Home Media Magazine - March 23-29, 2009 - (Page 24) NEWS Indies Looking to Rental Market Continued from page 1 www.homemediamagazine.com and others are up, and digital downloads continue to grow for independents, they are far from making up the loss of retail shelf space,” Thor said. Indican’s Hill added that 10% of the country still doesn’t use computers, and Netflix, for all its impressive gains, still has just 10 million subscribers. “I think this market will grow, but don’t expect it to dominate anytime soon,” Hill said. “We see plenty of opportunity in the changing landscape toward digital, both free and ad-supported content, and we are experimenting with all of them,” said Cinema Libre’s Mair. PEOPLE I HAMBURGER TAKES BUYOUT There’s been another changing of the guard at Best Buy, sources say. Jill Hamburger, the chain’s point person with the Hollywood studios, has reportedly taken a buyout. Hamburger’s former boss, Julie Owens, is reportedly the studios’ new contact. Hamburger’s position as VP of movies and games has long been one of the most important in home entertainment retail. — Staff Reports taken up space at Blockbuster, Hollywood Video, Hastings, Best Buy and other retailers, said Shaun Hill of Indican Pictures. Getting product on store shelves in the first place is proving difficult, independents say, driving a majority of their sales through online outlets. “We’re having a hard time getting product placed,” said Arny Schorr, president of S’More Entertainment. “And I’ve seen sales drop off, the product going into retailers. We’re seeing a lot of retailers cut back on the number of SKUs that they carry.” Martin Mair, head of home entertainment for Cinema Libre Studio, said the entry barriers some major retailers place on their product — such as minimum sales performance, or theatrical benchmarks — take a heavy toll on moving niche product. “The majority of consumers are spending less on discretionary items, and, unfortunately, we fall in that category,” said Berry Meyerowitz, president of Peace Arch Home Entertainment. “Retailers are shrinking shelf space, and they don’t see DVD as a double-digit growth industry.” Freyr Thor, president of Vanguard Cinema, added: “Brick-and-mortar retail has all but abandoned independent products in favor of electronic accessories that bring in more dollars per square inch of shelf space. Buyers of indie films have migrated online, and the economy has additionally suppressed consumer spending enough to produce a downturn in sales.” For companies such as Lifesize Entertainment — which touts strong packaging as one of its strengths — not having product in front of consumers’ eyes for impulse buys makes things difficult. “The disappearance of the consumer browsing experience as we once knew it is the unintended consequence of this shrinking shelf space,” said Lifesize President Bruce Frigeri. “It creates a selffulfilling downward spiral of consumer interest; there is less and less to choose from in the retail environment.” But this isn’t the first recession independents have been through, and most agreed that DVD sellthrough isn’t going to disappear “I have heard a lot of chicken littles running around out there predicting that DVD is dead,” said Mike Stimler of Water Bearer Films. “Well, I do not think an industry as large as ours dies in 15 months, especially when there is no true alternative on the horizon.” Keeping many independents from losing too much sleep over sellthrough is rental, which is showing strong numbers. Netflix in January reported impressive fourthquarter profit of more than $22 million, up 45% year-over-year. Blockbuster has posted five straight quarters of same-store sales growth. Coinstar — owner of the Redbox rental kiosks — expects its DVD revenue to increase by 80% in 2009, to as much as $750 million. And Adams Media Research projects the rental market to stay flat with about $8 billion in annual revenue. “I’m very surprised and happy to see that the rental accounts are growing, where everything else is shrinking or just stuttering along,” said Joe Amodei, president of Virgil Films and Entertainment, formerly Arts Alliance America. Consumers still want their movies — as $1 billion in January theatrical spending shows — and for home entertainment, a $5 rental vs. a $20 purchase will always be appealing to cost-conscience consumers. “Thankfully, the rental market has been responsive and consistent throughout this past few quarters,” Vanguard’s Thor said. “If the price is right and you participate in revenue share programs at big retail, you can still get decent amount of independent rental copies out. We are currently relying on the strength of the rental numbers.” “Theatrical and rental have been two areas of growth for MPI as we continue to expand into newer avenues,” said Badie Ali, president of MPI Home Video. “Home video has always been a cheaper version of entertainment and in times like this serves as a nice supplement.” When it comes to digital downloads, downloadto-burn, download-to-SD cards and other forms of digital delivery, independents are saying the same thing as their studio big brothers: the money’s not there — yet. “Even if online catalog sales through Amazon Blockbuster Focus: $200M in Cuts Continued from page 1 PS3 Price Cut? Continued from page 1 prediction that a price drop of $50 to $100 was just around the corner for the PlayStation 3. Wedbush Morgan Securities analyst Michael Pachter echoed that prediction in January, saying April would see a $100 drop for the PS3 80GB model, with Microsoft following suit and dropping $50 off its Pro model in the summer. However, Peter Dille, SVP of marketing for Sony Computer Entertainment America (SCEA), told the news service that there are no immediate plans to drop the price of the PS3. “Everybody in the development community would love for the PS3 to be free, so they could just sell razor blades,” he told Bloomberg. According to video game data tracking site VGChartz.com, the Wii has walloped both the Xbox 360 and PS3, with more than 48 million units sold worldwide, 22 million of those in North America. The 360 has sold just under 30 million (nearly 17 million in the United States) while the PS3 is bringing up the next-generation console rear with 21 million units, about 8 million of those in North America. The NPD Group reported that the PS3 sold about 276,000 units in the United States in February, compared to 391,000 for the 360, and 753,000 for the Wii. “The Xbox 360 realized its biggest non-holiday sales month, save for September 2007, when the Halo 3 release brought in a large group of new owners,” said NPD analyst Anita Frazier. “Compared to last month, the PS3 realized the greatest month-overmonth unit sales increase of all platforms.” its credit revolver. The Dallas-based No. 1 DVD rental service said it planned to complete a $250 million funding of the facility in the coming days, which would represent about 65% of Blockbuster’s credit obligations. Without the amendment, analysts were concerned whether Blockbuster could meet its debt obligations. Blockbuster’s current $200 million credit revolver comes due Aug. 10. In a call with analysts, CEO Jim Keyes said with the third-party financing not assured, Blockbuster will continue to restructure $400 million in lease expenses and scale back retail initiatives in the first quarter of 2009. He said the company would take a conservative stance regarding ongoing efforts to transition from a rental pure-play to an entertainment retailer, including seeking out partnerships with third parties. Keyes said Blockbuster would focus on $200 million in cost reductions this year since it had little control over revenue growth in the current economy. “Even though $200 million in cuts sounds harsh, it’s only 10% of our total [sales, general and administrative expenses],” he said. “As the year progresses, we … will be investing as liquidity allows.” Keyes said the rental market’s biggest driver remains title strength, which he said lagged in the first quarter. He said first-quarter releases such as Punisher 2: War Zone and Elegy were good movies but not box office hits. Keyes said the year-to-date box office results, which included movies such as Watchmen, Slumdog Millionaire and Paul Blart: Mall Cop, portended better rental revenues in the future. “This is great for our business in about three months,” he said. “There are some great titles coming out.” The CEO said Blockbuster would continue to strive for profit in the Total Access by-mail, instore return service. “We feel we are positioned to grow the by-mail business,” Keyes said. He said the company would deploy Blockbuster-branded kiosks this year. Same-store sales (open at least 12 months) in the quarter increased 4.4%, compared to a 0.9% decline last year. The increase was attributed to a 2.6% decrease in domestic rentals (which includes previously viewed sales) and a 36.5% increase in retail sales driven by video games, merchandise and consumer electronics. Comp sales increased in all four quarters of fiscal 2008 (ended Jan. 4). It’s the first time in five years that Blockbuster has achieved compstore increases for all quarters in a year. Yearly comps jumped 6.4% in fiscal 2008. Blockbuster reported a fourth-quarter (ended Jan. 4) loss of $359.8 million, compared to income of $41 million during the prior-year period. The loss was attributed to a $435 million goodwill impairment charge, which meant actual adjusted net income totaled $80.4 million — exceeding analyst projections. Total revenue topped $1.38 billion, down 12% from $1.57 billion last year when the quarter included an additional week and Blockbuster operated an additional 167 corporate stores. Edward Woo, analyst with Wedbush Morgan Securities in Los Angeles, said the credit amendment bought Blockbuster breathing room. “They are closer to being out of the woods, but not completely out yet,” Woo said. “Success will be determined in the future, but they are chugging along.” http://www.homemediamagazine.com http://www.VGChartz.com
Table of Contents Feed for the Digital Edition of Home Media Magazine - March 23-29, 2009 Home Media Magazine - March 23-29, 2009 Contents News Comedy Reviews Research Top 20 Sellers Top 20 Rentals Just Announced Home Media Magazine - March 23-29, 2009 Home Media Magazine - March 23-29, 2009 - Home Media Magazine - March 23-29, 2009 (Page Cover1) Home Media Magazine - March 23-29, 2009 - Home Media Magazine - March 23-29, 2009 (Page Cover2) Home Media Magazine - March 23-29, 2009 - Home Media Magazine - March 23-29, 2009 (Page 1) Home Media Magazine - March 23-29, 2009 - Home Media Magazine - March 23-29, 2009 (Page 2) Home Media Magazine - March 23-29, 2009 - Home Media Magazine - March 23-29, 2009 (Page 3) Home Media Magazine - March 23-29, 2009 - Home Media Magazine - March 23-29, 2009 (Page 4) Home Media Magazine - March 23-29, 2009 - Contents (Page 5) Home Media Magazine - March 23-29, 2009 - News (Page 6) Home Media Magazine - March 23-29, 2009 - News (Page 7) Home Media Magazine - March 23-29, 2009 - News (Page 8) Home Media Magazine - March 23-29, 2009 - News (Page 9) Home Media Magazine - March 23-29, 2009 - Comedy (Page 10) Home Media Magazine - March 23-29, 2009 - Comedy (Page 11) Home Media Magazine - March 23-29, 2009 - Comedy (Page 12) Home Media Magazine - March 23-29, 2009 - Comedy (Page 13) Home Media Magazine - March 23-29, 2009 - Comedy (Page 14) Home Media Magazine - March 23-29, 2009 - Comedy (Page 15) Home Media Magazine - March 23-29, 2009 - Comedy (Page 16) Home Media Magazine - March 23-29, 2009 - Reviews (Page 17) Home Media Magazine - March 23-29, 2009 - Reviews (Page 18) Home Media Magazine - March 23-29, 2009 - Reviews (Page 19) Home Media Magazine - March 23-29, 2009 - Reviews (Page 20) Home Media Magazine - March 23-29, 2009 - Top 20 Rentals (Page 21) Home Media Magazine - March 23-29, 2009 - Top 20 Rentals (Page 22) Home Media Magazine - March 23-29, 2009 - Just Announced (Page 23) Home Media Magazine - March 23-29, 2009 - Just Announced (Page 24) Home Media Magazine - March 23-29, 2009 - Just Announced (Page Cover3) Home Media Magazine - March 23-29, 2009 - Just Announced (Page Cover4)
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