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Jim Wuthrich: Lifting and Shifting From the Disc Into the Digital Stream

“Put it on a Disc.” That was the name of our relay team that back in August 1995 ran the 200 miles from Mount Hood to the Oregon coast over a 24-hour period.

I didn’t have a clue how that phrase would come to dominate my career.

The startup company I was working for at the time in Portland, Creative Media, was my introduction to DVD as it pivoted from the early computer multimedia era of CD-ROM.  One of our first DVD products was the Blockbuster Guide to Movies and Video, recently ported from CD-ROM to the higher capacity DVD.

That product led me to Southern California in 1998 to join the Warner Bros. team that was launching movies on DVD.  When I walked through those doors on the famed Warner Bros. lot, I would never have imagined I would still be here 24 years later, but it’s a testament to a company and industry that is ever-changing.

Those early days were frenetic — much as they were at the startup I left.  Warren Lieberfarb [at the time, Warner Home Video president and the “father of DVD”] was a missionary, resolute in the belief that people would want to own and collect movies, and he was determined to make the format a success.

It wasn’t a forgone conclusion.  There were naysayers everywhere: “Movies are one viewing and done, why would anyone want to own?”; “DVD isn’t the future; digital tape will win the format war”; “DVD players are too expensive, no one will buy.”

But Warren saw the future and tirelessly drove his staff, industry and detractors until DVD became one of the fastest-growing consumer electronics formats in history.  It was a fun, heady time.  The breakout was the first The Matrix movie.  I remember speaking with my mother, who said she bought The Matrix DVD, which was interesting because it wasn’t her type of movie, but more to the point, she didn’t own a DVD player!  When asked why she bought it, she said she heard so much about it, she just had to buy it.

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On a large title we’d ship 20+ million discs, host lavish launch parties and debate spending millions on advertising “chase” campaigns.  There were many innovations including special features (behind the scenes/making of/documentaries), connected discs which enabled content updates and “virtual” theater events with the director, and E Copy, a digital copy of the film that could be stored on a computer.

There were format wars (Divx/Blu-ray/HD DVD) that spilled over to the front page of The Wall Street Journal, business model innovations (rental revenue sharing, subscription by mail), discovery of latent consumer interest in TV series (DVD was the original binge format), and hijacked trailer trucks full of DVDs (because of their value).

As successful as DVD was, it would only be a bridge to the next chapter in distribution: digital, delivered over the internet.  Eliminating the physical disc was the ultimate efficiency tool, promising near instantaneous global distribution, where and when needed.

Physical media is inherently inefficient in that predicting consumer demand down to the individual store is fraught with either not enough or too much product, and the resultant lost sales or “returns” (excess inventory) could have a major impact on profitability.  Internet-delivered movies and TV shows also freed up endless “shelf space” so even the most obscure movie or TV series could find a listing in a digital retailer’s database.

But there were challenges, too, including slow internet speeds, data caps, digital rights management, getting it to the TV, rights and supply chain issues.

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The early days of digital were a lift and shift of the physical world in that the predominant business model was transactional; either a rental (video-on-demand, or VOD) or “ownership” (electronic sellthrough, or EST).  The MVPDs and satellite companies were offering VOD or PPV and eventually expanded into EST, but it was the internet-based businesses that had the biggest impact.  There were many retail pioneers, including Movielink, the studios’ ill-fated joint venture.  iTunes extended their innovation of unbundling the music album to TV, allowing consumers to buy individual episodes of TV shows versus the whole series; they also were one of the first to offer special features from a digital menu familiar to DVD users and were the first to build a global footprint.  Other early pioneers that are still offering transactional include Vudu, Xbox, Amazon and Google.

Another concept borrowed from the world of physical media was buy-and-play anywhere. Back then, digital platforms were silos where the content was captive to the platform it was purchased on, unlike DVD, which could be bought at any retailer and played on any DVD player.

Ultraviolet (UV) was an attempt to add more utility to a digital purchase, so that a movie bought through retailer “A” could be played back at retailer “B” — which was particularly helpful  in the early days, with limited ways to playback on TVs.  Eventually, the entitlement concept pioneered by Ultraviolet was replaced by Movies Anywhere, with a more robust retailer and studio network.

Today, digital video is everywhere, but the dominant business model has shifted from transactional to subscription.  An undeniable consumer bargain, the all-you-can view subscription buffet continues to enjoy tremendous growth as it spurs the industry to create ever-more storytelling.

It’s interesting to note that the other formats have not gone away. The transactional market generated over $8 billion in consumer sales through DVD/Blu-ray and transactional digital last year — the majority purchased by consumers who also have subscription services.  For fans of movies and series, there has never been a better time.

Having seen it all, I can retire the “Put it on a Disc” shirt.  I have a new one to wear now that says “HBO Max.”

Jim Wuthrich is president of content distribution for WarnerMedia and chair of DEG: The Digital Entertainment Group.

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