Home Media Magazine - December 14-20, 2008 - (Page 20) NEWS By Erik Gruenwedel he union representing movie and television actors Dec. 10 said it would formally send strike authorization ballots to members Jan. 2, 2009, with the results tabulated Jan. 23. If 75% of the Screen Actors Guild’s (SAG) 120,000 members approve a strike against the Alliance of Motion Picture and Television Producers (AMPTP), the union’s national board www.homemediamagazine.com Resolute SAG Seeking a Strike Vote in January T could authorize Hollywood actors’ first major work stoppage since 1980. Both sides, which have failed to find agreement despite involvement of a federal mediator, have been working under the previous labor contract, which expired June 30. SAG president Alan Rosenberg said a “yes” vote would send a strong message to the studios and empower union negotiators. “Our objective remains to get a deal that SAG members will ratify — not to go on strike,” Doug Allen, SAG national executive director and chief negotiator, said in a statement. Actors are seeking greater compensation from Internet distribution, in addition to revamping the 20year-old home video residual agreement, which studios have steadfastly refused to address. The agreement originally applied to VHS, but the subsequent arrival of DVD and Blu- ray Disc made residuals a more lucrative prospect. In addition to increased minimums, pension and health care provisions, the new contract presented by the AMPTP offers jurisdiction on new-media programs, in addition to first-ever residuals on ad-supported streams of movies, TV shows, permanent downloads (burn to disc), and original and derivative new-media programs. The AMPTP said SAG members are being asked to bail out their union’s failed negotiating efforts by going on strike during one of the worst economic periods in history. “We hope that working actors will study our contract offer carefully and come to the conclusion that no strike can solve the problems that have been created by SAG’s own failed negotiation strategy,” the trade group said in a statement. Blockbuster Can Weather Economy, CFO Says Continued from page 1 He said Blockbuster charges on average $4.30 per rental across its chain of 5,000 domestic stores. When eliminating free in-store exchanges from Total Access, discount coupons and related rewards, the net-rental rate is about $3.15, which Casey said lagged behind the industry standard. Edward Woo, analyst with Wedbush, said Casey wanted to get the effective pricing closer to real pricing, which he said could involve charging premium pricing for longer rental terms and greater product availability. “They need to grow the average price and shorten the length of the average rental … and Blu-ray should help,” Woo said. Casey said the recent rollout of 99-cent rentals of catalog and second-day product in 2,500 stores, combined with 60% availability of new releases during the first week (compared to 15% in 2006) and increased sellthrough product, had resulted in year-todate gross profit dollars (at the store level) increasing to $1.43 billion, from $1.39 billion. In addition to a recently announced $99 Rinna’s Beautiful Debut set-top box that delivers movies from the Internet to the television, Blockbuster also is testing proprietary rental kiosks and content downloads to scan discs and flash drives. “I have to believe the 99-cent rentals are aimed squarely at both kiosks and this weak economy,” Woo said. To promote the Dec. 9 DVD and Blu-ray Disc release of home entertainment’s most coveted title, The Dark Knight, Blockbuster hired actors dressed as Batman to woo consumers from 10 p.m. to midnight Dec. 8 in select stores. “We want to communicate to people that coming to Blockbuster can be a new experience,” Casey said. He said Blockbuster represented a better value proposition compared to Wal-Mart due to its online, streaming and packagedmedia distribution channels and proximity to consumers. The CFO said home entertainment revenue would remain relatively flat through 2011, which he said included $8 billion in DVD rentals and $26 billion in retail sales. “Blockbuster hasn’t historically served [retail] but has been ramping up efforts to do so this year,” he said. Casey said the subscription rental business remained profitable to Blockbuster and represented “a place holder” on the digital future. The executive downplayed analyst and media attention on digital distribution, which he characterized as small in terms of dollars. Casey said cable VOD is the biggest part of digital distribution ($1.2 billion in 2007) and grew to $1.6 billion this year. “As part of the $35 billion adjustable home entertainment market, the dollars involved in digital downloads are actually nominal,” he said. “The DVD rental business [remains] the principal engine of [our] growth. “Studios only make 2.5% of their revenue in the VOD window today and are not likely to put at risk half of their profitability. [That] is why there hasn’t been much collapsing of the [release] window for cable over time.” Casey said Blockbuster this year reduced administrative expenses and in the future will seek to reduce leases, 40% of which come due each year. Restructuring expired leases downward reportedly could save the company more than $67 million annually. Warner Home Video hosted a DVD launch party for the new “Lisa Rinna Dance Body Beautiful” DVDs. (L-R): Don Polite, WHV executive director, sports and fitness marketing; Lisa Rinna; Eddie Scannell, WHV director of sports and fitness marketing; and Robin Massey, WHV manager of sports and fitness marketing. Netflix Prospers in Bad Times Continued from page 1 subscribers by the end of the year and buck gloomy economic trends by increasing marketing expenditures. “The economy has very much been our friend,” McCarthy said. “We are having a remarkably strong quarter. We are sitting at the Wal-Mart end of the spectrum.” The retail behemoth Wal-Mart through the fourth quarter has bucked retail trends and impressed analysts with same-store sales gains, not losses. The CFO said Netflix nonetheless continued to scale back on employee costs, which involved cutting 50 technical specialist positions. Conversely, Netflix said it is expanding its customer service group, according to spokesperson Steve Swasey. McCarthy said Netflix would increase marketing spending 20% more than previously budgeted because the business model was “working so well.” While DVD subscribers continue to emerge, McCarthy admitted that the number of new subscribers coming to the service just for streaming was “embryonic” but getting better. LAT E F L ASHES I FUTURESOURCE BOWS SUPPLY CHAIN REPORT Distributors and content owners can expect less shelf space from retailers and less time on the shelf for titles, according to a home entertainment supply chain report from Futuresource Consulting. “[Lower DVD revenue is] resulting in retailers employing a more cautious approach to ordering stock,” said Futuresource consultant Michael Boreham. The report concludes that retailers are having a tougher time balancing the need to stock enough product vs. inventory costs. “The game is really picking up now, and there’s very little margin for error,” — Chris Tribbey Boreham said. I DALY: DREAMWORKS DISC REVENUE DOWN DreamWorks Animation SKG COO Ann Daly told investors the decline in home entertainment was “dramatic,” but that the company was weathering the recession. DreamWorks’ internal numbers have DVD sales down 6% thus far in 2008, with new theatrical disc release revenue down 20% since the start of the year, Daly said. November’s release of Kung Fu Panda (more than 10 million units worldwide) and higher retail prices for new releases compared to the industry average ($21 vs. $16) have kept the company in good shape, she said. She said 25% of sellthrough revenue has come from premium product, such as Blu-ray Disc and multiple-DVD packs. Daly also shared that Secrets of the Furious Five — the DVD bonus with the Kung Fu Panda release — would be released on its own before Easter, and will see a broadcast run starting Feb. 26. Shrek the Halls (Nov. 4) should hit 1.5 million worldwide units shipped by the end of the year, Daly said. — Chris Tribbey I WII, 360 OUTSELL PS3 Consumers snapped up lower-priced next-gen game consoles in November. The Wii sold 2.04 million units for the month to the Xbox 360’s 836,000 and PlayStation 3’s 378,000, according to U.S. data from The — Stephanie Prange NPD Group. He told Reuters that as the instant streaming service grows, Netflix will eventually charge subscribers for it. Piper Jaffray analyst Michael Olson concurred, believing Netflix has been overly conservative regarding its financial estimates and doomsday scenarios. “At the very least, we believe estimates have been revised down to the point where numbers more than reflect any impact from slowing consumer spending,” Olson wrote in a research note. Separately, Netflix said a team of computer scientists and machine-learning experts from the United States and Austria won the $50,000 progress prize in the 2-year-old $1 million challenge aimed at improving Netflix’s movie recommendation system by 10%. The winning team, whose members comprised last year’s winner and runner-up, improved Netflix’s recommendation system 9.44% (and has since moved up to 9.56%). “Hitting that last 0.44% is less of a dash to the finish line and more of a tough slog to the peak of Mt. Everest,” said Neil Hunt, chief product officer at Netflix. 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. 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. 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Table of Contents Feed for the Digital Edition of Home Media Magazine - December 14-20, 2008 Home Media Magazine - December 14-20, 2008 Contents News News Cine Mercado Reviews Research Top 20 DVD Sellers Top 20 Rentals and Top 10 Charts Just Announced Home Media Magazine - December 14-20, 2008 Home Media Magazine - December 14-20, 2008 - Home Media Magazine - December 14-20, 2008 (Page Cover1) Home Media Magazine - December 14-20, 2008 - Home Media Magazine - December 14-20, 2008 (Page Cover2) Home Media Magazine - December 14-20, 2008 - Home Media Magazine - December 14-20, 2008 (Page 1) Home Media Magazine - December 14-20, 2008 - Home Media Magazine - December 14-20, 2008 (Page 2) Home Media Magazine - December 14-20, 2008 - Contents (Page 3) Home Media Magazine - December 14-20, 2008 - News (Page 4) Home Media Magazine - December 14-20, 2008 - News (Page 5) Home Media Magazine - December 14-20, 2008 - News (Page 6) Home Media Magazine - December 14-20, 2008 - News (Page 7) Home Media Magazine - December 14-20, 2008 - Cine Mercado (Page 8) Home Media Magazine - December 14-20, 2008 - Cine Mercado (Page 9) Home Media Magazine - December 14-20, 2008 - Reviews (Page 10) Home Media Magazine - December 14-20, 2008 - Reviews (Page 11) Home Media Magazine - December 14-20, 2008 - Top 20 DVD Sellers (Page 12) Home Media Magazine - December 14-20, 2008 - Top 20 DVD Sellers (Page 13) Home Media Magazine - December 14-20, 2008 - Top 20 Rentals and Top 10 Charts (Page 14) Home Media Magazine - December 14-20, 2008 - Top 20 Rentals and Top 10 Charts (Page 15) Home Media Magazine - December 14-20, 2008 - Top 20 Rentals and Top 10 Charts (Page 16) Home Media Magazine - December 14-20, 2008 - Top 20 Rentals and Top 10 Charts (Page 17) Home Media Magazine - December 14-20, 2008 - Just Announced (Page 18) Home Media Magazine - December 14-20, 2008 - Just Announced (Page 19) Home Media Magazine - December 14-20, 2008 - Just Announced (Page 20) Home Media Magazine - December 14-20, 2008 - Just Announced (Page Cover3) Home Media Magazine - December 14-20, 2008 - Just Announced (Page Cover4)
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