DEG Announces Board for 2019-20

DEG: The Digital Entertainment Group on Aug. 9 announced its incoming board of directors at the start of its 23rd year as one of the home entertainment industry’s leading trade associations.

DEG’s voting member companies elected the new board to serve for the 2019-20 fiscal year (Aug. 1 – July 31). New board members include Pedro Gutierrez of Microsoft Corp., Cheryl Goodman of Sony Electronics and Erol Kalafat of Amazon Studios.

Amazon Studios is a new member company represented on the
DEG board for the first time.

The DEG also has added two additional companies to its membership: Row8, a transactional digital movie service that allows viewers to stop a movie they don’t like and choose a new one at no additional charge, and Snap Inc., parent company of social networking app Snapchat.

The Officers of the DEG board were elected to a two-year term in 2018 and will continue to serve through July 2020. Officers include Chair Matt Strauss of Comcast Cable; Vice Chair Sofia Chang of WarnerMedia Distribution (HBO); CFO Bob Buchi of Paramount Home Entertainment; Secretary Jim Wuthrich of Warner Bros. Worldwide Home Entertainment & Games, and Chair Emeritus Mike Dunn, formerly of 20th Century Fox Home Entertainment.

“At a time when our industry is rapidly changing, the board of directors strives to produce deliverables that meet the needs of the industry at this dynamic time, such as DEG’s D2C Alliance, formed at the start of the year,” said Amy Jo Smith, president and CEO of the DEG.

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Media Play News Fast Forward 2019 Awards Luncheon

Media Play News honored four digital retailers with the publication’s second annual Fast Forward Awards for driving the home entertainment industry forward. This year’s awards included a luncheon and ceremony, held April 4 at the Universal Hilton in Universal City, Calif., and hosted by the Entertainment Merchants Association. Awards went to Cameron Douglas of FandangoNow, Jonathan Zepp of Google Play Movies & TV, and Galen Smith of Redbox, and the team at Apple iTunes. EMA used the event to launch its EMA Leadership Development Foundation, aimed at supporting professional training and development within the home entertainment industry, and particularly within the EMA membership.

Cohen Tapped as President of Worldwide Home Entertainment & Television Distribution at Paramount

Paramount Pictures Feb. 26 announced the promotion of Dan Cohen to president of Worldwide Home Entertainment & Television Distribution.

Cohen, previously President of Worldwide Television Licensing, assumes the role previously held by Mary Daily, who had overseen International Theatrical Marketing and Home Entertainment for the studio since 2017, but earlier this month was promoted to co-president, Worldwide Theatrical Marketing & Distribution. He reports to Andrew Gumpert, Paramount’s chief operating officer.

Bob Buchi remains president of Worldwide Home Entertainment and reports to Cohen.

Cohen and Buchi are both veterans of Walt Disney Studios’ mighty home entertainment operation.

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Cohen joined Paramount in 2017. Prior to that, he spent 20 years at Disney/ABC, most recently as EVP of Pay Television & Digital for Home Entertainment & Television Distribution for The Walt Disney Studios. There, he distributed catalog properties including Disney, Pixar, Marvel, Lucasfilm, ABC & Disney Channel.

Buchi has been with Paramount since 2006. He assumed leadership of the studio’s entertainment division in 2015. He began his career in home entertainment at Walt Disney Studios, and subsequently oversaw marketing at DreamWorks Home Entertainment. He later oversaw family brand marketing at Universal Studios Home Entertainment before joining Paramount.

“Dan has been an indispensable leader in the licensing space, both for Paramount and in the industry at large,” said Gumpert. “He has a proven track record of business growth, and I am confident that, along with Bob Buchi and his team, he will more than excel in overseeing our home entertainment and television distribution businesses.”

2019: Home Entertainment to Thrive on Change

If there’s any truth to the adage “change or die,” then the home entertainment business has plenty of life left in it as we begin 2019.

The coming year will bring significant changes, as studios and distributors continue to rejigger business models to reflect changing consumer habits domestically and worldwide.

Walt Disney will finalize its merger with 20th Century Fox, leaving Hollywood with five major studios, not six. AT&T will continue the integration process with the former Time Warner, now known as WarnerMedia.

And if you thought subscription streaming had a banner year in 2018, 2019 will likely see even bigger growth, with the emergence of at least two formidable challengers to longtime market leader Netflix.

Walt Disney will finally launch its much-ballyhooed SVOD service, Disney+, with a focus on the same content that rules at the box office: “Star Wars” and all things Marvel. The first “Star Wars” live-action series, “The Mandalorian,” should arrive later this year, and Disney recently announced a prequel series based on Rogue One character Cassian Andor (played by Diego Luna). Disney also confirmed Disney+ is developing a live-action Marvel series centered around Loki, from the “Avengers” movies.

Not to be outdone, AT&T’s WarnerMedia also plans on launching a direct-to-consumer streaming platform in 2019, with three different services, including a premium one fronted by HBO, home of mega-hit “Game of Thrones.”

The latest numbers from DEG: The Digital Entertainment Group show consumer spending on subscription streaming grew 30% in the first nine months of 2018.  If that growth rate held up through the end of 2018, then consumers will have spent nearly $12.3 million on subscription streaming, or SVOD (subscription video-on-demand).

How high consumer spending on SVOD will grow in 2019 remains anyone’s guess, although observers believe continued double-digit gains in line with prior years is the most likely scenario as consumers continue to “cut the chord” with pay-TV services.

Last August, research firm eMarketer said it expected the number of U.S. cord-cutters — adults who have canceled a pay TV service and continue without it — to climb by 32.8% in 2018 to 33 million. The number of subscription OTT video service viewers, meanwhile, was on track to rise to 170.1 million, or 51.7% of the U.S. population.

The “VOD” that the studios are most intent to grow, transactional VOD, posted a surprising growth spurt in the third quarter of 2018 — 18% for electronic sellthrough, or EST, and 10% for digital rentals.

Michael Pachter, a senior media analyst with Wedbush Securities in Los Angeles, doesn’t see SVOD making much of a dent in TVOD in 2019.

“Transactional VOD should be relatively flat, as Netflix has few — if any — programs that people typically rent,” he said. “They have no new movies — once Disney pulls its films — and few current TV shows, although I suppose some TVOD is for older television series.  My sense is that the bulk of TVOD is new movies, with some catchup TV from current season TV shows, neither of which is carried on Netflix to any great extent.”

Jim Wuthrich, president, Warner Bros. Worldwide Home Entertainment and Games, agrees that the transactional business and streaming can peacefully co-exist.

“Consumers have more choices for content than ever before, and on demand streaming services are increasingly their go-to option,” he said. “On an aggregate basis, the streaming services have helped transactional services become mainstream, encouraging consumers to connect their devices to on-demand video.

“On a title basis, transactional demand drops when it’s on a major SVOD service, but transactional demand returns when the title rolls off the service. Ultimately we are competing for consumer attention and transactional services generally offer first in-home viewing and always on availability – a distinct and unique proposition.”

Looking ahead, Amy Jo Smith, president and CEO of DEG: The Digital Entertainment Group, says 2019 will be the most exciting yet for digital media.

“2018 has been a lot about the notion of how transaction and subscription distribution models can co-exist, and content owners have begun to lay foundations for their direct-to-consumer businesses,” Smith said. “In 2019, we will see the world’s biggest content owners actually beginning to deliver very high-profile entertainment directly to consumers, and as they do that they will gain the most detailed view yet of who their customers are and what their fan base craves.

“As a result, content owners will become smarter about how to reach consumers and the content delivery experience will improve. As direct-to-consumer offerings multiply, consumers will continue to sort out what is meaningful for them. They will prioritize the content they find worthy of collection and also decide what provides value for a monthly subscription.”

Accordingly, studio executives agree that in 2019, their No. 1 priority will be to continue to growth the transactional, or on-demand business — both physical and digital.

“We are taking a deep dive into consumer behavior as we continue to navigate the changing home entertainment landscape,” said Bob Buchi, president, worldwide home media distribution, for Paramount Pictures. “We’ll be sharing the results of quantitative and qualitative studies with our retail partners to work with them on crafting innovative strategies for reaching consumers and driving transactional sales.

“There is untapped potential in light and lapsed consumers who may have slowed their entertainment collecting and ongoing opportunity with heavy users who value high quality offerings. We’re going to work with our retail partners to maximize our learnings and strategically target diverse consumer groups.”

“Our focus remains on delivering a product offering and value proposition that enables the best consumer experience to continue the expansion and adoption of digital sell-through (and VOD for that matter),” said Michael Bonner, EVP of digital distribution at NBC Universal. “Improving these experiences through product enhancements like premium formats or interactive extras along with embracing new services like Movies Anywhere are just a few examples of how we’re investing as an industry.”

Warner’s Wuthrich agrees. “We believe there’ll be continued growth in digital transactions in 2019,” he said. “We have great momentum coming out of 2018 and have a number of programs to remind movie and TV fans that their favorite content is a click away. In addition to using performance marketing to help connect consumers with the content they love we’ll be introducing a fresh approach to advertising.”

Ron Schwartz, president of Lionsgate Worldwide Home Entertainment, said the key points on his agenda for 2019 are “continuing to create progressive windowing and focused strategies for our specialty and multi-platforms releases, and continuing to grow the digital business while maximizing results on the physical side.”

“Lifecycle management is more critical than ever, particularly with franchises,” he said. “For example, we’ll be working with our partners on compelling catalog initiatives such as ‘John Wick’, as well as on the third installment, throughout the distribution windows, providing more access and innovative marketing to keep fans engaged.”

As consumer habits continue to evolve, digital movie sales and rentals — electronic sellthrough (EST) and transactional video-on-demand (TVOD) — will remain a priority, Schwartz said.

“We saw a significant increase in industry spending in this area in 2018, up 20%, and we will continue to collaborate with our retail partners on fresh ideas to keep consumer interest alive,” he said. “We see a large and growing market with multi-platform and specialty releases and will continue to build our leadership in this area.”

While studio executives agree their focus on 2019 will be to grow the digital side of the business, they aren’t giving up on the physical disc — particularly with the rapid acceptance of 4K Ultra HD.

“4K will continue to gather momentum as more consumers experience the incredible quality of the content on their 4K televisions,” said Paramount’s Bob Buchi. “Paramount will offer most of our theatrical releases on 4K UHD Blu-ray, as well as carefully chosen titles from our vast library.  The response to our catalog 4K releases has been very promising, so we expect to see increased interest in owning treasured classics in the very best format available.”

“Consumers decide how, when and where they want to experience our content, and the physical disc remains a valuable option for them,” adds Chris Oldre, EVP of pay TV, digital and international distribution at Walt Disney Direct-to-Consumer and International.

“We view the business holistically, with physical and digital ownership as one market. Our continued commitment to including the digital code delivers the added value of streaming, too, and the introduction of Movies Anywhere as a simple, fast method to redeem that code delivers the best of both worlds — physical and digital — in one experience.”

Oldre said he’s particularly excited “about the incredible range of content that will be offered by Disney in 2019, and with our continued commitment to delivering best-in-class experiences, we’re looking forward to another exciting year across both physical and digital platforms.”

“The home entertainment releases of Ralph Breaks the Internet and Mary Poppins Returns will offer the kind of trusted family entertainment that Disney is known for,” he said. “Later in the year we’re introducing a new Marvel character to the home entertainment audience with Captain Marvel, and we will be closing out a truly iconic series with Avengers: Endgame.

“In addition, Disney’s brands and franchises are content that consumers want to own and a significant portion of our revenue comes from our library of classic and timeless titles that continue to entertain generation after generation.”

In the first quarter on 2019, Oldre said, “we’ll be celebrating the eagerly anticipated 30th anniversary of The Little Mermaid.  Those are just a few of the highlights of the year ahead, which will see us continue to roll out releases in 4K UHD, as well as continuing to focus our efforts on growing Movies Anywhere and educating consumers about the ease of building a digital library.”

Independents, meanwhile, are looking for whichever distribution channels and platforms that make the most sense.

“I am really focused on watching three exciting trends that will have enormous impact on the ever-changing entertainment landscape,” said Bill Sondheim, president of the Cinedigm Entertainment Group, who in November 2018 took on additional duties as President of worldwide distribution.

“First is the battle for SVOD dominance that really starts in earnest when Disney launches its direct-to-consumer streaming service to compete head on with Netflix,” said Sondheim, who in his expanded role continues to lead the company’s growing China/North America business pipeline, in addition to managing distribution in the rest of the world.

“This will likely create audience migrations that will have far reaching impact on the mid-tier SVOD players more that the top-tier providers,” Sondheim said. “The second trend to watch is AVOD’s explosive growth, which may be a prime beneficiary of the audience shifts that will occur in the SVOD battles mentioned above. The AVOD segment has long been the held back due to lower quality content or older catalog offerings, but as the cost of SVOD consumption grows, the AVOD alternative is rapidly evolving with higher caliber brands and newer content that will drive audience adoption.

“Finally the arrival of 5G broadband will start to demonstrate the impact of true high speed wireless connections. While it will likely be more than two years before we have a true nationwide network, 5G will start to make an impact in most major cities later this year.”

“Buckle up,” he added. “It is going to be a year of massive growth and further disruptive change.”

2018: Getting Along in a Multi-Platform World

Back in 1989, a State Department official named Francis Fukuyama wrote a controversial essay on the “end of history,” opining that the collapse of the Soviet Union and Eastern bloc communism, the reform movement in China, and the reunification of Germany signaled a triumph for Western democracy and a very real promise of freedom and liberty for all.

Fukuyama’s vision of a global utopia didn’t last long, but for a brief moment in time cultural and political differences seemed to be set aside in favor of everyone working together to make the world a better place.

Similarly, in 2018 the various factions in home entertainment seemed to set aside their differences and recognize that we’re living in a multi-platform world — and that a peaceful coexistence between disc and digital, subscription and transactional, was, indeed, possible.

“2018 saw the continued integration of technology and content at an even more accelerated pace, and, with that, the opportunity to engage fans with more focused and meaningful experiences that extend the life of our film and television properties,” said Keith Feldman, president of worldwide home entertainment for 20th Century Fox.

Indeed, studios cut back on selling content to Netflix — most notably Disney, which pulled all its movies off the service by the end of the year — in favor of issuing it on their own platforms. They rallied behind Movies Anywhere, a digital movie storage “locker” launched in October 2017, and saw digital movie sales soar, with an 18% gain reported in the third quarter of 2018, according to DEG: The Digital Entertainment Group numbers.

Netflix, meanwhile, vowed to spend $8 billion in 2018 on producing its own shows, with the goal of making its content library 50% original.

Studios that once sued Redbox for renting DVDs and Blu-ray Discs, claiming the kiosk vendor was cannibalizing disc sales, struck distribution deals in which prior holdbacks were either sharply cut back or eliminated. They also rallied behind Redbox On Demand, a digital movie store launched in December 2017.

On the retail front, big-box chains like Best Buy and Walmart put discs back into the spotlight, buoyed by the emergence of 4K Ultra HD Blu-ray.

And digital retailers like FandangoNow and Google Play revved up their promotional muscle and pumped up the message that they had fresh movies for sale or rent. FandangoNow even put up a notice on its home page, touting the fact that it offers “New releases not on Netflix, Hulu or Amazon Prime subscriptions.”

It was all part of a bigger picture, in a year dominated by major media mergers — AT&T buying Time Warner, Disney buying 20th Century Fox — suggesting it was high time to come together and restructure existing business models to reflect changing consumer habits.

Content, as always, was king, but the feuding fiefdoms of the past were at last coming to peace with each other — and with themselves.

Subscription streaming continued to dominate the home entertainment business in 2018. Indeed, in the first nine months of this year, according to DEG: The Digital Entertainment Group, consumer spending on Netflix and other subscription streaming services rose more than 30% to $9.4 billion, nearly $2 billion more than consumers spent on all other forms of home entertainment combined– disc purchases ($2.79 billion) and rentals ($1.37 billion); digital purchases, or electronic sellthrough (EST, $1.8 billion),  and digital rentals, or transactional video-on-demand (TVOD, $1.57 billion).

But where Hollywood once saw a threat, in 2018 the studios saw an opportunity. As consumers, thanks to streaming, became increasingly accustomed to viewing movies and other content electronically, studios focused on moving them toward on-demand digital purchases or rentals — driving home the message that new releases aren’t typically available through subscriptions.

“Our comprehensive and strategic efforts to drive digital ownership and bolster engagement such as leveraging the early window, offering exclusive extras and emphasizing the best viewing experience possible are proving to be very effective as consumers continue to move toward and embrace the digital experience,” said Chris Oldre, EVP of pay TV, digital and international distribution at Walt Disney Direct-to-Consumer and International.

“Movies Anywhere has had a tremendous impact on transforming digital consumption and is a testament to the strength of the studios and digital retailers that have joined forces on an unprecedented scale. This year Disney once again experienced remarkable growth as our digital sales exceeded expectations in conjunction with the studio’s unrivaled box office success. Disney has the top three bestselling digital titles to date with Avengers: Infinity War, Black Panther and Thor: Ragnarok. We’re also incredibly proud of our celebration of Marvel’s 10-year anniversary this year.  We promoted the Marvel Cinematic Universe home entertainment catalog with a special sales promotion across digital, which undoubtedly helped propel Avengers: Infinity War to the No. 1 live-action spot on the all-time digital sales chart in a record-setting period.”

Ron Schwartz, president of Lionsgate Worldwide Home Entertainment, said that as consumer habits evolve, digital movie sales and rentals – electronic sellthrough (EST) and transactional video-on-demand (TVOD) — remain a priority. “We saw a significant increase in industry spending in this area in 2018, up 20%, and we will continue to collaborate with our retail partners on fresh ideas to keep consumer interest alive,” he said. “We see a large and growing market with multi-platform and specialty releases and will continue to build our leadership in this area.”

At the same time, Schwartz notes, “Disc sales remain robust … 4K UHD BD is rapidly gaining in popularity, as spend is on track to double this year versus last. We are committed to serving our audiences across the full spectrum of the digital   and physical business and we will continue to be a first mover in adapting these businesses as they continue to evolve.”

For Bob Buchi, president of worldwide home media distribution at Paramount Pictures, 2018 was the year of 4K.

“More than 42 million homes now have a 4K Ultra HD television and roughly 400 titles are available on 4K Ultra HD Blu-ray Disc and over 600 on Digital 4K,” Buchi said. “The numbers keep growing and for good reason: 4K brings home entertainment to life like never before, delivering content that better represents filmmakers’ original vision.  We’ve seen this play out with the week one 4K sales of Mission: Impossible — Fallout, which delivered our highest number of UHD discs sold, as well as the highest percentage of our physical sales ever.”

Disney’s Oldre agrees. “4K Ultra HD is a robust line of business for us and we’re experiencing healthy growth,” he said. “We continue to receive solid support from our physical retail partners and are confident it’s a market that our customers will continue to embrace given the format’s premier resolution.”

Catalog sales were another bright spot in 2018, Buchi said. “We’ve seen our digital catalog sales growing in markets around the world, including a 35% increase domestically through October, which indicates that more and more consumers have become comfortable with the format and are returning to the concept of building collections.  In addition, physical catalog sales have exceeded our expectations, as we continue to make concerted efforts to celebrate anniversaries of classic titles and strategically promote films from our library.”

Retailers certainly did their part in pushing the transactional business. At Best Buy and Walmart, the emergence of 4K Ultra HD Blu-ray led to bigger disc sections and, in the case of Best Buy, placement back in the center of the store.

Redbox in 2018 relaunched its brand, which included some major ad campaigns and sponsorships, including the Redbox Bowl college football game on New Year’s Eve at Levi’s Stadium in Santa Clara, Calif. The company also revamped its loyalty program; negotiated more favorable distribution deals with studios; and expanded the availability of previously rented movies and video games at kiosks.

The Redbox On Demand digital service, meanwhile, celebrated its first birthday in December with a new app on Vizio SmartCast TVs. The company also expanded its selection to 12,000 titles, from 7,000 at launch. CEO Galen Smith in December told Media Play News that Redbox On Demand has “surpassed major milestones to become a real player in the competitive digital home entertainment space. We’re seeing hundreds of thousands of customers, including bringing back folks we haven’t seen in a while.”

FandangoNow, a business unit of movie-ticket seller Fandango, struck deals with most major studios that allow it to package movie rentals into “binge bundles” that let consumers watch multiple movies at a lower price. The new offering launched on the Labor Day weekend with more than 100 bundles.

FandangoNow also cross-promotes digital movie sales and rentals with ticket sales. In December, just before the holidays, consumers who spent $20 on FandangoNow received $8 toward a movie ticket.

In the end, studio executives agree, it all comes down to keeping consumers engaged — which requires constant work.

“From a functional solution like Movies Anywhere that allows consumers to build and enjoy a streamlined digital library, to premium viewing with 4K HDR, to story extensions through virtual reality and other emerging formats, keeping consumers invested and engaged requires constant experimentation and innovation,” says Fox’s Keith Feldman. “Our ongoing challenge is to exceed consumer expectations today and simultaneously deliver next-generation offerings that will continue that engagement in the future.”

Paramount Appoints New Head of Sales and Distribution

Craig L. White has been appointed EVP of worldwide sales and distribution for Paramount Home Media Entertainment, the studio announced Feb. 9.

In his newly created role, White will report to Bob Buchi, president, worldwide home media distribution. He is charged with overseeing the global sales and distribution of physical and digital transactional products for Paramount Home Media Entertainment while expanding purchase and rental opportunities through enhanced partnerships, technological advancements and new business development.

“Craig is an incredibly talented media and entertainment executive with proven success developing and implementing transformational business strategies,” Buchi said.  “His wide-ranging experience with multinational brands and companies along with his acumen in dealing with rapidly evolving marketplaces will help bolster our continued growth and innovation around the world.”

White said, “I am very excited to join Paramount at a time of great change and opportunity for the industry.  I have long admired the studio’s rich history and extraordinary film catalogue and franchises and am passionate about helping consumers enjoy the best experiences available to them in home media.”

White joins Paramount from Tronc (Tribune Publishing), where he was in charge of spearheading business development as SVP and general manager.  He previously served as VP of sales for 20th Century Fox Home Entertainment in Australia, where he drove growth year over year during his tenure and built the Australia business into the single highest performing catalog business at Fox.

White also held senior executive positions at Great Southern Wine Asia Pacific and Access Digital Entertainment/Élan Media Partners in Australia. He began his career in sales and marketing at Cadbury Schweppes and also held management positions at HJ Heinz and Foster’s Brewing International.  White earned an MBA from Swinburne University of Technology in Melbourne, Australia.

Home Entertainment’s Mantra in 2017 was ‘Just Keep Swimming’

At this year’s Video Hall of Fame ceremony in Beverly Hills in December, Janice Marinelli, president, Disney/ABC Home Entertainment & Television Distribution, for The Walt Disney Studios, drew solid applause when she advised her fellow home entertainment executives to “just keep swimming.”

The line, from the hit Disney film Finding Nemo, seemed to resonate with the several hundred execs in the room, many of whom have been contending with increasingly choppy seas for the better part of a decade.

In fact, 2017 marked the 10th anniversary of Netflix’s decision to transition its subscription approach from disc rentals by mail to digitally delivering content over the Internet – a truly disruptive moment that shattered the traditional home video model. Year after year, disc sales plummeted as consumers planted themselves on their sofas for a nightly steam of at first studio discards and then an increasingly compelling menu of original programming.

In the first nine months of this year, numbers provided by DEG: The Digital Entertainment Group show, more than 40% of the money consumers spent on home entertainment in the first nine months of 2017 was generated by Netflix and other subscription streaming services, up from 34% in 2016 and 29% in 2015.

Sales of Blu-ray Discs and DVDs, meanwhile, accounted for 24% of consumer home entertainment spending in the first nine months of 2017, down from 27% in the comparable period in 2016 and 31% in 2015.

In the first nine months of 2011, by contrast, streaming accounted for just 3.8% of the home entertainment business, with disc sales accounting for 46%, or $5.6 billion – compared to $3.26 billion in the first nine months of 2017.

“The [disc sales] business remains under pressure, due to the growing number of entertainment options,” says Eddie Cunningham, president of Universal Pictures Home Entertainment. “Nonetheless, studios and retailers continue to aggressively champion the category, looking to create the most compelling and meaningful opportunities to eventize our disc products and deliver the best, most exciting shopping experience possible.”

“Physical media continues to be an integral component of the product mix, but we need to find ways to remind consumers of the value of owning and renting discs,” adds Mark Fisher, president and CEO of the Entertainment Merchants Association (EMA).

Disney’s Marinelli says “physical consumption continues to be a vibrant, viable and top-performing line of business for us and it is also proving to be a very valuable resource in the transition to digital with e-copy redemption. This year the in-home division broke and set new records with four bestselling physical titles in the top 10 to date including tentpoles Star Wars: Rogue OneMoanaGuardians of the Galaxy Vol. 2 and Beauty and the Beast.  As viewing habits and consumer consumption rapidly evolve, we continue to evaluate our offerings on a regular basis and what will best meet the needs and demands of our customers.  This year we vigorously expanded into the 4K Ultra HD Blu-ray premium format beginning with inaugural title Guardians of the Galaxy Vol. 2, which quickly rose to the top of the industry’s 4K physical sales chart.”

Through it all, home entertainment executives have, well, just kept on swimming – and managed to keep their heads afloat through a steady string of technological advances and innovation. This year’s gold star goes to Movies Anywhere, the Walt Disney-owned digital movie service that allows consumers to buy newly released movies electronically (or redeem access codes packaged inside Blu-ray Discs) and watch them whenever they want to, on any screen, from the family room TV to their iPhone.

“Consumer centricity was without a doubt a defining characteristic of 2017, which was most notably addressed by the launch of the multi-studio digital locker Movies Anywhere,” said Disney’s Marinelli. “Movies Anywhere is a huge win for the consumer, providing them with more freedom, flexibility and utility and their digital library can now be viewed through a range of devices and digital retailers, anytime and anywhere. The strength of the studios and digital retailers that have come together at launch is unprecedented.”

Hollywood also claimed a seat at the burgeoning Ultra HD table with Ultra HD Blu-ray Disc, which experts agree is the optimum way to view 4K content , with even sharper pictures and more realistic colors than standard high-definition.

“We can expect to see the number of 4K UHD Blu-ray titles to expand considerably in 2018, as content companies  continue to release new and catalog titles in the premium format,” says Universal Pictures’ Eddie Cunningham. “As well, 4K movies, TVs and players are selling units in record numbers.  There is a clear groundswell around consumer demand and the industry is highly optimistic about the format’s future prospects.”

As Netflix and its OTT compadres continue to grab market share, studio executives – who still consider movie sales, either on disc or electronically, as their holy grail – also have had to contend with other challenges. Distribution channels have continued to proliferate, and the concept of content continues to evolve as millennials are as quick to spend an evening watching their favorite YouTuber or anime webisodes as they are the new Spider-Man movie.

“2017 really was the year of ‘more’ – more content, more provides, more devices, more technological enhancements, and more consumer choice,” said the EMA’s Mark Fisher. “Overall, this is a good thing, but it did lead to disruption of traditional business models. And we haven’t seen the end of it.”

Electronic sellthrough – also known as Digital HD – remains the most promising bulwark the studios have against continued double-digit OTT growth, but challenges remain. Consumers accustomed to spending around $10 a month for unlimited Netflix viewing might be reluctant to spend the same amount, or more, for a single piece of entertainment, even if they own it.

EST growth slowed from several years of double-digit gains to 7% in 2016, then rose slightly to 8% in the first nine months of this year. Executives hope Movies Anywhere will be the catalyst to reignite higher growth.

“On the EST front, we continue to see product, marketing and merchandising investments across the industry accelerate,” says Michael Bonner, EVP, Digital Distribution, for Universal Pictures Home Entertainment. “As a result, digital sell-through has been growing year over year and we continue to see increased consumer engagement in the category. Movies Anywhere is just the latest example of studios and distributors working together to provide more value to the consumer and setting a new bar for digital movie ownership.”

“Our focus is always on offering the best consumer experience possible, removing the barriers and offering a high-quality experience that adds value and utility to a digital movie collection,” adds Disney’s Marinelli. “Providing consumers with early digital access has been a successful way to drive consumers to the digital experience.  We continue to work closely with our digital retail partners to build a compelling in-home movie watching experience, including offering quality formats like 4K Ultra HD, as well as expanded and interactive extras – some of which are only offered digitally.”

Ultra HD Blu-ray Disc also is seen as a growth driver, particularly as the number of UHD TVs continues to mushroom.

“2017 was the year 4K UHD really took off,” said Jim Wuthrich, president, The Americas and Global Strategy, at Warner Bros. Home Entertainment. “With $200 million in global consumer sales, ample physical and digital distribution and accelerating penetration of capable TVs, content sales will continue to soar into 2018.”

“2017 was a year where we saw 4K HDR make huge strides towards becoming a mainstream part of the industry,” adds Jason Spivak, EVP, Worldwide Digital Distribution and North America Sales, for Sony Pictures Home Entertainment. “ 4K UHD physical discs are selling well, and we are seeing big advancements in 4K HDR digital services and devices.   The format is essential to our commitment to deliver the highest caliber consumer experience, and it is well on its way to mass acceptance.”

“ The number of 4K devices continues to grow, and is forecasted to triple in the next five years to nearly 350 million,” said Bob Buchi, president, Worldwide Home Media Distribution, for Paramount Pictures.  That clearly indicates that consumers have an appetite for the format, but we have to ensure that we don’t have a content gap.  At Paramount, we are committed to releasing the vast majority of new releases in 4K and have greenlit dozens of catalog titles for the format.

“We are seeing 4K UHD with HDR represent up to 10% of physical sales and a quickly growing percentage of digital sales as more platforms embrace the superior technology.  This technology is a huge boon to both consumers and filmmakers who are able to better realize their vision on home viewing platforms.  And the reality is that 4K UHD with HDR and object-based sound looks and sounds great.  It all contributes to the value proposition. “

Driving ownership of content, both physical and digital, is critical as the industry moves forward, executives agree.

“We continue to employ the most innovative and comprehensive tactics to drive ownership across both physical and digital platforms,” said Disney’s Marinelli. “We’ve had tremendous success implementing a number of strategic initiatives including pre-sale promotions, improving retail placement, expanding our social presence, producing live events and creating promotional partnerships. We are also committed to creating a superior in-home viewing experience that extends the consumer experience and deepens engagement.”

“We continually work with our retail partners to present consumers with compelling reasons to own, including superior audio and video presentations, early access, exclusive bonus features, special packaging, and more,” adds Paramount’s Bob Buchi. “Our job is to make our content readily available while maximizing revenue, which means carefully honing the distribution strategy of each title based on projected consumption. The great news is that the proliferation of platforms means consumers are enjoying our content in more ways than ever.”

Transactional video-on-demand (TVOD), which lets consumers “rent” a film or TV show for a limited streaming period, could use a shot in the arm.

“I am concerned that the consumer embrace of TVOD has not been as robust as we would have liked,” says the EMA’s Mark Fisher. “It remains a challenging business. Retailers and content providers are hesitant to invest in the category because it is not getting the desired growth, and we’re not seeing growth because investments are not being made. Delivery costs remain too high, and supply chain efficiencies need to be more widely embraced. EMA is actively working on both of those issues, and we will continue to do so because it is the right thing to do for the industry.”

Looking ahead to 2018, the prognosis among studios is essentially the same as it’s been at the end of the last few years – guarded optimism and a continued belief in the sales model.

Consumers’ appetite for home entertainment content remains remarkably robust,” says Universal Pictures’ Eddie Cunningham. “In fact, our research shows that a vast percentage of households continue to engage in the category whether via disc, digital or both.  Though there are many entertainment choices to distract consumers, offering tangible benefits unique to the format such as exceptional value, accessibility and utility of their favorite movies and TV shows reinforces the distinct advantages of ownership that you can’t get when renting or streaming.”

“I expect change to continue to be a factor in our industry in 2018 and beyond,” adds the EMA’s Mark Fisher.  “Movies Anywhere and Premium VOD, for example, will shake up the basic tenets of distribution and how and when consumers get content. Potential industry consolidations could significantly impact our industry as well. We shouldn’t fear any of this, but managing change will remain a challenge for all of us in the industry.

The home entertainment industry  “remains at the intersection of compelling content and technology, stemming from our consumers’ constant need for new and exciting experiences,” said Keith Feldman, President, Worldwide Home Entertainment, Twentieth Century Fox.

“Technology is moving at a rapid pace and we must evolve our content offerings to meet consumer expectations, which means delivering on next-generation technologies including 4K HDR, 5G and mobile content delivery, simple and functional solutions like Movies Anywhere and immersive experiences like virtual and augmented reality that accurately realize and extend the vision of our filmmakers.”

Disney’s Marinelli has high hopes for 2018. “Disney has the most impressive slate in the industry and we’re confident that 2018 will once again be a very successful year for us with the highly-anticipated in-home releases of Marvel Studios’ Thor: Ragnarok, Pixar’s Coco,Star Wars: The Last Jedi and The Walt Disney Signature Collection release of Lady and the Tramp.

“Movies Anywhere makes it easier than ever to build a digital movie collection. So far we’ve seen an incredible consumer response and believe that by offering a one-of-a kind experience, digital movie purchases will grow.  We will continue to work with the other studios and our digital retailer partners on programs to deliver exclusive content and offers that we believe will be important to driving engagement in the apps and website.”

“The choice between digital and physical is no longer an either/or proposition,” notes Paramount’s Bob Buchi. “We recognize that home entertainment has become a dynamic mix of consumption with opportunities across the spectrum.  Consumer behavior increasingly includes combinations of subscribing, transacting, renting, and buying, and greater comfort switching between digital and physical formats.  Our goal for 2018 is to make sure consumers have easy access to our content in the many ways they want to enjoy it.”

(This article previously appeared in Home Media Magazine.)