Home Media Magazine - February 24, 2008 - (Page 12) NEWS www.homemediamagazine.com European DVD Biz Facing Hurdles But looking forward to Blu-ray adoption by consumers By Sam Andrews ast year was a tough one for the European DVD business. The issues facing the region varied from the specter of an economic slowdown to piracy, price deflation and intense competition from other forms of entertainment, including a resurgent games industry. Two people charged with maintaining a healthy DVD business are Matt Brown, EVP international, Sony Pictures Home Entertainment, and Eddie Cunningham, president of Universal Pictures International Entertainment. For Cunningham, a major target for improvement over the next year is physical distribution and fulfilment. “One of the key points is the supply chain — it needs to be closer to its optimum than it is today,” he said. Cunningham can be forgiven for having the supply chain uppermost in his mind — Universal’s replicator system went into meltdown in late 2007, causing the studio a major headache. That local difficulty aside, he is more concerned that the industry through its boom years did not concentrate on improving its systems. “I think as an industry we have to sit down and think about what we can do better,” he said. Brown agrees, suggesting that the developments seen in the United States on logistics and merchandising will filter around the world. “We are going to invest much more in merchandising and instore,” he said. “It is unacceptable to be out of stock at any point — you cannot sell a movie unless it is on the shelf. Consumers need to have a good experience when they are in-store. Brown also highlights the need to work more closely with retailers to understand the demographics of individual stores, even in those towns with multiple outlets. “We need to be better at figuring out with retail what is selling in each of those stores,” he said. “It is no longer about sending a bunch of stuff out and seeing if it sticks. We have a tremendous business — a multibillion-dollar business around the world — but there is no question that we have to constantly L improve and get better at how we service the consumer through our customers.” On a European level, both are highly positive about regions such as the Benelux, Scandinavia, the United Kingdom and Germany but express some concerns about France, Spain and Italy. “Over the past couple of years, a number of the European markets have matured, and we’ve had some decline,” Cunningham said. “It feels to me that last year, the majority of markets showed some growth, the main reason being that there was some great content around. Good stuff sells.” Matt Brown Eddie Cunningham America’s favorite classic cowboy heroes star in this terrific collection of action features. You’ll find old favorites like Roy Rogers, Gene Autry, Johnny Mac Brown, Tim McCoy, Hoot Gibson, Ken Maynard, Bob Steele, Tex Ritter and the incomparable Randolph Scott. Also find hidden gems like The Proud Rebel starring Alan Ladd and The Gay Amigo, featuring Duncan Renaldo (The Cisco Kid). I Upcoming Event Brown and Cunningham will be speaking as part of PEVE Digital Entertainment 2008, the leading conference for the international home entertainment business, which takes place in Paris April 17-18. For more information visit www.peve. screendigest.com The big exception was France, he said, where the economic climate and political unrest made a lot of consumers uneasy about their financial position. “It seems that there was a broad retail issue, and it affected video sales,” he said. “We think the market in France fell about 11% in value last year, and it had a disastrous Q4.” excited about the new format.” He, like Cunningham, does not believe it will roll out as dramatically as the conversion from VHS to DVD. “That was a dramatic leap from analog to digital,” he said. “But I do think people will find high-definition product to be compelling, and the roll out will be steady. Our job is to figure how fast we can make it happen.” Brown admits that the emergence of improved standard-definition DVD players — the upscalers — are a potential distraction at consumer level but argues that the industry has to combat it with more in-store demonstrations. “As you get used to watching things in HD, it is hard not to want it all the time,” he said. “I still believe the best way to sell Blu-ray — and 1080p TV screens — is to show people the content.” An aggressive campaign in support of PlayStation 3 and Blu-ray in Spain has helped a market that is characterized by both execs as hard. “The difficult markets in Europe, apart from France, which I think is a blip, by the way, are Spain and Italy,” Cunningham said. “I think the reason for that is that they have been heavily rental-based territories, and that business just gets tougher and tougher.” More Broadband Could Boost Piracy Fuelled by broadband Internet, piracy is also a major issue in Spain and Italy, Brown said. “Piracy has affected us worse in Spain than pretty much any other country in Western Europe,” he said. “It really has been one of those countries where it has grabbed hold in spite of MPA efforts and in spite of all the studios’ individual efforts. We are looking to Blu-ray to help offset some of that.” And he warns that the roll out of broadband around the world could see similar damage done elsewhere. “We have seen it in places such as Korea where they have almost 100% high-speed Internet penetration,” Brown said. “Youth has been online playing games and interacting See EUROPEAN, Page 36 High Hopes for High-Def Brown hopes high-definition will lift the French market. “We’ve seen good growth out of Blu-ray this year,” he said. “The French love entertainment product and are embracing high-definition.” Cunningham believes high-def will make “a bit of an impact” over the next year, but Brown expects more. “I’m thrilled that it has happened,” he said of the Warner move to Bluray. “It means that we are going to go out and get the consumers Call: (866) 410-9000 12 Home Media Magazine February 24–March 1, 2008 http://www.homemediamagazine.com http://screendigest.com http://screendigest.com
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