Home Media Magazine - May 11-17, 2008 - (Page 32)

NEWS Digital Hollywood: DRM Not a Dirty Word Continued from page 1 www.homemediamagazine.com ª Both legal and illegal content [is available on most P2P networks]. I don' t think that' s a choice you should be offering. ¼ This industry just has to decide where its future lies.º P2P operators, Internet service providers and content companies all wrestled over how Hollywood can monetize a medium that many people have long been using for free. ªT his is not a new thing with us, adopting technology,º said Derek Broes, SVP of digital entertainment for Paramount Pictures. ªI t's the association with theft that we despise ¼ pira tes for pirates.º Paramount has certainly tried Ð and succeeded Ð when it comes to digital distribution. Last year's Jackass 2.5 was available first as a free online, streaming video and then as a paid digital download as well as VOD and DVD. That was a Hollywood first. ªAfter it was available for free, it did extremely well [in paid formats],º Broes said. LimeWire, one of the more popular P2P networks Ð the program is on one in five PCs worldwide, according to some estimates Ð is making headway in the ad-supported download realm. ªAnd we think this is a global solution,º said LimeWire CEO George Searle. Some argued that the studios are as much responsible as the P2P networks, when it comes to consumers choosing paid-for content. ªIf I search for Iron Man, what type of experience, what do I need, to click on the legal results?º asked Joey Patuleia, co-founder of Brand Asset Digital, which markets and brands digitally distributed content. With P2P traffic dominating Web traffic and faster downloading options being implemented, the war against free, illegal content isn't anywhere near completion. ªIn terms of where we'r e at in this [P2P] evolution, it's like the second chapter of War and Peace,º said Tom Munro with Verimatrix and the Digital Watermarking Alliance. DRM may be the only thing keeping video from suffering the same fate as music in the digital world. ªFo r various reasons, DRM has become a whipping horse, a buzz word,º said Alan Bell, EVP and CTO of Paramount Pictures. ªW hat we'r e really talking about is digital rights, because fundamentally, content owners are selling I.P. (intellectual property).º Bell compared studio properties without DRM to Ford lining trucks up on the curb with the keys in the door, or Blockbuster renting out movies without having your credit card on file. Nothing's meant to be for free, and content owners have no choice but to protect what they'r e selling. ªW hen someone says DRM is bad, it's nonsensical. Without DRM there wouldn't be any digital subscription models,º said Ton Kalker, senior research scientist with HewlettPackard. Still, content owners realize that too much DRM hurts their own bottom line. Finding the right DRM fit for products, without infringing on consumers' ability to use those products, is a difficult thing. ªYo u have to package the rights in a manner for what [consumers] want to do,º Bell said. ªI f it doesn't match, piracy will fill the void.º Making sure content with DRM will play on a majority of devices is becoming increasingly difficult, said Robert Shummann, GM of Dolby Laboratories subsidiary Cinea. He also suggested that studios lighten up with the DRM on older properties. ª By the time a movie is seven, eight months old, 75% of its value has been reached,º Shummann said. ª The idea that you need the same protection on a movie that' s five years old compared to one that' s just in theaters inherently seems out of place.º Dressed for DVD (L-R): 20th Century Fox Home Entertainment VP Dorrit Ragosine joins ªP roject Runway' sº Chris March, ªAl ways a Bridesmaid, Now a Brideº finalist Brooke Kaiser, 27 Dresses star Malin Akerman and fashion designer Randolph Duke at the DVD release event for Fox' s Photo by: Diane Bondareff 27 Dresses in New York April 28. Disney DVD Sales Pick Up Continued from page 1 Fox Still Bullish on Blu-ray Despite Slowing Continued from page 1 market by the summer and contribute to an upswing of both player and movie sales through the fourth quarter. The COO said News Corp. remains bullish on Blu-ray due to the format's higher margins compared to standard DVD. He said if margins remain constant and players become abundant, year-end industry Blu-ray revenue could reach $1 billion. ªW e think these [Blu-ray] discs are more valuable [than standard DVD],º C hernin said. The COO said Fox would begin releasing limited titles on cable videoon-demand (VOD) the same day as the DVD. Chernin said the studio will not emulate Warner Bros.' recent decision to release a majority of its movies simultaneously on VOD and DVD, citing ongoing monitoring of tests to determine whether the strat- egy cannibalizes DVD sales. ªIt's too soon to declare overall that we are going to move every single one of our releases to day and date,º Chernin said. ªV OD will continue to rapidly grow. But I wouldn't expect it to be overwhelmingly additive.º When asked what he thinks of physical rentals through Blockbuster and Netflix, Chernin said Fox will continue to be a player, but stressed that sellthrough margins greatly exceed DVD rental. ª We have consistently over a 10-year period seen that there are much higher margins for us in the sellthrough business Ð regardless of what delivery device you use, than there are in the rental business,º Chernin said. The filmed-entertainment segment of News Corp. reported thirdquarter (ended March 31), operating income of $261 million, down 36% from record $410 million during the same period in the prior year. The company said residual DVD sales of The Simpsons Movie, Live Free or Die Hard and Fantastic Four: Rise of the Silver Surfer were hard-pressed to beat sales of Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan, Night at the Museum, The Devil Wears Prada and Little Miss Sunshine during the prior year's same period. Filmed entertainment segment revenue, driven by Alvin and the Chipmunks and Oscar-winner Juno, topped $1.6 billion, compared to $1.8 billion the previous year. Chernin admitted the company's interactive segment, Fox Interactive Network, with properties that include MySpace and Hulu, would not meet prior 80% growth projections by about $10 million. ªO ur shortfall will be slight,º he s aid. He said Fox Interactive Network was still on target to generate $1 billion in revenue in the next three years. disc is $5 higher than standard DVD, which he said bodes well in the short term. ª We' re believers because of the quality of the experience, but it is going to take some time for the platform to penetrate the marketplace,º Iger said. Disney hardly required Blu-ray to boost second-quarter results. Strong DVD sales of Enchanted, The Game Plan and No Country for Old Men helped Disney' s studio entertainment division post a 61% increase in Q2 (ended March 29) operating income to $377 million, compared to $234 million during the prior-year quarter. CFO Thomas Staggs said he estimated DVD unit sales in the quarter had increased 15%, compared to the year prior. The entertainment division reported Disney' s highest internal revenue growth at 18%, followed by parks and resorts (11%), consumer products (10%) and media networks (5%). When asked about Warner Bros.' decision to release a majority of its new DVDs on cable video-on-demand the same day, Iger said he shared the enthusiasm. Still, he called ongoing tests between studios and cable operators ª neither negative nor positive.º ªT hey'r e not particularly conclusive,º he s aid. The CEO described current VOD revenue as incremental and said he expected same-day DVD/VOD rollouts from the studios to occur over the next five years. He said for Disney movies, families still prefer owning the DVD so their children can watch it repeatedly. ª The sale of physical goods (DVD) will continue to be important for a long time and will dominate the marketplace,º Iger said. ª But we also are in general quite positive about other forms of delivery.º Studio entertainment revenue topped $1.8 billion, compared to $1.5 billion last year, boosted by the box office success of National Treasure 2: Book of Secrets and Hannah Montana and Miley Cyrus: Best of Both Worlds Concert Tour. L A T E FL A SH ES I ANALYST OPTIMISTIC ABOUT BLOCKBUSTER Heading into Blockbuster Inc.' s earnings call May 15, an analyst with Utendahl Capital Partners said the No. 1 DVD rental company expects to report net income of $30 million and earnings (before interest, taxes, depreciation and amortization) of $110 million. Analyst Alden Mahabir said in a research note that he was ª encouragedº by the projection since he said it showed the operational strategy implemented by CEO Jim Keyes ª seems to be working.º Mahabir said his kudos did not apply to Blockbuster' s announced attempt to acquire Circuit City Stores Inc. Dallas-based Blockbuster had net income of $40 million in the fourth quarter Ð a result that left CNBC market analyst Jim Cramer declaring that ª Blockbuster Ð Erik Gruenwedel is back.º HOME MEDIA MAGAZINE (ISSN 1934-9882) is published weekly 51 times per year (weekly except for one week at the end of December) by Questex Media Group, Inc., 306 West Michigan Street, Suite 200, Duluth, MN 55802. Subscription rates: $49.99 for one year in the United States and Possessions; $79.99 for one year in Canada and Mexico; all other countries $99.99 for one year (by surface mail). Add $75 annually for air-expedited service. Single copies (prepaid only): $6.99 in the United States, $8.99 in Canada and Mexico, $13.99 all other countries. Back issues, if available: $9.99 in the U.S.; $15.99 in Canada and Mexico; $26.99 for all other countries. Include $6.50 per order plus $2 per additional copy for U.S. postage and handling. 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Home Media Magazine - May 11-17, 2008 Contents News News News News Commentary TV DVD Cine Mercado Reviews Pipeline Research Top 20 DVD Sellers Top 20 Rentals and Top 10 Charts Just Announced Christian Entertainment Review Contents Product Profile Talent Profile Retail Profile Reviews New Releases

Home Media Magazine - May 11-17, 2008

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