Home Media Magazine - February 23-March 1, 2009 - (Page 26) NEWS www.homemediamagazine.com Best Buy Axes 40 Corporate Staffers By Erik Gruenwedel here are 40 corporate employees at Best Buy Co.’s Minneapolis headquarters who probably wish they could turn back the hands of time. They were among the first layoffs initiated Feb. 19 by the No. 1 consumer electronics retailer at the corporate level following last month’s staff reductions in which 500 employees — prompted by expanded severance and healthcare benefits — left the company voluntarily. Best Buy employed 3,460 people at the corporate level following the layoffs, including the relocation of 210 personnel to new positions throughout the company, according to spokesperson Sue Busch Nehring. “It is our sincere hope that these jobs can be filled by the people whose jobs were im- T pacted today,” Nehring said in a statement. “The new positions reflect organizational changes made to better align activities with Best Buy’s priorities.” Best Buy has not announced any job cuts at the store level. Revenue declines in computer elec- tronics and packaged media (movies and music) contributed to Best Buy posting a 6.5% same-store (open at least 12 months) sales decline for the December sales period ended Jan. 3, compared to a 1.5% increase during the prior-year period ended Jan. 5, 2008. APPLE REJECTS ‘SOUTH PARK’ IPHONE APP By John Latchem GAMESTOP FORECASTS ROSEY FUTURE By Chris Tribbey ideo game retailer GameStop isn’t reporting its fourth-quarter earnings until March. However, the company sent its stock up 7% Feb. 19 when it reported that its quarterly sales were $3.5 billion, a 22% increase over the same period in 2007, with full-year sales of $8.8 billion, compared to $7.1 billion in 2007 (ended Dec. 31). Per share earnings were estimated at $2.39 to $2.40 V for the year, an increase of 33% over 2007, the company estimates, and for 2009 GameStop is estimating sales growth between 10% and 12%, and share earnings growth of 18% to 22%. The company plans to open an additional 400-plus stores worldwide this year. “2008 marked yet another year of strong new hardware sales, which will again help drive sales of new video games in the years ahead,” said GameStop CEO Dan DeMatteo. he creators of the hit Comedy Central series “South Park” have announced that Apple rejected a proposed iPhone application that would have allowed fans to watch episodes for free on their phones. The application was announced last October and was submitted to Apple a couple of times for approval, according to Matt Stone and Trey Parker on their SouthParkStudios.com site. However, they reported, Apple rejected it as “potentially offensive.” According to Parker and Stone, Apple told them the standards would evolve, citing that when iTunes first launched, it didn’t sell any music with explicit lyrics. Several bloggers speculated the move had less to do with content and more to do with profit, as uncensored “South Park” episodes are sold at the iTunes store for $1.99 each. T Rental Market Still Robust of money to spend on entertainment,” Zaganiacz said. He said that throughout the buying Pali Capital. Continued from page 1 Todd Zaganiacz, president of the Na- group some retailers are up a few to purchase a DVD for $15 to $20. “The lower price and increasing con- tional Entertainment Buying Group, points, some are down, but the majorvenience of rental are driving growth,” a coalition of 300 independent video ity is operating on par with previous rentailers nationwide, said rental has years, which is considered a positive in she said. Indeed, DVD rental kiosks from Red- an opportunity to significantly increase the current economy. Zaganiacz said previously viewed DVD sellthrough is box, Moviecube and The New Release revenue during the downturn. “Sure, [rental is] not the cash cow of up slightly despite a decline in sales of continue to expand exponentially and are expected to surpass 20,000 units days past, but it’s still a viable alterna- new releases. “If consumers are financially strapped by the end of the year, according to tive for someone who doesn’t have a lot but still want to buy movies, then [previously viewed content] makes sense,” he said. “Through thick and thin rental is not going away.” Analysts say that while the rental market (including kiosk and online subscription) ended flat in 2008, the results supplanted sellthrough, which declined 9%. They say ongoing technological innovations and customer service (at the store level) have kept the market alive all these years when may people thought it was dead. “The category has to be performing for Netflix [and others] to do well,” said Arvind Bhatia, analyst with Dallasbased Sterne Agee. “It’s telling that the DVD rental category is still robust.” Tom Adams with Adams Media Research said Netflix’s streaming service has undoubtedly contributed to the company’s solid results and added to the general buzz about the rental market. Netflix Building Its Streaming Biz Continued from page 1 “Right now the power of the service is that hybrid message, the best of both,” Hastings said. “So we’re putting most of our wood behind that. But we recognize at some point in the long term, the streaming will be good enough that an appreciable number of people will find streaming is all they need.” Hastings, who did not say how much the streaming-only option would cost, said Netflix is working on licensing deals for content from HBO and CBS. He acknowledged the company needs a bigger online library, more subscribers and its software embedded on additional third- party devices to sustain a viable streaming-only service. Microsoft recently said that a million Xbox 360 users (and Netflix subscribers) had downloaded the software to stream content. Netflix spent more than $11 million in the most recent quarter acquiring physical and streamed content, according to a regulatory filing. “Increased streaming content not only helps us with our current subs, it also helps us with consumer electronics manufacturing partnerships,” Hastings said last month. Edward Woo, research analyst with Wedbush Morgan Securities in Los Angeles, said Netflix’s current $8.99 CLASSIFIED SHOWCASE CO M P U T E R S O F T WA R E USED TAPES & DVDS REDUCING YOUR INVENTORY? We Buy VHS, and also DVD & Video Games xtreme deo E 733-7370 (203) Vi FOR ADDITIONAL INFORMATION CONTACT: Kurt Wohlman (714) 338-6749 kwohlman@questex.com www.homemediamagazine.com monthly plan for one DVD and unlimited streaming already comes pretty close to standalone digital distribution. “They see streaming as their big advantage, and so far it’s proving to be the case, as they are having record [subscriber] adds and better churn rates,” Woo said. Independent analyst Rob Enderle said Netflix is aggressively hedging its bets floating a streaming-only option and not becoming complacent with physical distribution. “Most experts would agree that streaming will probably be the future for home entertainment,” Enderle said. In addition Enderle said that as the economy sours, an increased number of cable subscribers who have an HDTV with HDMI compatibility would turn to the Internet for video entertainment via downloads, streaming and Hulu.com to save money. “Netflix is ensuring that if that does happen, they can catch customers on the other side,” he said. Phil Leigh, analyst with InsideDigitalMedia.com in Tampa, Fla., agreed Netflix is doing an outstanding job establishing itself as a major benefactor as Internet video-to-TV gains momentum. He cited a recent humorous online video from The New York Times technology columnist David Pogue that hailed Netflix as the company that “finally nails the Internet movie business.” In the video Pogue is educated by a fictional babysitter about entertainment options on Netflix through his TiVo set-top box. Leigh argues that the tech-savvy babysitter actually missed a more direct route for Web-based entertainment: The HDMI cable. Instead of being limited to the largely older and obscure titles on the Watch Now library, Leigh said the sitter could have connected the PC to the TV with an HDMI cable and streamed newer content directly from Hulu.com or other destinations, including YouTube, ABC.com, NBC.com and CBS.com. “Nobody who has been surfing the Internet for years is going to be satisfied with 12,000 titles from Netflix,” Leigh said. “As hip as she is, the babysitter could have gone anywhere on the Internet to watch video with an HDMI connection.” Latino DVD Awards Continued from page 1 reception in MOLAA’s sculpture garden followed by dinner and awards presentation. The awards will honor the top Latino titles of 2008 in these categories. I Best Theatrical DVD I Best Non-theatrical DVD I Best TV DVD I Best Blu-ray Disc I Best Special Features/Bonus Materials I Best Classic DVD I Best Children’s DVD I Best Music DVD I Best Stand-Up Comedy DVD I Best Boxed Set/Collector’s Edition DVD I Best Packaging The Latino DVD Awards will be selected by a panel of judges composed of home entertainment industry experts, journalists and consumers. Submissions will be accepted through March 27. Pre-registration is $125 for EMA and DEG members, $150 for all others; after April 20, registration is $150 for EMA and DEG members and $175 for all others. For more information visit homemediamagazine.com or call 714/338-6734. Home Media Magazine February 23–March 1, 2009 http://www.homemediamagazine.com http://www.SouthParkStudios.com http://www.Hulu.com http://www.ABC.com http://www.NBC.com http://www.CBS.com http://www.Hulu.com http://www.InsideDigitalMedia.com http://www.rapidrental.com http://www.homemediamagazine.com http://www.homemediamagazine.com
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