu-ray players and home
theater systems. In addition, “the issue of next generation personal electronics is going to play pretty heavily,” he said.
Of course, stepped up interest in entertainment hardware of
Sales moving online
In addition to continued slowness in consumer spending, the
country’s largest entertainment retailers this year are responding to the growth in online shopping through both Internet and
mobile applications, and the urgency that has created to present
customers with a seamless digital and in-store shopping experience, experts say.
Nielsen showed ecommerce as the fastest growing channel
in overall retail in 2012, accounting for 9.1percent of U.S. retail
sales, up a full 3.8 percentage points from 2011.
Ecommerce is expected to continue taking share from other
retailers, with Nielsen predicting the channel’s CAGR at more
than 10% through 2017.
That growth will be enabled by mobile shopping, with 78%
of consumers in Nielsen’s Mobile Shopping Report in the third
Channel
2008
2013*
Discount/mass
55%61%
Online 11% 17%
Electronics
12%8%
Members-only Warehouse 4% 3%
Book Store
3% 2%
Video Store
5% 2%
Music & Video Store
2% 1%
DEGQFALL2013
Source: NPD Group, * Jan.-June 2013
19
Photos of Best Buy and Target by DNO1967B @flickr.com
DEG retail Landscape
Brick-and-mortar retailers have adapted to the changing needs and behaviors of today’s consumer.
quarter of 2012 saying that they had shopped on a smartphone
or tablet: 24 percent of smartphone owners and 38 percent of tablet owners said they had used the devices to purchase a physical
item (DVD or Blu-ray, for example) online within the past 30 days.
The growth of mobile shopping, fueled by rapid consumer
adoption of tablets and smart phones, meanwhile, presents
both opportunities and challenges for retailers. Opportunities
abound for the discovery of new products and the anytime/
anywhere purchase of both physical and digital goods. The the
devices also allow consumers to check out products in stores
then easily buy them elsewhere when a lower price is found
online, however, in a practice known as showrooming.
Blischok and other experts advocate that both retailers and
manufacturers adopt a “omni-channel retail strategy” taking
into account in-store purchases, orders placed online and
picked up in stores and pure Internet or mobile shopping.
“The customer’s digital experience goes way beyond a Web
site,” Blischok said.
Having recently redrawn its physical stores, Best Buy will
also use them to ship online orders to consumers in an expansion
of its “buy online, ship from store” initiative tested in 50
stores this year. The company will expand “ship from store”
to more than 200 stores in time for the holidays, in an effort to
improve convenience for customers, better manage inventory
and ship products faster and more cheaply. Best Buy executives
said that 2 percent to 4 percent of its online visitors in any week
do not buy anything because the merchandise shows as out of
stock, though it may be available in a local store.
Like Best Buy, Walmart is expanding its Ship from Store
program, under which it says the majority of orders are delivered
within two days, at a lower cost than traditional shipping.
It also is testing an in-store locker program for site-to-store
delivery.
Walmart U.S. President and CEO Bill Simon told investors
on the retailers’ second quarter earnings call that “We continue
to integrate our e-commerce platform with our stores to
create a unique shopping experience.”
Home entertainment can be a bridge between
stores, online
The home entertainment category, in particular, is ripe with
opportunities for retailers to link sales in physical stores with
online engagement and fulfillment.
A recent visit to a Walmart store revealed as many as a dozen
movie and TV titles available for pre-order, bundled with one
or more online components offered through Walmart’s Vudu.
com. An in-store pre-purchase of Iron Man 3, for instance, was
bundled with exclusive Iron Man 3 content and other Marvel
content available on Vudu. A preorder of the Pain & Gain DVD
came with early Digital access to the movie as well as instant
access to The Italian Job, also toplined by Pain & Gain star
Mark Wahlberg. A pre-purchase of Sons of Anarchy Season 5
came with instant access to watch the entire season on Vudu.
Ditto, Grimm Season 2. Consumers could prepurchase the Bluray combo pack of Star Trek Into Darkness and watch Star Trek
instantly on Vudu.
Best Buy uses similar promotions linking physical home
entertainment product with digital elements. Near the movie’s
theatrical opening, Best Buy began offering preorders of
Despicable Me 2 on disc with digital access to a sneak peek
of the animated comedy and a promised early release Digital
copy before the Blu-ray/DVD release.
DEGQFALL2013
20
“E-gifting is one of the new primary emerging channels.
You will be opening up your cell phone on Christmas morning
to see that Santa has three gifts for you.”
Thom Blischok, Booz & Company’s Retail Practice
Target will have similar opportunities when it rolls out its
Target Ticket Digital service by Oct. 1.
In the near future, Booz’s Blischok predicted, Digital movies
will also become popular e-gifts, with givers making the purchase either in stores or online and being able to choose the
date and time the gift is delivered.
“E-gifting is one of the new primary emerging channels,” he
said. “You will be opening up your cell phone on Christmas
morning to see that Santa has three gifts for you.”
Mass, online consolidate share
Online merchandising of digital and physical entertainment
also allows retailers to stock a broader range of titles than they
may have room for in stores.
Best Buy as part of its Renew Blue makeover strategy
instituted by president and CEO Hubert Joly late last year, has
reduced and restructured its floor space devoted to CDs, DVD
and Blu-ray to make room for growing and more profitable
product categories including mobile phones, tablets and small
appliances, and its instore showrooms for brands including
Samsung, Sony, Apple and Microsoft.
“Death by a dozen cuts, that’s what I think has been happening with shelf space over time,” in home entertainment
retail channels said Russ Crupnick, Senior Vice President,
Industry Analysis at NPD Group.
Like Best Buy, even music and video specialists Trans World
Entertainment and Hastings Entertainment have increased
their emphasis on profitable and popular non-software categories, particularly electronics and trend merchandise, although
they haven’t necessarily reduced the space devoted to home
entertainment to do so.
Marcy Magiera
Marcy Magiera is a writer and editor with 20
years’ experience covering the business of media.
She was formerly editor-in-chief of Video Business and is also known for her work with Variety
and Advertising Age.
Over the past five years, both the electronics and music/video
channels have lost share as entertainment buyers have migrated
to mass merchants and online. NPD data shows that for the
first half of 2013, the discount/mass merchant channel, including
Walmart and Target, captured 61.7 percent of consumers’ new Bluray and DVD purchases, while online represented a 16.5 percent
share. Five years ago, discounters held a 55.3 percent share and
online had 10.9 percent.
In the same time period, the share of electronics retailers, including Best Buy, fell to 7.7 percent, from 12.2 percent, and the share of
music/video specialists declined to 1.4 percent from 2.3 percent.
Mass merchant and online retailers also have the most loyal
home entertainment customers, according to Nielsen, with mass
shoppers purchasing 58 percent of their home entertainment
products in that channel, and online shoppers making 51% of their
home entertainment purchases online. Electronics store shoppers,
by comparison, made only 34 percent of their purchases in that
channel.
Price competition remains intense
While major retailers are loathe to give away their fourth
quarter promotional strategies, it’s safe to assume Blischok’s
call for “deals, deals, deals” will be heeded during the holiday
shopping season, which he forecast to start in September.
Target stores regularly stock a large array of $5 Blu-ray titles,
and Best Buy’s executives spoke in depth on the company’s recent
earnings calls about the need to improve the chain’s price competitiveness.
NPD data shows that across retail channels two of the most
potent factors in getting consumers to buy entertainment are
sale prices and the browsing experience. “There’s still an impulse
factor going on,” said Crupnick. “The ability to get some notice at
retail continues, in my opinion, to be really important.”
Nielsen reports that about two-thirds of all consumers age 13-54
do buy discs. Among buyers, about 18 percent of DVD purchasers
and 33% of Blu-ray buyers reported buying more movies than they
did a year earlier. Top reasons for buying more movies were recent
Blu-ray player acquisisions and, predictably, lower prices. n
DEGQFALL2013
21
DEGroup Reports
Committee Preps for Q4
Communications
Preps for Q4
T
he DEG is pleased to announce that the first DEG Digital Data Tracking report will be published in late October. This highly anticipated industry-wide
digital entertainment reporting system aggregates digital sales of movies
and TV shows in the U.S., Canada, Australia and Japan.
DEG members Anchor Bay Entertainment, HBO Home Entertainment, Lionsgate, NBC Universal, Paramount Home Media Distribution, Sony Pictures Home
Entertainment, Twentieth Century Fox Home Entertainment, Walt Disney Studios
and Warner Bros. Worldwide Home Entertainment Distribution are contributing
data to this new gold standard for digital data industry sales tracking.
The report will illuminate digital sales trends and performance by genre,
channel, source, territory, or resolution to help inform marketing decisions that
will drive ownership and collection of digital movies and TV shows.
Please contact the DEG for more information
“
T
he Communications Committee
continues to support the DEG in
all aspects of its public relations,
promotional and educational endeavors. For the balance of the year, the
Committee is primarily focused on
supporting the re-positioned branding
of digital products as outlined in this
issue’s cover story (see page 12 for the
full article).
The group is working with an
agency to actively respond to negative
references to UltraViolet on blogs and
forums, not allowing for criticism and
confusion to be accepted as truth.
They will also be producing a video
component to further dispel common
myths and dispel confusion about
UltraViolet.
“
SOUND TECHNOLOGY
Promoting the Benefits of Audio
T
he Sound Committee is tasked with
developing initiatives that promote
high quality audio as part of the overall consumer entertainment experience.
The Committee’s first initiative was to
promote the many features and benefits
of sound bars. The Committee produced
a brief video that highlights this YouTube
page: http://tinyurl.com/lxrcb89
The Sound Committee has asked DEG
member hardware and music partners to
post the link. They are also working with
retailers to post it online. Please contact
the DEG about further ideas for socializing
the video for greater awareness.
The Committee will focus its next
efforts on potential opportunities related
to headphones along with digital audio
platforms and services.
DEGQFALL2013
22
Blu-ray Not Looking Too
Shabby for Studios as
Digital Dollars Pile Up
“
DDT Report Goes Live
“
Digital Data Tracking
Home entertainment business
grows 2% in first half
As we look to the 4th quarter, we
continue to be positive about the
strength of the home entertainment
business, as outlined in our Mid-Year
2013 Home Entertainment Report.
For the balance of the year, the
group is aligning with the Connected Entertainment and UltraViolet
Marketing Committees on their respective projects in research, social
media, Blu-ray Disc messaging and
UltraViolet messaging and marketing.
DEGROUP REPORTS
Media & Content Operations
Creating Efficiencies and Common Standards in the
Physical and Digital Space
T
he Media and Content Operations
Committee is tasked with creating
efficiencies in the physical and digital
supply chains as well as promoting collaboration with several other organizations in
the space.
They oversee the activities of the Digital
Supply Chain Task Forces (Standards, Reporting and Universal Media ID), who focus
on developing and implementing common
industry standards in the digital space.
Metadata/Standards: A Common Metadata Board oversees and maintains the
common metadata specification, which
was developed by members of the DEG, Entertainment Merchants Association (EMA),
and MovieLabs. The Standards Task Force
is currently reviewing EMA’s specifications
for file formats, artwork, avails and closed
captioning, and will regroup shortly to
review edits.
Reporting: The Task Force is working
with Mediamorph on a Retailer Reporting
Service which will provide an XML spec for
direct studio to retailer communication and
“translate” retailer formats to the common
DEG format. They are working with both
studios and retailers in the integration/system testing and UAT phase. The project will
be completed in a few weeks.
Universal Media Identifier: The Task Force
continues its collaborative efforts with the
Hollywood IT Society (HITS) and EIDR, to
develop proof of concepts and drive consensus among content owners for registry
definition and use. The Committee will meet
with EIDR to discuss retailer involvement/
adoption, resources, business use cases
and milestones.
All of the above-mentioned standards
can be found on the DEG Web site and we
welcome any feedback to help with implementation and adoption.
Media & Content Standards
Digital Supply Chain Workshop
D
EG’s Media & Content Operations
Committee has engineered several
key learnings sessions for DEG members, most recently on July 31st, the group
promoted Digital Supply Chain standards
at a workshop at Netflix consisting of
70 DEG members, studios, retailers and
vendors. The workshop was the culmination
of more than two years of work in creating,
compiling and publishing standards for
title ID, metadata, and reporting. Representatives from DECE, EMA and Movielabs
also attended, reinforcing the respective
associations’ alignment and cooperation on
these standards.
Our purpose in developing these standards is to drive continued growth in the
digital video business. As we’ve found over
the years with the physical supply chain,
we have discovered time and time again
that collaboration in the supply chain is
better than competition.
There are myriad benefits to digital standards. The most crucial benefits are faster
product introduction, with higher quality
content and data, at a lower cost. These
benefits also drive sales, as more product is
available sooner and at a lower break-even,
monetizing catalogs. New entrants can more
rapidly enter the market if they adopt the
standards, as the content and infrastructure
is already prepared and in place. Vendors are
able to streamline and automate workflows,
as content is standard across the supply
chain, increasing capacity at lower costs. Accurate metadata makes it easier for consumers to find the content they want, lessening
consumer frustration. And finally, consistent
reporting data makes it easier to track sales
and efficiently pay rights owners.
At the workshop, participants reviewed
in-depth the standards for metadata, title ID
and reporting, identifying areas of agreement
and areas needing more work along the way.
Mike Sid of MediaMorph conducted a live
demonstration of the DEG Reporting Portal
and signed up additional test companies.
Following the meeting, all comments were
captured and all materials were distributed. For those that didn’t receive them, the
DEGQFALL2013
23
Netflix’s Chris Fetner
workshop materials are also available on the
DEG’s Web site (www.degonline.org).
The next steps are that the existing DEG
Task Forces will now work to refine their
standards to incorporate feedback from
members. Any DEG member company is
welcome to participate on these Task Forces.
If you are interested in joining, please reach
to out to Joanna Sulakhyan at Joanna@
degonline.org.
We are grateful to all participants for
taking the time to attend this important
workshop and to the Task Forces for their
exceptional work. And, a special thank you
to Chris Fetner for hosting us at Netflix. n
DEGroup Reports
Marketing
Aligning Messaging for
and
T
he Marketing Committee has been
busy developing unified plans to drive
movie ownership and collection, via
Blu-ray and Digital. The overall objective
is to increase home entertainment sales
by emphasizing the benefits of Blu-ray
and encouraging digital trial and adoption.
The group will focus on communicating to
consumers why buying and collecting movies is the best choice, particularly in high
definition: more value, more options, and
with digital, the ability to watch anywhere
across the device of their choice.
Digital and physical initiatives will be
combined for maximum impact and efficiency that consistently communicate the
value and benefits of ownership to different target audiences. The group is creating
marketing and messaging for three prime
audiences – DVD only buyers, Blu-ray Disc
buyers and Digital enthusiasts who collect
and store their movies digitally. The group
will position high definition Blu-ray & Digital ownership as the ultimate entertainment solutions in a consistent manner.
Based on the results of the recent Bluray research study, marketing initiatives
will reinforce key Blu-ray benefit messages
that resonated with consumers, i.e. Blu-ray
is the best quality, best value and best
choice. With Blu-ray you get - six times the
picture resolution of DVD, exclusive extras,
HD sound, and most Blu-rays include a
digital version of the movie for on the go
viewing. In addition, research has shown
that consumers have a growing understanding of “Digital” as a home entertainment product and service offering, and
the proliferation of retailer services and
digital storefronts has reinforced those
behaviors and knowledge. Consumers are
very comfortable with the term “HD” and
appreciate the value and benefits that it
brings to their entertainment. Combining
these concepts with the positioning of
“Digital HD” to convey high definition
digital ownership is a compelling offer and
we feel that consumers will respond to
positively.
The group is aligning messaging for
all marketing materials and consumer communication touch points. In
the fourth quarter, the top of Blu-ray
packages will include newly designed
Digital HD or Digital HD + UltraViolet
logos. The back of the package and
product stickers will prominently feature
graphic representations of Digital HD or
Digital HD + UltraViolet and the devices
available for consumers to enjoy digital
versions of the movie purchased.
Looking ahead, the group has retained a
strategic branding agency to further refine
overarching and specific target audience
messaging. A style guide is being developed for studios and retailers with focus
on all advertising and marketing materials
including television, online, on-screen,
product inserts and retail point-of-sale.
DEG has also created a Retail Task Force
consisting of key physical and digital account sales executives. The team will work
closely with the Marketing Committee to
support retailers with the roll out of new
messaging and other promotional activity.
To drive the messaging initiative in the
fourth quarter the group will launch a major Blu-ray and Digital online Social Media
campaign supported with advertising,
promotions and targeted blogging initiatives for key audiences. Studios also plan
to include the new messaging in key fourth
quarter title marketing activities. The
Committee is also developing Social Media
promotional plans to support the launch of
next generation game consoles featuring
Blu-ray playback functionality. n
Member Advisory Council
John Crosier
Senior Vice President, Digital Architecture and
Delivery, Cinram
johncrosier@cinram.com
Andrew Fry
Director of Product Strategy
Intel Digital Media Services
andrew.fry@intel.com
Mark Turner
Director, Content Relations
Dolby Laboratories
mark.turner@dolby.com
Steve Nickerson
President
Millennium Entertainment
snickerson@millenniumentertainment.com
DEGQFALL2013
Danny Kaye
Executive Vice President,
Business Development
danny.kaye@fox.com
24
DEGROUP Directory
Marketing Steering Committee
Co-Chairs
Rich Marty
Vice President,
Emerging Platform Development & Marketing
Sony Pictures Home Entertainment
rich_marty@spe.sony.com
Hilary Hoffman
Executive Vice President of Marketing
Universal Studios Home Entertainment
hilary.hoffman@nbcuni.com
Susan McLain
VSenior Vice President, Global Product
Management, Walt Disney Studios
susan.mclain@disney.com
Dorinda Marticorena
Senior Vice President, Worldwide Marketing
and New Technology, Warner Home Video &
Warner Bros. Digital Distribution
dorinda.marticorena@warnerbros.com
Members
Anne Parducci
Executive Vice President, Family Entertainment
and Marketing, Lionsgate
Bob Buchi
Senior Vice President, Brand Marketing
Paramount Home Media Distribution
Aubrey Freeborn
Senior Vice President,
Marketing & Product Management
Twentieth Century Fox Home Entertainment
Hilarie Hildebrandt
VP Retail Marketing
Twentieth Century Fox Home Entertainment
Robert Read
Senior Vice President,
Worldwide High Definition Marketing
Universal Studios Home Entertainment
Kris Brown
Vice President, Worldwide Film and High
Def Global Product Marketing
Warner Home Video
Julie Cartwright
Vice President, Marketing & Brand
Management, Anchor Bay Entertainment
Jim Belcher
Vice President, Technology and Production
Universal Music Group
Arnaud Dudemaine
Vice President, Operations Business Development, Audionamix
Nadia Balamash-Haney
HD Strategic Marketing
Universal Studios Home Entertainment
John Kellogg
Senior Director, Corporate Strategy and
Development, DTS
Sherine Saad
Executive Director, Global Product Management – New Product Strategy
Walt Disney Studios
Molly Kronberg
Vice President, Digital Media, DTS
Craig Eggers
Director, Home Theater Playback and
Content Creation, Dolby Laboratories
Gary Epstein
Product Marketing Manager – Professional
Authoring Tools, Dolby
Tim Alessi
Director, New Product Development
LG Electronics
Jeff Hiatt
Senior Product Marketing Manager
Sony Electronics
Aaron Levine
Product Marketing Manager, Home Audio/
Video-Home Products Division
Sony Electronics
Chris Frankenberg
VP Business Operations, Global Digital
Business, Sony Music Entertainment
Tripp Wood
Vice President, Digital Marketing
Twentieth Century Fox Home Entertainment
Vincent Marcais
Executive Vice President, Worldwide Brand
Marketing
Twentieth Century Fox Home Entertainment
DEGQFALL2013
25
Telly Kim
Director, Global Product Marketing,
Film & New Technology
Warner Home Video
DEGroup directory
DEGQ JUMPS
Media & Content Operations Committee
Chair
Ellen Goodridge
Vice President, Global Digital Operations
and Product Development,
Sony Pictures Home Entertainment
ellen_goodridge@spe.sony.com
Vice Chair
Susan Cheng
Vice President, Supply Chain Planning &
Data Governance, Warner Home Video
Members
Erin McGregor
Senior Vice President, Operations
Anchor Bay Entertainment
Michelle Nunes
Vice President of Operations
Gaiam Vivendi Entertainment
Anh-Van Nguyen
Director, Supply Chain Operations
HBO Home Entertainment
Akin Ceylan
Chief Supply Chain Officer &
EVP Operations, Lionsgate
Bob Wenokur
Executive Vice President Post Production
Delivery Lionsgate
Craig German
Executive Vice President Worldwide
Technical Operations
Paramount Pictures
MacPherson Q&A Continued from page 11
Ryan Stouffer
Senior Vice President Vendor Managed
Inventory (VMI) and Operations
Paramount Home Media Distribution
Chris Frankenberg
Vice President Business Operations,
Global Digital Business
Sony Music Entertainment
Steve Belmont
Vice President, Operations
Sony Pictures Home Entertainment
John Daly
Senior Vice President
Worldwide Production Services
Sony Pictures Home Entertainment
Doug Grossman
Vice President Supply Chain
Twentieth Century Fox Home Entertainment
Thomas Stilling
Vice President of Product and Promotion
Management,
Twentieth Century Fox Home Entertainment
Heidi Turk
Senior Vice President, Supply Chain
Universal Studios Home Entertainment
Steve Dahl
Senior Vice President, Worldwide
Operations & IT
Walt Disney Studios
Communications Committee
Chair
Jim Noonan
Senior Vice President, Worldwide Strategic
Promotions & Communications
Warner Bros. Home Entertainment Group
jim.noonan@warnerbros.com
Vice Chair
Lea Porteneuve
Senior Vice President, Communications &
Publicity
Universal Studios Home Entertainment
lea.porteneuve@nbcuni.com
Members
Peter Wilkes
Senior Vice President, Investor Relations &
Executive Communications, Lionsgate
Brenda Ciccone
Senior Vice President, Worldwide Publicity
Paramount Home Media Distribution
Marty Gordon
Vice President, Philips Electronics
Fritz Friedman
Senior Vice President, Worldwide Publicity
Sony Pictures Home Entertainment
James Finn
Executive Vice President, Marketing
Communications
Twentieth Century Fox Home Entertainment
Liz West
Vice President, Publicity, Walt Disney
Studios
DEGQFALL2013
26
original content, then purchase or rent it and begin
viewing immediately with a couple of clicks. In this
digital environment, are established entertainment
brands as important as they are in the traditional,
retail-oriented DVD and Blu-ray business?
A: I think it makes them more important, because
in the digital space right now, to your point, it’s
incredibly dense. There’s so much content. There’s
so much choice. The landscape is very fragmented.
There’s a lot of distraction and what rises to the top
are brands and franchises that the consumer knows
they like, and that they can trust. I think brands
become a beacon in the digital space.
Traditionally in the retail space we put a lot of
energy behind trying to secure Disney sections
and branded real estate and now a lot of our
activities in the digital space are taking that same
form. We’re going out with a lot of branded initiatives behind Marvel, Lucas, Pixar, Disney.
Q: How do you watch movies with your family?
A: We are movie omnivores. I grew up with a
father who worked in production and so I always
found movies with my family, and that’s been important to me with my husband and children. We
go to the movies in the theater, we see 2D, we see
3D, we do VOD, we own movies digitally, we buy
Blu-rays, we buy DVDs, we’re Netflix subscribers,
we’re Amazon Prime subscribers, we have DirecTV and I think we have every paid channel. We
even have this little arthouse rental store and my
kids get such a kick out of going there because
they didn’t grow up going to Blockbuster all the
time like kids did 10 years before them. They love
going to this rental store and just browsing the
shelves and seeing all these movies that they’ve
never discovered and asking about them. So
that’s a family experience too.
Q: How has the DEG has helped to support the
industry’s many initiatives?
A: The DEG has been such a great voice for the
industry. They have really helped to grow Blu-ray
and to educate the public about the value of Bluray and the benefits. They really helped to demystify Digital HD and digital ownership and explain
what started out as a very complicated ecosystem
in a very simple way. And they’ve also helped a lot
with just industry knowledge and really getting the
facts out there about what’s happening with the
industry and the fact that it’s very healthy and consumers are still in love with movies and spending a
lot of money on content. n
DEGQ-Tips
A wide open time for windows
What is the potential of window and pricing tests to boost digital sales?
Despite the fact that premium VOD has yet to gain traction in the U.S., windows are anything but static. On a quest to
create new opportunities for digital movie sales, Hollywood this year has undertaken a number of experiments in windowing and pricing. Consider the $50 World War Z “Mega-Ticket” that gave fans early access (by 2 days) to the theatrical release and a Digital HD copy on home entertainment street date. In Canada, $20 got moviegoers a “SuperTicket” to Pacific
Rim to see the movie in theaters and Digital access ahead of the wide home entertainment release. In fact, early Digital
availability ahead of packaged media has become a feature offered by some studios and retailers on select releases, such
as this month’s Star Trek: Into Darkness. DEG Quarterly asked leading media analysts for their take on the trend.
Q : What impact are these window and pricing experiments
having on theatrical and home entertainment revenue? Do early
windows have the potential to build the digital business?
A: Consumers are rapidly embracing personalized entertainment devices with beautiful HD screens that are always on and
connected to the Internet. So we are all increasingly walking
around with movie screens in our pockets, yet the tacit collusion
of the movie exhibition industry has scared the movie studios
from more aggressively collapsing windows. There is simply no
reason for the theatrical-to-home entertainment window to still
be 14-plus weeks long, especially when most movies have played
out the vast majority of their theatrical run in 3-4 weeks. We believe a wide array of consumers go, and will continue to frequent,
movies in the theater, but there is a meaningful population that
either cannot get to the theater regularly or does not like the
theater environment, who would happily pay premium prices for
earlier access to content delivered digitally. Whether it takes
the form of ownership (early digital-only sellthrough) or rental (so called, premium home
theater or earlier window iVOD), studios are
missing an opportunity to generate incremental
revenues/profits and feed consumers’ interest
in movies. It is time for studios to push innovation harder, even if their partners (the theaters)
are not in favor of change.
Rich Greenfield
Managing Director, Media & Technology Analyst, BTIG
A: The gradual shifting behaviour from ownership to access
is perhaps the biggest challenge facing the industry right now.
Therefore, studio experimentation with new digital release windows and pricing is partly born out of the need for studios to transition consumers to higher value digital products, as packaged
sell-through is in continued decline and the
demand for lower priced VOD product grows.
The strong performance of digital sellthrough titles in 2013 means the early release
strategy is likely to remain for many titles and
will help increase the appeal to consumers.
However, an early release is just one part of
the value proposition. Many consumers perceive the price as too
high, compared to the packaged version, PPV VOD services and
the cost of a monthly subscription to Netflix. But industry opinion on digital sell-through pricing remains divided—it may be
a while before we see widespread lower pricing of new release
titles, potentially restricting wider consumer appeal. With these
assumptions in mind, digital sell-through is expected to account
for less than 15% of home video revenues by 2017.
David Sidebottom
Senior Market Analyst, Futuresource Consulting
A: Although recent economic headwinds have not impacted
domestic box office trends (with this summer actually setting a
new record) and historical data has not shown
any meaningful correlation between consumer earning power and box office results, I do
not believe consumers are likely to gravitate
towards paying higher prices for early access
to movies – whether that is at the theater or at
home. Premium pricing and early windowing
experiments are likely to remain a niche business for studios for the foreseeable future. These experiments
generate some incremental revenues/profits for the studios on
some of the marginal titles and help to drive overall acceptance
of digital ownership with consumers.
Eric Wold
Senior Analyst, Media & Entertainment, B. Riley & Co. n
DEGQFALL2013
27
Together, Advancing the Future of
Home Entertainment