Chicken Soup for the Soul’s Bill Rouhana on the Rise of AVOD: ‘You Cannot Expect to Monetize Content From One Place’

Chicken Soup for the Soul CEO Bill Rouhana gets a chuckle out of how the big streaming services are now jumping on the AVOD bandwagon that companies such as his pioneered.

“I’ve seen it before,” Rouhana said in an exclusive interview with Media Play News on Aug. 11, the day Chicken Soup announced it had completed its acquisition of Redbox. “You cannot expect to monetize content from one place. And the subscription video guys, they just made the mistake of thinking that somehow or another they were going to get their money back [that they spent] on buying content just from subscriptions, and it’s proven to be completely false.

“So now they’re all coming to AVOD because they need more money, because they can’t recoup the cost of content from just their subscription business. Having been through this many times, I understand that content has to be monetized from in every possible way in order to have a sustainable business model.”

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Rouhana has been an executive in the media, entertainment and communications industries for more than 35 years. He founded Winstar Communications, a wireless broadband pioneer, and Winstar New Media, one of the earliest online content companies, back in 1993. Even before that, as an entertainment and finance lawyer from 1977 to 1985, he developed new film financing models for major producers such as Blake Edwards.

Rouhana acquired Chicken Soup for the Soul, at the time a book publishing company, in 2008. Since then, he has grown the company into a publicly traded operator of video-on-demand streaming services that include Crackle, Chicken Soup for the Soul, and Popcornflix. Chicken Soup also acquires and distributes video content through its Screen Media and 1091 Pictures subsidiaries, and produces original video content through the Chicken Soup for the Soul Television Group.

The Redbox acquisition brings to the Chicken Soup fold more than 145 free ad-supported streaming television (FAST) channels, a transactional video on demand (TVOD) service, and a network of more than 36,000 disc-rental, all supported by original film and television production and distribution divisions.

Rouhana said one of the company’s top priorities is to turn the Redbox app “into a super app that has all of our existing AVOD apps as well as everything it already has. I think that app is great, with the way they put it together, with kiosks and TVOD and free live TV and their Redbox AVOD. We’ll just add Crackle, Chicken Soup and Popcornflix, just like Disney does with its Disney+ app, where you can also get Hulu and ESPN. The apps will also be available individually — again, just like Disney+ — but also through a super app, if you want to use that.”

No date has yet been set for the launch of this “super app,” Rouhana said. “The development will take a little time,” he said, “but it’s certainly a priority.”

The executive also said initial integration plans will consist mostly of cross-promoting the company’s various products and services.

“Our Crackle apps have tens of millions of viewers, and there’s no reason we can’t promote Redbox products on there as well,” he said. “I think the cross-promotional opportunities are fantastic, and don’t forget the customer loyalty programs, which we can use for all products. One of the great opportunities here is to market more efficiently and in particular to know more about what people are interested in, so we can market the right things to them.”

As for the Redbox brand, Rouhana said he’s more interested in exploiting it than in absorbing it. “We don’t want to abandon the Redbox brand,” he said. “It’s a fantastic brand, and promoting and it making it a core part of our lives is critical. I don’t think we’ve figured it out exactly just yet — it’s hard to tell where this will go. Redbox is a fantastic brand in video, movies, etc., and we’re going to look at it from every possible angle and make sure we do the smartest thing for the overall company.”

Rouhana said Redbox fits in with existing Chicken Soup for the Soul properties because both are geared toward the value-conscious consumer.

“I think it’s a segment that hasn’t been catered to in the way that it should be,” he said. “Can the value-conscious consumer find places to get things for less? They can, but do people make it easy for them? I don’t think they do. And what I think we will do is focus hard on making it as easy and seamless as possible for the value-conscious consumer to find great entertainment. They want premium entertainment, but they have to search for it more than they should have to.”

Rouhana said Chicken Soup for the Soul has always been focused on quality content.

“I think we’ve been proving, step by step, that there’s high-quality content that you can make available on AVOD,” he said. “If you look at our track record, we have 70 or so original or exclusive pieces of content on our AVOD networks and a lot of it is really top-notch. Some of it has generated more views than most of the stuff you’ll see on the SVOD services.

“’Going for Broke’ is a great one, and so it ‘In the Vault.’ These are very successful series that people will binge watch, not because they’re free, but because they like them. I think it’s a matter of just continuing to plug away.”

Creating great content doesn’t require breaking the bank, Rouhana maintains.

“I think most people realize that merely because you pay too much to make something doesn’t make it good,” he said. “There’s no question that a lot of money is wasted making content. Batgirl may be the greatest example of that — we’ve never seen it, but they decided to give up on a $70 million to $90 million investment because it’s not good enough to keep going.  Spending a lot of money, that’s not a guarantee of quality. It just isn’t.”

Paramount’s Dan Cohen New Chair of DEG; Warner’s Jim Wuthrich Becomes Chair Emeritus

DEG: The Digital Entertainment Group on Aug. 12 unveiled its new board of directors, with Paramount Global chief content licensing officer Dan Cohen elected chair and prior chair Jim Wuthrich, president of content distribution at Warner Bros. Discovery, moving to chair emeritus.

Jonathan Zepp

Jonathan Zepp, head of media and entertainment global partnerships at Google, is the home entertainment trade association’s new vice chair.

DEG is celebrating its 25th anniversary this year and says it aims to drive membership “that reflects the diverse, global and fluid digital entertainment marketplace.”

The new officers of the DEG board were elected to two-year terms and will serve through July 2024.

Andrea Downing, president of PBS Distribution, returns as CFO, with Rick Hack, head of media and entertainment partnerships at Intel Corp., re-elected secretary.

Returning DEG member Sony Pictures Entertainment (SPE) and Amazon Web Services (AWS), a new DEG member company, are each represented with new DEG board directors: Jason Spivak, EVP, distribution, North America, SPE, and Chris Blandy, global leader, strategy and business development, media & entertainment, at AWS.

Andrea Downing

A+E Networks and Fandango/Vudu are longstanding members returning to the board. They are represented, respectively, by Mark Garner, EVP, content licensing and business development, and Mark Young, SVP of strategy, business and corporate development for Fandango and Vudu and general manager of Rotten Tomatoes.

The new DEG board also includes two seats representing DEG’s two alliances, the D2C Alliance (D2CA) and the Advanced Content Delivery Alliance (ACDA), which the trade group says “play increasingly important roles in focusing DEG membership for the future and broadening the organization’s membership.”

The D2CA director is Adam Lewinson of Tubi. The ACDA director is Bill Neighbors of Xperi Holding Corp. Both Lewinson and Neighbors serve as chief content officer of their respective companies.

DEG directors also appointed Robin Tarufelli of Deloitte as a special board advisor for the 2022-23 term, a role “intended to provide diversity of input from membership sectors and companies that might not otherwise be represented on the board,” DEG says.

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Rick Hack

DEG arrives at its quarter-century mark with an expanding global membership that includes 81 member companies encompassing all areas of digital entertainment, with diverse business segments and from a wide range of geographical locations. Examples include Israel’s Deepdub, a localization service provider; Argentina’s BB Media, a data science company specializing in media and entertainment; South Korea’s Blintn, a global content marketplace; and U.S.-based TreeTrunk, which introduces a new standard for NFTs that enables blockchain royalty collection and distribution.

“I’m delighted that DEG membership is evolving to reflect the increasingly global nature of the digital entertainment ecosystem,” said new board chair Cohen in a statement. “The new board is committed to serving all DEG members and to providing the membership even more opportunities for collaboration, education and networking across industry sectors and across borders.”

“We welcome all of our new DEG board directors and are thrilled about our expanding base of companies based outside the U.S.,” said Amy Jo Smith, DEG president and CEO. “I’m grateful that they see the value of membership in DEG, which is committed to continuing to deliver high return on investment for members evolving into global providers of direct-to-consumer entertainment.”

Extended Edition of ‘Jurassic World: Dominion’ Heads to Digital, Disc on Aug. 16

Universal Pictures Home Entertainment on Aug. 9 announced it is preparing a new extended edition of Jurassic World: Dominion for release on Aug. 16.

The extended edition, featuring 14 additional minutes of the film and an alternate opening, will be available digitally as well as on 4K Ultra HD Blu-ray and Blu-ray Disc.

The blockbuster dinosaur epic, the sixth in the “Jurassic Park” franchise and third in the “Jurassic World” trilogy, earned nearly $372 million in North American movie theaters, with a worldwide gross of over $960 million, according to Box Office Mojo.

The film first became available for rent and purchase on digital platforms on July 15.

The movie, which co-stars franchise regulars Chris Pratt and Bryce Dallas Howard, along with original Jurassic Park cast members Laura Dern, Sam Neill and Jeff Goldblum, was directed by Colin Trevorrow and executive-produced by Steven Spielberg, the director of the first two “Jurassic Park” films. Jurassic World Dominion takes place four years after Isla Nublar’s destruction, when dinosaurs roam the Earth again. 

Netflix, Redbox, MoviePass Vet Mitch Lowe’s New Book Coming Out Sept. 6

A new book by industry veteran Mitch Lowe, Watch and Learn: How I Turned Hollywood Upside Down with Netflix, Redbox, and MoviePass — Lessons in Disruption will be published Sept. 6 by Hachette Go, part of France’s Hachette Livre, the third-largest trade and educational publisher in the world.

“This is the inside story of how I and other entertainment industry disruptors shaped a world where you can watch whatever series or movie, wherever and whenever, you want,” Lowe said in an email to Media Play News.

The book features a forward by Marc Randolph, a co-founder of Netflix.

Lowe was a founding executive at Netflix, where he served as VP of business development and strategic alliances from 1998 to 2003. In 2003 he joined the investment group at McDonald’s to co-lead, first as COO and then as president, the management team at Redbox, the DVD vending machine rental service that under his leadership grew to 35,000 kiosks across the U.S.

In 2016, Lowe became CEO of MoviePass, a movie theater subscription service that acquired three million subscribers in eight months.

Lowe has since been on the speaker circuit, and has presented to audiences as large as 7,000 around the world. In 2019 he made BigSpeak’s list of the top five most-booked speakers.

Prior to Netflix, Lowe ran the Video Droid video rental store in California’s Bay Area and was the elected head of the Video Software Dealers Association (VSDA), the video retail trade group that has since morphed into OTT.X, the streaming trade association.

 

 

Giant Interactive Sold to Global QC Company Testronic Labs

Giant Interactive has been acquired by Testronic Labs, a global QC and localization company providing services to publishers and developers around the world.

According to a July 28 news release from Testronic, “this move will enable
Giant Interactive to greatly expand their capacity and services domestically and internationally. Together, we will make a significant investment in people and infrastructure. The result of this acquisition will immediately create a bigger, stronger company that can meet the increasing demands of our clients to deliver more content to a growing number of streaming platforms domestically and internationally.”

Jeff Stabenau

Expansion of facilities in both New York and Burbank are already underway, according to the release, as is the establishment of a content delivery services branch in Warsaw, where Testronic has an office with more than 800 people.

Jeff Stabenau, the founder and president of Giant Interactive, said, “We have partnered with Testronic on many projects over the years and know them to be a high-end company that executes to perfection. This expansion will enable Giant to better serve our clients throughout the U.S. and internationally, transforming Giant Interactive into a truly global provider.”

Giant Pictures, Giant Interactive’s content distribution company, will continue to operate as a separate stand-alone business and is not a part of this deal.

Rocking the Boat

The home entertainment business used to be fairly cohesive, with everyone — particularly the studios — pretty much in lockstep with one another.

Under the watchful gaze of antitrust attorneys, studios during the VHS videocassette’s last hurrah agreed on a common street date, and then banded together to support a new format, DVD, and a shift in strategy from consumer rental to consumer purchase.

Despite a brief format war, they ultimately agreed on one high-definition successor disc, Blu-ray Disc, and then 4K Ultra HD.

In the early days of Netflix, the studios blindly followed each other into feeding the beast that would one day eat them, and when digital delivery became an option they agreed on giving the digital release of movies a two-week window in the hopes of goosing sales — as well as supporting the notion of a “digital locker” in the cloud to make it easier for consumers to access their purchased content.

But today, as editor Stephanie Prange details in our July 2022 cover story, we’re seeing what essentially amounts to a free-for-all when it comes to windows. It started with the pandemic, when the closure of movie theaters gave studios the opportunity to pursue their long-held fantasy of premium video-on-demand. It was furthered when the same corporations that own movie studios launched streaming services of their own and needed content.

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The only common factor is that the traditional 90-day window between a film’s theatrical debut and its home release is gone. Three months was never really grounded in reason, given that most films peter out on the big screen after two or three weeks. But theater owners stubbornly clung to the old ways, perhaps out of fear of the proverbial “slippery slope” — which, in a way, is precisely what has happened, although not to the extent that exhibitors feared.

Prange points out that while windows are still all over the place, “patterns are starting to take shape.” Studios whose parent companies also own streaming services, now most of the majors, are sending some though not all of their top hits to streamers at the same time as, or shortly after, their theatrical release. Studios without streamers are playing the field. PVOD? No particular rhyme or reason. As for transactional availability, either digital or on disc, that’s even more of a guessing game. Most studios seem to favor shorter windows of, say, 30 to 50 days, but nothing’s set in stone.

The argument can be made that eventually, things will settle down, and schedules will be set and followed. But that doesn’t take into account the proliferation of platforms or the dominance of streaming, both of which are new developments, or the difference between a film’s audience and its theatrical performance, which was being argued over 30 years ago. An animated Disney film that earns more than $200 million in theaters is not the same as a $40 million, ‘R’-rated genre film.

Back in the old days, however, studios were reluctant to rock the boat. Now, each studio has its own set of priorities and strategies, driven by consumer, competitive and investor needs — and rocking the boat is the least of everyone’s concerns.

This Week’s Podcast: ‘Dual,’ ‘South Park’ Reviews; Weekend Box Office Report

On this week’s episode of the Media Play News podcast, hosts Charles Parkman and Charlie Showley cover the sleeper sci-fi film Dual, starring Karen Gillan and Aaron Paul. Gillan plays two parts simultaneously, the protagonist of the movie and the clone of said protagonist. It’s an interesting premise that didn’t get much attention when it was originally released. Following up is a review of both parts of South Park: The Streaming Wars, which touches (or beats the viewer over the head with) the absurdity of studios creating content for multiple streaming platforms. In typical South Park fashion, it’s done in hilarious and creative ways. (Both reviews are written by John Latchem.)
 
Lastly, in the weekend box office numbers, Jordan Peele’s third film, Nope, debuted in the No. 1 spot, the first film to unseat Thor: Love and Thunder as the weekend’s top grossing feature
 
Keep an eye on the podcast feed for our upcoming special report from 2022’s Comic-Con!

A World Without Retailers

Home entertainment retailing is on the ropes.

The buzz phrase of the moment is “direct to consumer.” Streaming keeps gobbling up more and more consumer home entertainment dollars — more than 80%, according to the latest DEG numbers, for the first quarter of this year. And while transactional spending appears to be holding up, disc sales remain in a freefall, with the latest quarterly spending reporting showing consumer purchases of DVDs, Blu-ray Discs and 4K Ultra HD Blu-rays accounted for less than 5% of total home entertainment spending.

No wonder, then, that big retailers like Best Buy and Walmart are cutting back on their physical media sections. I shudder to think what the end result of all this may be — will there come a day when physical media is gone completely from the major retailers, and if we want to buy a DVD or Blu-ray Disc we need to go to a studio website or that grand e-commerce aggregator, Amazon.com?

To me, at least, that’s a chilling thought. I’ve always enjoyed the retail experience — the searching, the discovery — from the time I was a teen eagerly browsing the cut-out bins at Tower Records, The Wherehouse and Licorice Pizza (the store, not the movie) to the more recent days of Suncoast and the Virgin Megastore, with vast inventories of what seemed to be every movie ever made.

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Maybe that’s why a few years ago, I resurrected my vinyl record albums, bought a new turntable and had Chuck Berry (my sound man, not the late rock pioneer) hook everything up to my home theater system. I regularly visit used record stores and also spend at least an hour a day on Discogs and/or eBay. The philosophical question I ask myself is this: Do I visit these stores because I am a record collector, or am I a record collector so I can visit these stores and once again enjoy the retail experience?

Hard to say.

I will say that I enjoy Netflix as much as anyone, with Discovery+ a close second. But there’s so much good stuff out there that isn’t on any of the streaming services that I regularly visit digital retailers such as Vudu and Redbox On Demand to check out what else is available. And I truly wish there was at least one big disc store with thousands of different titles — not just to buy, but also to browse and maybe get acquainted with something I ordinarily would never have thought about, or even known about.

But, alas, there isn’t any such store, at least not near my home.

I understand the concept behind, and benefits of, direct-to-consumer sales. The lack of a middle man means higher profits for the brand, and, hopefully, lower prices for the consumer. But as a consumer, I feel as though I have lost something — the joys of search and discovery, which I can still do online at the handful of third-party digital retailers that are bucking the DTC trend, but even that’s not nearly as gratifying as searching and discovering new movies and shows in a physical environment.

I fear there’s also an element of self-fulfilling prophecy. As physical media sections shrink, the lack of choice leads to even less business — which, in turn, leads to even smaller sections.

I sincerely hope we never get to the proverbial point of no return — although, in a way, we are already there.

Longtime Home Video Distributor Finds Gold in Vintage VHS Cassettes

Veteran home video distributor Steven V. Scavelli has uncovered a new profit center in the warehouse of Flash Distributors, the company he’s run for more than 30 years.

He’s been selling vintage VHS cassettes, most of them still sealed, through auction sites such as Goldin and Heritage — for hundreds and even thousands of dollars apiece.

Recent scores include the original 1982 Star Wars VHS release, which recently sold for $28,500; UFC #1, which went for $7,000; and Jaws, which brought in $12,500.

Scavelli says that over the last three years, Flash has generated sales in the seven figures from tapes that cost him, at most, $5,000, with the highest prices coming for original cassettes that are either still sealed or were sent out by the studios as promotional “screeners.”

“I’m telling you, this has become huge,” Scavelli says. “No one has any idea. And it’s still so early that we think it’s going to explode.”

Brooklyn, N.Y.-based Flash Distributors, which Scavelli launched in 1985, was one of fewer than a dozen national distributors who bought rental-priced cassettes from studios and independent film suppliers in the 1980s and ’90s and sold them to video rental stores, many of them single-owner operations or small regional chains.

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The rental business, which at one point generated upwards of $10 billion a year in revenue, began to shrink with the advent of DVD in 1997, as more and more consumers switched from renting cassettes to buying low-priced discs. But Flash and several other distributors soldiered on, selling DVDs and, later, Blu-ray Discs to video retailers not big enough to buy directly from studios.

Even today, Scavelli says, Flash distributes discs to 80 to 100 independent video rental stores. “And then we have sellthrough stores, guys who sell online, and guys we don’t know where they sell, but who buy in bulk,” he says with a laugh.

But the company’s primary business over the last three years has been selling VHS cassettes into the collector market.

“This started during the pandemic,” Scavelli says. “We started noticing people were asking for VHS again, and we began listing some of our old tapes on eBay, Amazon and etsy. We started checking the value of them, and we started seeing that people were asking for some pretty outlandish prices, we felt. It was $20, $50, $100, $500. And we thought, this is interesting. So we started listing them online, and we started getting sales. So we’re like, OK, this is real.”

Most of the cassettes, Scavelli says, “were just old product, cassettes that have been in Flash inventory for 30 years and have never been touched, never been circulated — just overstock we never sold and never returned when VHS ended. And some of it was stuff people were dumping, people offering to give us their VHS for free if we just paid for freight, which we did, because we figured one day it would be worth money.”

It didn’t take Scavelli and his team long to realize that day had come. Before long, Flash was seeking out more surplus VHS inventory, focusing on franchises such as “Teenage Mutant Ninja Turtles,” “Star Wars,” “Star Trek,” “Pokemon” and “Back to the Future” that could be picked up for as little as 25 cents apiece.

“We wanted to buy up as much inventory as possible,” Scavelli said. “We wanted to have all of it. If 10 other people have it, it dilutes the value, so this way we could basically set the value ourselves. Then we started listing more online, and we started realizing people would pay $20 for some, $50 for others, $100 for some, $500 for others — even $2,000. This all on eBay or etsy — Amazon wouldn’t let the prices go up so high.”

Sales were so strong, and some of the prices were so high, that Scavelli and his team contacted some of the online auction houses and collector auction sites that deal only in higher-priced collectables to see if they were interested in working with Flash.

“We had noticed that people were realizing this was becoming a thing, and there were VHS groups on Facebook and other places, and we started going on those, and then we learned that some people were starting to grade them, like you would a comic book or baseball cards,” Scavelli says.

“And that’s where the real money is. We’ve gotten $200 to $300 for used, open VHS cassettes, like rare horror, wrestling, and some of the top franchises such as ‘Star Wars’ or ‘Back to the Future.’ But many of the collectors want new sealed tapes, so we started seeing hobbyists start to grade them, based on the seal, the tightness of the packaging, if it has a sticker on top or watermark. And then some of the professional grading services started doing it, like PSA and VGA.”

Eventually, Scavelli and his team moved over the majority of their product to dedicated collector auction sites such as Goldin Memorabilia, a leading marketplace for trading cards, collectibles and memorabilia, and Heritage Auctions, the Dallas-based auction house that since its founding in 1976 has grown to become the largest auctioneer of collectibles ranging from numismatic collections, comics, fine art, books and luxury accessories to memorabilia from film, music, history and sports.

Just recently, Scavelli listed 12 titles with one auction house that sold for more than $100,000 combined.

Aside from first pressings of iconic films such as Star Wars and The Goonies and popular franchises from the 1980s and ’90s, the titles that bring in the biggest bucks are cult horror and blaxploitation films from indie labels such as Spartan, York, Coliseum and Academy, as well as direct-to-video productions from companies such as Media Entertainment and Shapiro Glickenhaus.

“Most of these titles never made it onto DVD or Blu-ray,” Scavelli says.

Scavelli envisions VHS prices getting even higher, noting that unlike other nostalgic trends, such as the resurgence of the vinyl LP, this one’s still in its infancy.

“People are just starting to get into it,” he says. “But it’s only going to get bigger. Rolling Stone just ran an article about Quentin Tarantino doing a podcast with Roger Avary, with whom he wrote the Pulp Fiction screenplay, on classic VHS films.”

And yet as a profit center for Flash, it’s not going to last forever, since eventually even he is going to run out of inventory.

“It’s already very hard to replenish because we’ve basically bought up everything in the market that has value,” he says.  “There are still people out there with inventory, but a lot of it is either ‘PD’ stuff or documentary-style stuff that isn’t really valuable. But, we have been able to accumulate over 250,000 sealed VHS tapes of titles and early prints that we have found are valuable to the generation that grew up on VHS.”

So what’s next?

“It’s interesting, because some of the DVDs and Blu-ray Discs that are out there, the ones that came out as Steelbooks and with cardboard O-rings, they are already starting to become valuable collector’s items,” Scavelli says.“But I do think it will be awhile before DVD has this VHS nostalgia thing, with people talking about how they grew up on this and willing to pay crazy amounts of money.

“New, sealed VHS collecting checks off all the boxes of what makes something collectible … fond memories, technology that changed how society enjoys entertainment, and scarcity.”

Kino Lorber Sets Blu-ray Disc Date for 1987 Actioner ‘Steele Justice’

Kino Lorber has set a July 12 Blu-ray Disc release date for Steele Justice, a 1987 actioner starring Martin Kove as a troubled Vietnam War veteran-turned-cop who confronts the Vietnamese Mafia after the murder of his best friend.

The film, directed by Robert Boris, will be released under Kino Lorber’s Studio Classics banner.

The cast also includes Sela Ward, Ronny Cox, Bernie Casey, and Sarah Douglas.

Kove is best known for his roles in The Karate Kid, Rambo: First Blood Part II, and “Cobra Kai.” He plays John Steele, a battle-hardened vet unable to find his niche in mainstream America. But when Southern California’s drug-running Vietnamese mafia murders his best friend, Steele finds a new war to fight.

Bonus features include a newly recorded commentary by Kove and Boris, moderated by film historian Alex Van Dyne.