Home Media Magazine - August 19-25, 2007 - (Page 1)

AUGUST 19–25, 2007 >> E LE C T R O N I C D E LI V E RY INSIDE Google Vid Ends Downloads The Web search giant is canceling its video download/rental service. Veoh Files Against UMG The video-sharing site filed a preemptive suit to state its compliance with digital law. PAGE 14 B R I N G I N G D I G I TA L E N T E R TA I N M E N T TO YO U 4T H Q UART E R U N W R AP P E D Movie Gallery Seeking To Stem the Bleeding By Erik Gruenwedel R E TA I L Facing default proceedings with creditors and possible insolvency, Movie Gallery Inc. didn’t blink and instead extended its forbearance agreement with lenders to Aug. 27. The No. 2 video rental chain recently had incurred significant losses in the second quarter (ended July 1), raising doubts it could meet its debt requirements and continue operations. Gallery lost $325 million in the second quarter, compared to $25 million during the same period last year, according to a filing with the Securities and Exchange Commission. Revenue fell 6% to $561 million, from $601 million last year. In the filing, the company said non-compliance with its debt requirements resulted in vendors, including studios, restricting credit terms in favor of up-front payment or cash-on-delivery. Gallery had originally extended until Aug. 14 a forbearance agreement with senior lenders after disclosing poor quarterly sales and less than $50 million in liquidity. The company’s financial disclosure made it likely it wouldn’t meet those obligations, and analysts warned creditors could begin foreclosure proceedings. Separately, the company Aug. 1 sold an empty warehouse originally built as a distribution Studios saturate the market with DVD sets of film series, especially trilogies FLOOD FRANCHISE center to an investment group in Dothan, Ala., for an undisclosed amount. “They are not quite dead yet, but they are definitely passed out,” said Michael Pachter, analyst with Wedbush Morgan Securities in Los Angeles. He said Gallery was beyond the point financially where current management could save it. Joe Malugen, chairman, president and CEO See MOVIE GALLERY, Page 38 Spider-Man IGER: BABY DVD STUDY IS FLAWED By Chris Tribbey he Walt Disney Co. and The Baby Einstein Co. LLC are demanding the University of Washington retract and clarify a press release the university issued Aug. 6 for a study that concluded watching baby DVDs may hinder infants’ language development. The university rejected the request. Disney CEO Bob Iger also questioned the validity of the study’s findings in a strongly worded letter to UW president Mark A. Emmert. See DISNEY, Page 40 By Billy Gil n this “year of the trilogy,” studios are taking full advantage of the successful film series in their libraries. Sony Pictures Home Entertainment and Lionsgate are leading off what should be a fertile season for franchise collections with the announcements of upcoming “Spider-Man” and “Saw” sets, respectively. Sony Pictures has a slew of “Spider-Man” releases coming Oct. 30 (prebook Sept. 27). The web-slinging superhero will appear in a DVD threepack ($38.96) and the Spider-Man High Definition Trilogy (three-Blu-rayDisc set $98.95), both of which include all three “Spider-Man” films, as well as a single-disc DVD ($28.97), two-disc special-edition DVD ($36.95), UMD ($28.97) and two-disc Blu-ray ($49.95) of Spider-Man 3 alone. See TRILOGIES, Page 40 I T Saw Genius CEO: Industry Should Be More Proactive in HD Format War By Erik Gruenwedel enius CEO Trevor Drinkwater isn’t afraid of challenges. The former Warner Home Video executive showed considerable moxie last year when he shrewdly sold 70% of the company to Bob and Harvey Weinstein’s The Weinstein Co. The Santa Monica, Calif.-based distributor just reported its first profitable quarter, which Drinkwater believes can be sustained without an overreliance on TWC titles. Home Media Magazine caught up >> H I G H-D E F H I G H-D E F MAR KE T S HAR E Blu-ray and HD DVD Sales Comparison as of 8/12/07 Week Ended 8/12 Year-to-Date I Blu-ray I HD DVD G Drinkwater INSIDE: Genius posts first company profit Page 8 with the CEO following the quarterly results (see story, page 8) to get his opinion on the format war and nascent electronic sellthrough market, among other issues. I HM: Is the industry doing a good job selling next-generation optical media? Since Inception 34% 66% 66% 34% 61% 39% Drinkwater: We could be doing a better job. I think we should be taking a little bit more of a leadership role, focusing more attention on the retailers’ needs and the consumers’ needs so we can move this thing forward. It feels to me See DRINKWATER, Page 36 Source: Nielsen VideoScan First Alert data INSIDE PAGE 12 >> Blu Reigns Overseas Blu-ray Disc sales are soaring in regions such as Eastern Europe and the Middle East. >> ‘Galactica’ on HD DVD Season one of “Battlestar Galactica” is landing on HD DVD Dec. 4. >> LG Cuts Player Price LG’s dual format HD DVD/ Blu-ray player, the BH 100, is getting a $200 price cut. NEWS Lionsgate is looking to boost digital delivery and VOD to snag a bigger piece of the home entertainment pie. PRODUCT See what titles studios are pitching to holiday shoppers, such as Sony Pictures’ Surf’s Up, in our fourth-quarter buying guide. RESEARCH Warner Home Video’s 300 once again fought to the top of the sales chart, while DreamWorks’ creepy Disturbia topped rentals. Page 10 Page 18 Page 32

Table of Contents Feed for the Digital Edition of Home Media Magazine - August 19-25, 2007

Contents News News/Box Office News TV DVD Q4 Preview Reviews Pipeline Research Top 20 DVD Sellers Top 20 Rentals and Top 10 Charts Just Announced

Home Media Magazine - August 19-25, 2007

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