Best Buy Q1 Entertainment Sales Fall 13.6% Due to Tough Pandemic Comps

Best Buy May 24 reported first-quarter (ended April 30) entertainment revenue of $593.6 million, with same-store sales dropping 13.6%.

That compares with an uptick of more than 32% on revenue of $687 million during the previous-year period when consumers spent large on home entertainment due to COVID-19 shutdowns of alternative entertainment choices.

The segment includes products such as DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software.

International entertainment same-store revenue dropped 7.5% to $60.2 million from $65 million, which was up 12.2% from the previous-year period in 2020.

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Best Buy CEO Corie Barry

CEO Corie Barry said the sales declines across all retail categories underscore the outsized results during the pandemic when consumers upped their purchases in part due to government-imposed stay-at-home living.

“Even with the expected slowdown this year, we continue to be in a fundamentally stronger position than we were before the pandemic from both a revenue and operating income rate perspective,” Barry said in a statement. “We are confident in the strength of our business and excited about what lies ahead.”

On an earnings call, Barry said, “On one hand, consumers still have relatively strong balance sheets. They continue to spend, wages are up, and unemployment is at record lows. On the other hand, many consumers are lapping stimulus income they received last year and are also facing issues like higher gas and food prices, rising interest and mortgage rates, recession fears, stock market volatility, and geopolitical uncertainty, stemming from the war in Ukraine.

“Underlying all that is the gradual shifting of spend from stay-at-home purchases to more experiential spend on services and the activities many were unable to enjoy during the pandemic…. While the drivers of our results were largely as expected, the comparable sales decline of 8% was on the softer side, as inflationary pressures heightened throughout the quarter. That trend has continued into the beginning of Q2, and it does not appear that it will abate in the near term.”

Accordingly, she said, the company is “revising our guidance and now expect [a] fiscal ’23 comparable sales decline in the range of 3% to 6%. And we are correspondingly updating our non-GAAP operating income rate to a range of 5.2% to 5.4%. We will continue to proactively navigate this rapidly changing environment, balancing the day-to-day operations with our commitment to our long term-strategy and growth initiatives.”

CES 2022 Shortens Run by a Day Due to Health Concerns

On the eve of CES 2022, the Consumer Technology Association (CTA) announced that the annual trade show, which opens in Las Vegas on Jan. 5, will close one day early.

“The step was taken as an additional safety measure to the current  health protocols that have been put in place for CES,” the CTA said in a press release.

The CTA reaffirmed that more than 2,200 exhibitors will be at the show, with an additional 143 companies signing up over the last two weeks.

“Construction of exhibitors’ show floor space is well underway and soon attendees will be able to see and experience the latest tech innovations,” according to the CTA announcement.
 
“As the world’s most influential technology event, CES is steadfast in its pledge to be the gathering place to showcase products and discuss ideas that will ultimately make our lives better,” Gary Shapiro, president and CEO of CTA, said in a statement. “We are shortening the show to three days and have put in place comprehensive health measures for the safety of all attendees and participants.”

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Those that are unable to travel to Las Vegas for CES 2022 can join digitally. Digital registration will grant access to more than 40 live streamed conference sessions, keynotes, select Media Days press conferences and the ability to engage with exhibitors, according to the CTA. 

The weeks leading up to CES 2022 have been difficult ones for CTA, as the surge in COVID-19 cases brought on by the fast-spreading new Omicron variant triggered a wave of high-profile exits from the show, including Amazon, Google, Meta (Facebook) and Intel.

Several annual events that have involved the home entertainment industry, including an annual party and awards ceremony presented by DEG: The Digital Entertainment Group and streaming trade group OTT.X’s annual breakfast, also are not happening.

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In a Dec. 22 press release, the Consumer Technology Association (CTA) reiterated its intent to proceed with the show, now scheduled for Jan. 5-7, despite what it said were 42 exhibitor cancellations. 

CES went virtual in January 2021, but as a winter COVID-19 surge began to ebb and movie theaters and other businesses began to reopen, the CTA on April 28 announced CES 2022 would once again be held in person in Las Vegas in January 2022.

At the time, CTA president and CEO Gary Shapiro said in a statement, “We’re thrilled to return to Las Vegas — home to CES for more than 40 years — and look forward to seeing many new and returning faces. Hundreds of executives have told us how much they need CES to meet new and existing customers, find partners, reach media and discover innovation.” 

 

NATPE Miami 2022 Announces COVID-19 Protocols

Organizers of the NATPE Miami 2022 confab, taking place Jan. 18-20, have announced COVID-19 protocols for the show.

“With the health and safety of exhibitors, buyers, sponsors, honorees, partners and all attendees as top priority, NATPE will be following the highest standards and COVID-related protocols,” read an email from organizers. “Continually refined with guidance from the CDC, WHO and local authorities, and in effect for the entirety of the event, this will include, among other things: mandatory proof of vaccination for all attendees, outdoor tents for sessions and meetings, and designated NATPE safe zones fully controlled by the event production team and the specially appointed Director of Safety and Health.”

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During the event, attendees, who must be vaccinated,  have access to free optional testing. Those who take advantage of the daily testing will receive identification (i.e. wrist badge) of their negative COVID test. Individual exhibitors and sponsors may choose to require testing in order to meet with their staff.

Despite Rash of High-Profile Cancellations, CES Organizers Vow to Press On — For Now

After a flurry of high-profile exhibitors such as Google, Microsoft, Meta (Facebook), Intel and TikTok dropped out of CES 2022 last week over Omicron variant concerns, show organizers nevertheless vowed to press on with an in-person event in Las Vegas.

In a press release issued three days before Christmas, the Consumer Technology Association (CTA) reiterated its intent to proceed with the show, scheduled for Jan. 5-8 in Las Vegas, despite what it said were 42 exhibitor cancellations. 

Since then, there’s been no further communication from the CTA, leading to widespread speculation that plans are still in flux. The latest daily email briefing from VPO/PR Newswire’s dedicated online press page for CES, issued late Sunday, Dec. 26, had just two press releases from exhibitors. And on social media, particularly Twitter, calls for the CTA to cancel the show appear to be mounting, with #cancelCES an increasingly popular hashtag.

In a Dec. 22 news release, CTA said the show will proceed as scheduled “with strong safety measures in place, and our digital access is also available for people that don’t wish to, or can’t travel to Las Vegas. Our mission remains to convene the industry and give those who cannot attend in person the ability to experience the magic of CES digitally.

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“While we recently received 42 exhibitor cancelations (less than 7% of our exhibit floor), since last Friday we’ve added 60 new exhibitors for our in person event. Registrations for both our digital access and our Las Vegas event are continuing to show strong momentum, with thousands more registrations in the last few days. … We have increased our official count to over 2,200 exhibitors. …

“Given CES’s comprehensive health measures — vaccination requirement, masking and availability of COVID-19 tests — coupled with lower attendance and social distancing measures, we are confident that attendees and exhibitors can have a socially distanced but worthwhile and productive event in Las Vegas, as well as a rewarding experience on our digital access.”

CES went virtual in January 2021, but as a winter COVID-19 surge began to ebb and movie theaters and other businesses began to reopen, the CTA on April 28 announced CES 2022 would once again be held in person in Las Vegas in January 2022.

At the time, CTA president and CEO Gary Shapiro said in a statement, “We’re thrilled to return to Las Vegas — home to CES for more than 40 years — and look forward to seeing many new and returning faces. Hundreds of executives have told us how much they need CES to meet new and existing customers, find partners, reach media and discover innovation.” 

Several media outlets, including TechCrunch and The Verge, also have said they will not send reporters to the show. Media Play News editors still plan on attending.

Organizers of the Pepcom Digital Experience, held in concert with CES at the Mirage hotel, announced they are also still planning an in-person event — though they plan to add a live-streaming presentation.

“Happily, most of you have told us you can still attend,” read an email. “But for those who cannot, we will be streaming the event live from 7-10 p.m. PT on Jan. 4.”

‘Dune’ Home Entertainment Release Party Canceled Due to Omicron Concerns

A party to celebrate the Jan. 11 DVD, Blu-ray Disc and 4K Ultra HD release of Dune has been canceled due to concerns over the Omicron variant.

On Dec. 17, journalists received, by email, an invitation to a Jan. 4 release party at the Bar Lis at the Thompson in Hollywood. A reception was scheduled to start at 6:30 p.m., followed by a performance by Hans Zimmer, the film’s composer, at 7 p.m.

The party, jointly hosted by Warner Bros. and Legendary Pictures, also was to feature appearances by director, producer and co-writer Denis Villeneuve; writers Jon Spaihts and Eric Roth; director of photography Greig Fraser; editor Joe Walker; costume designer Jacqueline West; makeup hair and prosthetic designer, and makeup department head, Donald Mowat; and supervising sound editor Mark Mangini.

The invitation warned that “all guests must show proof of full COVID-19 vaccination to attend the event. All guests will be required to show a negative PCR COVID-19 test result within 72 hours or a negative COVID-19 rapid antigen test result within 24 hours of the event, in addition to proof of full vaccination. All guests will be required to wear masks while inside except while eating or drinking.”

Just five days later, a second email arrived, noting that “out of an out of an abundance of caution, we have made the decision to cancel our Dune Home Entertainment Release Party. … While we will not be able to gather in person to celebrate the home entertainment release of Denis Villeneuve’s Dune, we invite you to watch the film at home either on digital, which is available now, or on 4K UHD, available on Jan. 11.

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Dune became available for premium digital ownership ($29.99) and VOD ($24.99) on Dec. 3. The film, which has generated more than $350 million at the global box office, was directed by Villeneuve (Arrival, Blade Runner 2049) from a screenplay he co-wrote with Spaihts and Roth, based on the novel of the same name written by Frank Herbert.

The film’s cast includes Timothée Chalamet, Rebecca Ferguson, Oscar Isaac, Josh Brolin, Stellan Skarsgård, and Dave Bautista.

Dune tells the story of Paul Atreides (Chalamet), a brilliant and gifted young man born into a great destiny beyond his understanding, who must travel to the most dangerous planet in the universe to ensure the future of his family and his people. As malevolent forces explode into conflict over the planet’s exclusive supply of the most precious resource in existence — a commodity capable of unlocking humanity’s greatest potential — only those who can conquer their fear will survive.

The Blu-ray, DVD and 4K discs will include the featurette “The Royal Houses.”

Extras on the Blu-ray and 4K editions will also include:

  • Filmbooks: House Atreides
  • Filmbooks: House Harkonnen
  • Filmbooks: The Fremen
  • Filmbooks: The Spice Melange
  • Inside Dune: The Training Room
  • Inside Dune: The Spice Harvester
  • Inside Dune: The Sardaukar Battle
  • Building the Ancient Future
  • My Desert, My Dune
  • Constructing the Ornithopters
  • Designing the Sandworm
  • Beware the Baron
  • Wardrobe from Another World
  • A New Soundscape

 

T-Mobile CEO Drops Out of CES Keynote Citing COVID Concerns

T-Mobile CEO Mike Sievert has dropped out as a keynote speaker at next month’s CES in Las Vegas, citing concerns over the growing coronavirus infections, including the Omicron variant. The telecom giant will continue as event sponsor.

“While we are confident that CES organizers are taking exhaustive measures to protect in-person attendees, and we had many preventative practices in place as well, we are prioritizing the safety of our team and other attendees with this decision,” T-Mobile said in a statement.

Other companies also dropping plans to attend include Amazon, iHeartRadio, Facebook parent Meta and Twitter.

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CES, which is slated for Jan. 5-8, was held virtually in 2020. The annual consumer electronics confab remains on schedule for in-person attendees, which reportedly include 2,100 exhibitors. Attendees will be required to show proof of vaccination and a negative COVID test 24 hours before attending.

Study: Theatrical Recovery Still a Work in Progress; Vax Mandates, Lower Prices Would Help

A new study finds that while theaters have recovered quite well from COVID-19, they still need to do more — including building confidence among movie fans through vaccine mandates, and lowering ticket prices — if they want the box office to return to pre-pandemic levels.

The key is winning back “former filmgoers,” a “significant yet less understood segment of the movie-going public,” according to a Dec. 1 press release from the collective of three research and cultural insights firms behind the study: custom film research firm The Quorum, strategic cultural advisory Cultique, and research, strategy and creative agency Fanthropology.

More than 2,500 pre-pandemic movie-goers were polled nationally in October 2021 about their attitudes about going to the theater. Nearly half of the respondents (49%) said they once went to the theater but no longer do so. 

“Theatrical has made an admirable recovery, but future growth depends on understanding and winning back former filmgoers,” said David Herrin, founder and CEO of The Quorum. “The data show that there is an opportunity to gain back filmgoers who are currently on the sidelines, but only by the industry addressing both emerging and long-standing issues. Interestingly, the good news is that the majority of former filmgoers have signaled their willingness to come back.”

Access the full study here on The Quorum website

“This is an important time for theaters to reset habits coming out of the pandemic,” added Kristen Longfield, head of research at Fanthropology. “The decisions theaters make now will determine what the future of theatrical moviegoing looks like, and whether the audience is robust or anemic.”

Former filmgoers are not all the same, the study found. Rather, they fall into one of three groups. “Reluctants,” who account for 26% of those who no longer go to theaters, are those who began going back but then stopped with the emergence of the Delta variant. “Hopefuls” (58%) are those who have never returned, but hope to one day in the future. And “Likely Losts” (16%) are those who stopped going to theaters when the pandemic struck and don’t see themselves returning in the future.

Among former filmgoers, 59% said they don’t feel safe in a theater. However, requiring proof of vaccination would go a long way toward making them comfortable about going back, the study found. While some filmgoers perceive mandates as an overreach, the data show a net positive gain in attendance. 

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The study also contends that safety concerns over COVID-19 have exacerbated longstanding beliefs that going to the theater is too expensive and that the experience doesn’t provide great value. A majority (56%) say they would return to the theater if the experience provided more value.  

There are several ways that theaters can enhance the filmgoing experience, according to the study. On the concession side, price reduction of classic concessions was the leading request (65%) among former filmgoers, followed by availability of local food favorites (63%), healthier food options (58%), and craft cocktails (58%). On the in-theater side, the leading driver was more space between seats (69%), newer seats (65%), ability to order food and drinks from your seat (65%), and more large-format screens (63%). While the majority of respondents also cited enforcement of phone usage (58%) and fewer commercials (56%) as driving factors, these trailed the issues related to seating and large-format screens.

 

Supply Chain Crisis Impacts Home Entertainment Amid Lingering Replication Woes

The supply chain woes that are making headlines around the country are having an increasingly pronounced impact on the home entertainment business, sources say — compounding existing problems with limited replication.

Studios as well as independent content suppliers are reporting delays in bringing their product to market as the fourth-quarter holiday season nears. DVD and Blu-ray Disc sales may have been slipping year over year, but demand typically picks up as the holidays grow near. This year is no exception, particularly with catalog product, as studios continue to mine their vaults for anniversary or 4K Ultra HD reissues.

This uptick in catalog title sales is a good thing — and a bad thing. Most of the big Hollywood studios do the bulk of their physical disc replication through Technicolor, which now does most of its manufacturing work at a single facility in Mexico. (Paramount has its own manufacturing deal, with Sonopress.) And, sources say, when things get backlogged — as they invariably do during the fourth quarter — catalog titles are pushed back behind new releases. Now factor in supply-chain problems and it’s easy to see why that spectacular new anniversary release or 4K Ultra HD reissue may not be in stock.

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“It’s a huge problem,” said Bill Hunt, who as editor of The Digital Bits website closely monitors disc releases. “Almost every title is getting delayed, and those that aren’t are hard to find on street date.”

Hunt adds, “COVID is what started the supply chain issues, and they’ve basically cascaded across the economy. The Technicolor replication plant in Mexico City is at capacity, so a lot of studios are sending replication projects to Germany as well. But then shipping those discs back takes time, distributing all the discs to retail takes time, etc.

“It’s just a mess everywhere.”

“Our industry isn’t insulated from the global supply chain situation,” said Eddie Cunningham, president of Studio Distribution Services (SDS), the joint venture between NBCUniversal and WarnerMedia formed earlier this year to distribute DVDs, Blu-ray Discs and 4K Ultra HD Blu-rays from Universal Pictures Home Entertainment and Warner Bros. Home Entertainment. “At SDS, along with the rest of the industry, we have been wrestling with supply chain challenges for a number of months. We, with our many supply chain partners in manufacturing, distribution and freight, are doing everything in our power to mitigate those pressure points.

“Sometimes meeting delivery dates and keeping retail on-shelf availability at our usual high industry standards has been difficult. It is a huge focus across our company and everything in supply chain that we used to check weekly is now daily, and everything we did daily is almost hourly, as we constantly re-assess priorities.

“Our recent focus, aside of new releases and promotions, has been the fourth-quarter retail catalog resets and preparing for Black Friday, all of which looks good.”

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The trouble in getting consumer goods into stores — and consumer homes — is due to a variety of factors, including a labor shortage that is affecting all aspects of transport and shipping. This is compounded by pandemic-induced demand. In the first six months of this year, according to U.S. government estimates, retail sales rose more than 22% to $3.25 trillion.

As the World Shipping Council explains in a newly released video, “Global supply chains are a complex network connecting manufacturers, exporters, importers, rail, truck and ocean transport providers. Finely balanced, it can take a lot. But when COVID-19 closed down ports, put drivers in quarantine, the problems started. The U.S. demand spike has maxed out inland capacity, containers are tied up in storage, and vessels are stuck outside ports.”

“A lot of companies have really been struggling to get staff in these relatively low-paid jobs — pack and ship, that sort of thing,” said one high-ranking studio executive familiar with supply-side issues. “In a lot of cases, governments are paying more for them to stay at home.”

Labor shortages, he notes, have been impacting production of everything from the chips used in automobiles to the glue used to seal cereal boxes.

And even when the end product does get made, bringing it to market is a whole other challenge due to labor shortages in the transport sector. The trucking industry, for example, has long been having trouble attracting new recruits. Meanwhile, demand for trucking services has soared, thanks to the rapid gains of e-commerce — 32.4% growth in 2020, according to government statistics — and an overall rise in consumer retail spending.

More than 140 container ships are circling outside the ports of Long Beach and Los Angeles, waiting to be offloaded. “And if you figure each ship has about 1,800 of those great big containers, you can only imagine how much stuff is still sitting out at sea,” the studio executive said. “And medical supplies are the priority — not boxes of DVDs.”

Independent suppliers are grappling with their own worries, said Ed Seaman, GM of MVD Entertainment Group. These include a steadily shrinking number of smaller replicators who deal primarily in independent film.

But fewer replicators, and replication facilities, is just one of several clogs in the indie pipeline, he says.

“We’ve had some replication delays, but also lots of madness bringing goods in from Europe,” Seaman said. “The flights and capacity for cargo is scarce, and then products are getting lost, misplaced or delayed at the ports —  which, of course, is broadly publicized. This is causing release dates to be missed.”

On top of that, Seaman said, “the cost to bring goods in are nearly triple what they were pre-pandemic. Most of our suppliers and customers are understanding, but in some cases it is really straining relationships. Not fun.”

Additional reporting by Stephanie Prange.

NAB Show Canceled for Second Year, Eyes Return in April 2022

Concerns over the coronavirus Delta variant, and the pullout of several high-profile exhibitors, has prompted organizers of the annual National Association of Broadcasters (NAB) Show to scrap its live event, scheduled for October in Las Vegas.

Key elements of the show will be offered online, with a planned return to an in-person event in April 2022.

The move comes less than one month after organizers announced they would require attendees to provide proof of COVID-19 vaccination.

The April 2020 NAB Show was one of the first big events to be canceled after the COVID-19 pandemic was declared by the World Health Organization on March 11, 2020.

In a Sept. 15 email Chris Brown, EVP and managing director of Global Connections and Events at the NAB, wrote, “For more than a year we have worked tirelessly to bring our industry together safely in Las Vegas at NAB Show. Unfortunately, the pandemic and surge of the Delta variant has presented unexpected and insurmountable challenges for our global community. … It has become apparent in the face of these challenges that we can no longer effectively host NAB Show or our co-located events, the Radio Show and Sales and Management Television Exchange, in person. … We will not move forward with a show that delivers anything less than the excellence our community has come to expect and deserves from us.

While we are disappointed that we will not be together again in person next month, we look forward to converging at the 2022 NAB Show, April 23-27, 2022, to reignite our passion for our business and focus on a bright future ahead.

Stay tuned for details regarding virtual options for accessing select 2021 NAB Show content through NAB Amplify.”

The NAB Show has become increasingly focused on streaming in recent years.

OTT.X Fall Summit Moving Outside, Requiring COVID-19 Vaccination or Test

The OTT.X. Fall Summit, taking place Sept. 1-2 at the Skirball Cultural Center in Los Angeles, will move all activities outside, and attendees will be required to provide proof of COVID-19 vaccination or a negative test within 72 hours of the start of the event.

Masks will not be required outdoors but will be required indoors at the Skirball Center during the event.

“We are aware of and have been closely monitoring the recent rise in COVID-19 cases,” read an email from OTT.X. “So, in an abundance of caution and for the safety of our attendees, we have decided to take the Fall Summit outdoors.

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“All conference components including the main conference program, workshops, tabletops, meetings, cocktail receptions and more will be held outdoors. We have also instated some protocols to follow to ensure the health and safety of the conference.”