Home Media Magazine - November 30 - December 6, 2008 - (Page 32) NEWS Indies Say Nothing Is Recession-Proof Continued from page 1 www.homemediamagazine.com Martin Mair, head of home entertainment for Cinema Libre. “For niche films like ours, we are seeing a drop in sales … but we think the niche market consumers of our titles are usually a little more affluent and less likely to stop buying them.” Today sales are going against the theory. Home Media Research says sales of packaged media — DVD and Bluray Disc — are down 7.62% through Nov. 16, compared to the same period last year. Consumers have spent $6.71 billion in 2008 through Nov. 16, compared to $7.26 billion in sales at that point in 2007. The 2007 figures include the sales of the now-defunct HD DVD. In a word, the climate for selling packaged media is “brutal,” according to Phoenix Entertainment Group president Tony Perez. Product from independents has long played second fiddle to new theatrical releases. “When corporate-owned sellthrough retailers make cuts to their buys, they often see our films as expendable,” said Michael J. Shoel, president of Ariztical Entertainment. “An ironic plus for us is that when we see this happen, we usually do see an increase in our business with online retailers.” And the loss of several retailers in recent years has made sellthrough for indies that much more difficult. “In three years we’ve lost Musicland, Comp USA and Circuit City,” said Greg James, president of Topics Entertainment. “That’s about 3,000 stores total.” Freyr Thor, president and CEO of Vanguard Cinema, said independents are suffering from cash-flow challenges, without theatrical revenue or overseas operations to compensate for a slowdown in domestic DVD sales. Belt-tightening is happening in every industry, and the independent movie distributors are no exception. Ariztical Entertainment is cutting back on how much it offers to producers of films. Topics Entertainment cut 10% of its staff in September, and may have to make more personnel cuts. Phoenix Entertainment Group is dropping its release slate from 25 titles to 15 for 2009. Advertising and marketing spending is being reined in by many independents, forcing them to get creative with viral, online campaigns to get their product noticed. “I think the relative mediocrity of studio DVD releases this spring and summer contributed to consumers concluding that buying DVDs just wasn’t as valuable as it once was,” said Bruce Frigeri, president of Lifesize Entertainment. “Add on the collapse of consumer confidence in the economy, and we are where we are.” The plight of independents is also hurting Blu-ray, with several companies saying they have no choice but to steer clear of it for now. “I have not seen a significant demand for it,” Ariztical’s Shoel said. “Perhaps after the holidays, that may change.” Shawne Kleckner, president and CEO of The Right Stuf International, said Blu-ray might not be the answer to declining DVD sales. “There’s going to be a lot of pressure to get the retail price down,” he said. If there is a recession-proof portion of the industry, it’s in the rental arena, several independents agreed, and the numbers back them up. According to Home Media Research, as of Nov. 23 consumer spending on DVD rentals is up 3.1% over the previous year, to $7.05 billion. “The rental market is the closest thing to recession-proof in our business,” said Berry Meyerowitz, president of Peace Arch Home Entertainment. “People need that two- hour break to take their minds off more serious things.” Frigeri said his company’s emphasis on rental product has left Lifesize in a better position than other independents. Ariztical’s Shoel added: “Rentals, in whatever format it takes shape, will provide an inexpensive form of needed entertainment and escape.” There are other silver linings to be found, some said. Jon Soo, VP of sales and marketing for Tai Seng Entertainment, pointed to the success of Summit Entertainment’s Twilight ($69.6 million on opening weekend) as proof that the movie industry continues to be attractive. And Dan Gurlitz, VP of video for Koch Entertainment Distribution, said positive sales figures for catalog titles show the industry is “recession resilient.” “Broadness of ordering seems to be back on track again vs. depth of copy, a signal that both the trade and consumers are once again seeking selection,” he added. Larry Brahms, president of MTI Home Video, said no industry is recession-proof. “That being said, any expenditure that averages under $5 and can entertain for multiple hours may be one of the last to go,” he added. Helping in Whoville (L-R): Andre Ethier of the Los Angeles Dodgers, a costumed Mayor of Whoville and Dorrit Ragosine, VP of publicity for 20th Century Fox Home Entertainment, spent the day at the Union Rescue Mission in Los Angeles Nov. 22, serving Thanksgiving meals to the homeless and volunteering at the “Whoville” Kids Zone, which was sponsored by Fox in celebration of its release of Dr. Seuss’ Horton Hears a Who!, available on DVD and Blu-ray Disc Dec. 9. Blockbuster Debuts Box Continued from page 1 I We asked some independent home entertainment companies to offer advice on how to weather the current economic climate. “Be realistic with sales projections and find a way to make the budget work.” — Michael J. Shoel, president, Ariztical Entertainment unlike today’s young consumer. Give the consumers that are spending their money what they want.” — Tony Perez, president, Phoenix Entertainment Group “Negotiate terms that make sense for the distributor and allow for the release to underperform. Be prepared to say no, even if you love the film.” — Bruce Frigeri, president, Lifesize Entertainment “We need to operate with fiscal responsibility and make changes quickly with a sense of urgency. We have to operate with the ability to make quick adjustments in expenses.” — Freyr Thor, president and CEO, Vanguard Cinema “Create value. As purses tighten, consumers are becoming more discerning in how they spend their hard-earned money. This does not necessarily point to lower SRPs, but instead to greater content and a greater experience being offered.” — Dan Gurlitz, VP of video, Koch Entertainment Distribution “The key is to remain focused and to provide consistent, quality product to your core audience.” — Badie Ali, EVP, MPI Media Group “Everything comes back to marketing.” “Be super-efficient and spread your bets.” — Greg James, president, Topics Entertainment — Maria Lynn, president, Wolfe Video “That older consumer is not spending as much as the younger consumer is. They just lost a bundle in the stock market and are looking at their retirement accounts, “Don’t overspend on acquisitions, don’t overspend on marketing, and take special care of your customers.” — Berry Meyerowitz, president, Peace Arch Home Entertainment HDMI cable — does not require a Blockbuster subscription. The box is available online at Blockbuster.com and at select Blockbuster stores. “We are bringing Blockbuster and thousands of movies in our digital library straight to customers’ TVs,” said Jim Keyes, chairman and CEO of Blockbuster, in a statement. Mentioned earlier this month in Dallas-based Blockbuster’s thirdquarter financial call, the player is positioned as direct competition in the burgeoning slate of devices, including Netflix’s proprietary streaming device from Roku, launched in May. The market for set-top devices, fueled by the conversion to digital broadcasts and IPTV, among other factors, is slated to peak at around 110 million unit shipments annually by 2012, according ABI Research. Netflix licenses its streaming technology to Blu-ray players manufactured by LG and Samsung, as well as Microsoft’s Xbox 360 and TiVo’s broadband digital video recorder. Sonic Solutions two weeks ago acquired movie download service CinemaNow, which it plans to incorporate in both proprietary and third-party media players. Netflix spokesperson Steve Swasey said the online DVD rental pioneer had no direct comment about the Blockbuster box. He reiterated that Netflix has relationships with five set-top box manufacturers and is working on others. “Our goal is to be ubiquitous and not just a Netflix box,” Swasey said. “We think the best thing for con- sumers is to have a choice.” Jonathan Symonds, VP of product management and marketing media, with 2Wire, said Blockbuster’s a-lacarte approach to movie streams and the MediaPoint player’s two USB ports and SD card slot did not suggest an apples-to-apples comparison with the Netflix box. “This is a different [streaming] model,” Symonds said. “[Blockbuster is] going to learn this market better, and this is the first step in that direction.” He said launching the player in the midst of a severe economic downturn necessitated the introductory pricing plan. “I think there is more risk at the higher end of the [consumer electronics] market than there is for a consumable impulse buy such as this,” Symonds said. Independent analyst Rob Enderle with Enderle Group said the Blockbuster player, if marketed correctly, could be just what the market is looking for this Christmas. “This isn’t a bad value, and it provides a gift that falls within the $100 window for family purchases, though, this year, that window may be much lower,” Enderle said. “It’s the products that cost in excess of $300 where we are likely to see the market pull back.” Edward Woo, analyst with Wedbush Morgan Securities in Los Angeles, said the price and features of the Blockbuster player made it compelling and differentiated it from Netflix’s box. “It is too early to tell [if it will be successful], but I think it’s another solid step towards a long path to eventual digital downloads,” Woo said. HOME MEDIA MAGAZINE (ISSN 1934-9882) is published weekly 52 times per year by Questex Media Group, Inc., 306 West Michigan Street, Suite 200, Duluth, MN 55802. 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Table of Contents Feed for the Digital Edition of Home Media Magazine - November 30 - December 6, 2008 Home Media Magazine - November 30 - December 6, 2008 Contents News Reviews Pipeline Research Top 20 DVD Sellers Top 20 Rentals and Top 10 Charts Just Announced Home Media Magazine - November 30 - December 6, 2008 Home Media Magazine - November 30 - December 6, 2008 - Home Media Magazine - November 30 - December 6, 2008 (Page Cover1) Home Media Magazine - November 30 - December 6, 2008 - Home Media Magazine - November 30 - December 6, 2008 (Page Cover2) Home Media Magazine - November 30 - December 6, 2008 - Home Media Magazine - November 30 - December 6, 2008 (Page 1) Home Media Magazine - November 30 - December 6, 2008 - Home Media Magazine - November 30 - December 6, 2008 (Page 2) Home Media Magazine - November 30 - December 6, 2008 - Home Media Magazine - November 30 - December 6, 2008 (Page 3) Home Media Magazine - November 30 - December 6, 2008 - Home Media Magazine - November 30 - December 6, 2008 (Page 4) Home Media Magazine - November 30 - December 6, 2008 - Home Media Magazine - November 30 - December 6, 2008 (Page 5) Home Media Magazine - November 30 - December 6, 2008 - Home Media Magazine - November 30 - December 6, 2008 (Page 6) Home Media Magazine - November 30 - December 6, 2008 - Contents (Page 7) Home Media Magazine - November 30 - December 6, 2008 - News (Page 8) Home Media Magazine - November 30 - December 6, 2008 - News (Page 9) Home Media Magazine - November 30 - December 6, 2008 - News (Page 10) Home Media Magazine - November 30 - December 6, 2008 - News (Page 11) Home Media Magazine - November 30 - December 6, 2008 - News (Page 12) Home Media Magazine - November 30 - December 6, 2008 - News (Page 13) Home Media Magazine - November 30 - December 6, 2008 - News (Page 14) Home Media Magazine - November 30 - December 6, 2008 - News (Page 15) Home Media Magazine - November 30 - December 6, 2008 - Reviews (Page 16) Home Media Magazine - November 30 - December 6, 2008 - Reviews (Page 17) Home Media Magazine - November 30 - December 6, 2008 - Reviews (Page 18) Home Media Magazine - November 30 - December 6, 2008 - Reviews (Page 19) Home Media Magazine - November 30 - December 6, 2008 - Reviews (Page 20) Home Media Magazine - November 30 - December 6, 2008 - Reviews (Page 21) Home Media Magazine - November 30 - December 6, 2008 - Pipeline (Page 22) Home Media Magazine - November 30 - December 6, 2008 - Pipeline (Page 23) Home Media Magazine - November 30 - December 6, 2008 - Pipeline (Page 24) Home Media Magazine - November 30 - December 6, 2008 - Pipeline (Page 25) Home Media Magazine - November 30 - December 6, 2008 - Top 20 DVD Sellers (Page 26) Home Media Magazine - November 30 - December 6, 2008 - Top 20 DVD Sellers (Page 27) Home Media Magazine - November 30 - December 6, 2008 - Top 20 Rentals and Top 10 Charts (Page 28) Home Media Magazine - November 30 - December 6, 2008 - Top 20 Rentals and Top 10 Charts (Page 29) Home Media Magazine - November 30 - December 6, 2008 - Just Announced (Page 30) Home Media Magazine - November 30 - December 6, 2008 - Just Announced (Page 31) Home Media Magazine - November 30 - December 6, 2008 - Just Announced (Page 32) Home Media Magazine - November 30 - December 6, 2008 - Just Announced (Page Cover3) Home Media Magazine - November 30 - December 6, 2008 - Just Announced (Page Cover4)
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