Oh, What a Year — With Transformational Changes, Home Entertainment in 2019 Got Smaller — and Bigger

The phrase “transformational change” has been used so much it’s become a cliché — and yet there really is no better way to describe what happened in not just home entertainment, but also the entertainment industry overall, in 2019.

The completion in March of the Walt Disney Co.’s purchase of 20th Century Fox saw the number of major studios drop to five from six. Some of the home entertainment sector’s most familiar faces were suddenly gone, including Mike Dunn, the longtime leader of Fox’s home entertainment unit, and Danny Kaye, the visionary behind Fox Innovation Labs. Later, in the summer, Janice Marinelli, Disney’s home entertainment chief, also exited in a surprise move, given that she had opened an office on the Fox studio lot and was reportedly screening staffers.

In November, two new streaming giants emerged to take on longtime leader Netflix, Apple TV+ and, most significantly, Disney+.

Meanwhile, a new flavor of streaming gathered momentum: free to consumers, paid for by advertisers. Among the heavyweights jumping into what’s known as “AVOD” are ViacomCBS, with its Pluto TV acquisition, and Comcast Corp., which in December was reported to be in advanced talks to acquire Xumo TV, which boasts more than 140 digital channels of programming across 12 genres, including sports, news, kids and family entertainment.

The overall impact of all these developments on home entertainment: It got smaller — and bigger.

Smaller, because the traditional transactional business model that has defined home entertainment since its birth more than 40 years ago has increasingly come under fire, with subscription streaming, in particular, gobbling up more and more consumer attention — and dollars — that previously would have gone toward buying or renting movies, either on disc or through digital retailers.

But also bigger, because streaming, in its various incarnations, is now widely accepted as being part of home entertainment — which is now broadly defined as people watching what they want, on demand. There’s even a new name for all of this — direct-to-consumer — which was first adopted by Disney and is now used interchangeably with “home entertainment.”

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Bob Buchi, president of Paramount Home Entertainment, says 2019 “was the year of transition.”

“From media mergers and changing consumer viewing habits to the explosion of streaming services, the landscape has shifted dramatically,” he says.

The Nov. 1 launch of Apple TV+ marked the tech giant’s entry into the content business, with nine original series. One of them, “The Morning Show,” picked up several Golden Globe nominations from the Hollywood Foreign Press Association (HFPA), a first for a new streaming service.

Less than two weeks later, Disney launched its much-ballyhooed Disney+, with a full menu of in-demand movies and series — including the “Star Wars” spinoff “The Mandalorian.” Disney said more than 10 million people signed up for the service in the first 24 hours. By the end of November, the service had 24 million subscribers, according to estimates from Wall Street firm Cowen & Co. (Netflix as of October had more than 60 million domestic subs.)

“It’s an exciting time and we believe we have a unique and significant role to play,” Ricky Strauss, president of content and marketing for Disney+, told Media Play News on the eve of the service’s launch. “Disney+ will compete based on the unparalleled strength of our brands, the quality of our intellectual property, and expertise in high-quality video streaming.”

And yet industry insiders insist that despite streaming’s growth, there’s room for transactional — largely because new theatrical films, particularly the blockbusters, aren’t available on SVOD services. This distinction has prompted FandangoNow, one of the big digital retailers, to boldly proclaim on its home page, “New releases not on Netflix, Amazon Prime or Hulu subscriptions.”

“Because we’re the first point of entry for fans to see movies in theaters, and first at home, we’ve seen a significant growth among consumers who are excited to own movies as soon as they’re available digitally,” says Cameron Douglas, head of FandangoNow. “Fans looking for high-quality content right out of theaters, including 4K HDR movies, don’t have to wait until they arrive later on subscription services, and innovative deals like rental binge bundles and the availability on new platforms keep them coming back to transactional digital services like our own.”

“New movie releases continue to be sought out by consumers during the first window in the home amidst the frenzied buzz around new streaming services,” adds Michael Bonner, EVP of digital distribution for Universal Pictures Home Entertainment. “While there’s no denying the landscape is becoming more competitive, this business has successfully co-existed with abundant availability of non-transactional content for a long time and we expect it to continue to do so.”

“There is space — and demand — for both transactional content as well as streaming — just as there is consumer interest in both digital and physical,” says Amy Jo Smith, president and CEO of trade association DEG: The Digital Entertainment Group.

Beyond new releases, streamers have a limited selection of older films and TV shows, particularly with their increased focus on original content.

“For many consumers, their streaming options are good enough,” says Mark Fisher, president and CEO of home entertainment trade association the Entertainment Merchants Association (EMA). “But just like the days when the first video rental stores opened and made it easy for the consumer to watch anything they wanted to watch when they wanted to watch it, online VOD retailers offer that same opportunity to the consumer. I know that every time I see a montage of old movie clips, I’m driven to watch titles that aren’t new releases — and these are titles not readily (or easily) found on the streaming services.”

Sales of digital movies, in particular, were a bright spot, with consumer spending up nearly 7% in the first nine months of 2019, according to trade association DEG: The Digital Entertainment Group.

“We’ve continued to see growth in EST (electronic sellthrough) — both in our new releases and in our catalog,” says Jason Spivak, EVP of distribution, for Sony Pictures Home Entertainment. “Certainly the enhanced consumer experience enabled by Movies Anywhere is part of that, as is increasing consumer connectivity in their homes. EST continues to gain prominence in our marketing planning, release data scheduling, and retailer partnerships.”

Ron Schwartz, president of Lionsgate Home Entertainment, says Lionsgate EST revenue grew 30% this year, “four to five times faster than the overall industry. With increased collaboration between studios and retailers, and more offerings such as dynamic bundling, customers are starting to build their lockers up to 10-plus titles. Recent data shows that once a customer gets to between 10 and 12 titles in their locker, their EST purchasing behavior doubles.”

In addition to selling movies, digital retailers also offer them for a la carte streaming, the digital equivalent of a physical movie rental. Redbox remains the only retailer to offer both digital and physical rentals, the former through an e-commerce site and the latter, through a network of more than 40,000 kiosks situated outside (or inside) large retailers like Walmart, convenience and drug stores, and other retailers.

“Redbox owns the transactional space with more transactions across physical and digital formats — for rental and purchase — than any other transactional provider,” says Redbox CEO Galen Smith.

In 2019, he said, Redbox expanded its offering of 4K Ultra HD discs into new markets, and stepped up promotions as well, with its Back to the Movies campaign and a joint Dinner & A Movie offering with meal delivery service DoorDash.

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In addition, Redbox Entertainment, a new content acquisition and production division, has further transformed Redbox into a multi-channel content provider and programmer. Launched in October, the new division is headed by Marc Danon, who spent eights at Lionsgate, most recently as SVP of acquisitions and business development.

Disc sales in 2019 continued to decline in the low double digits, with DEG reporting that in the first nine months of the year, combined 4K Ultra HD, Blu-ray Disc, and DVD revenues were down 18.5% to an estimated $2.3 billion — exactly half what they amounted to five years ago, in 2014.

But studios continued to support the disc. And while a trend among smaller titles is to release them only on DVD and digital, bypassing Blu-ray Disc, major new releases are still getting significant marketing campaigns behind them, particularly for the 4K Ultra HD editions. The UHD disc also made headlines last August when the UHD Alliance, along with leaders in consumer electronics, the Hollywood studios and members of the filmmaking community, announced collaboration on a new viewing mode for watching movies called “Filmmaker Mode,” designed to reproduce the content in the way the creator intended. Filmmaker Mode, bowing next year, will allow viewers to enjoy a more cinematic experience on their UHD TVs when watching movies by disabling all post-processing (e.g. motion smoothing, etc.) so the movie or television show is displayed as it was intended by the filmmaker, preserving the correct aspect ratios, colors and frame rates.

“For the time being, 4K UHD is still the gold standard for at-home content,” says Jim Wuthrich, president of Warner Bros. Home Entertainment & Games. “With hardware costs dropping and television functionality such as Filmmaker Mode being made available next year, there is still a great value proposition in owning content in 4K UHD, both physically and digitally, as is still represents the best home-viewing experience.”

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“As evidenced by the exceptional growth of 4K UHD to date, it is clear that there is a sizable appetite for premium high-definition products, and that format plays a meaningful role in boosting retail traffic,” says Eddie Cunningham, president of Universal Pictures Home Entertainment.

Retail partnerships are key, Cunningham adds. “Given that physical and digital transactional consumption rates are remaining steady year over year and that disc purchases are making up more than half of that consumption, there’s no question that movie buyers continue to be vitally important to retail,” he says. “At no other time in our industry has it been more critical to ensure that we work together to retain the loyalty of movie consumers, creating urgency for our products and delivering the utmost value, quality, accessibility and convenience possible.”

 

HDR10+ Licensing, Logo Certification Program Begins

HDR10+ Technologies LLC June 20 announced the start of the new licensing and logo certification program for HDR10+ technology.

HDR10+ is the royalty-free, open standard dynamic metadata platform for High Dynamic Range (HDR), which optimizes picture quality for 4K Ultra HD displays and improves the viewing experience for all audiences.

The new HDR10+ technology optimizes picture quality for 4K Ultra HD displays by using dynamic tone mapping to reflect frame to frame or scene to scene variations in brightness, color saturation, and contrast. The resulting enhanced viewing experience can now be easily provided on a wide range of displays bringing the viewing experience much closer to the original creative intent for the content.

The HDR10+ license and logo certification is available to interested companies that meet HDR10+ technical and testing specifications. The HDR10+ certification program qualifies the compliance based on different device categories and their technical performance to ensure that HDR10+ compliant products meet high standards for picture quality.

An on-pack HDR10+ logo signifies a product’s certification. The royalty-free adoption of HDR10+ for content production, distribution and consumption currently has more than 40 supporting companies.

“The new HDR10+ licensing and certification program represents a technological step forward for next generation displays,” said Danny Kaye, EVP of 20th Century Fox Home Entertainment and Managing Director of the Fox Innovation Lab. “HDR10+ improves the viewing experience for all audiences by delivering higher picture quality to a wider range of affordable TVs and devices.”

The HDR10+ platform was also designed to allow for future development and innovation in order to deliver a more powerful technology in the years to come.

CES 2018: From Consumer to Concept

The 2018 CES in Las Vegas marked a continuation of the trade show’s rather rapid shift from consumer to concept.

Once again, there was significantly less emphasis on traditional consumer electronics and more of a focus on technological innovation, from driverless cars to drones, from connected homes to voice-activated anything.

The “wow” factor dominated the show floor, even as Mother Nature flexed her muscle, with the city flooded by a rainstorm on opening day and the show virtually shut down for nearly two hours on day 2 by a blackout show organizers attributed to the rain.

In the old days, visitors to CES – which this year saw more than 3,900 exhibitors  showcase their technologies on a record 2.75 million net square feet of exhibit space across Las Vegas – could expect to see many of the products on display available for purchase later in the year.

But in recent years, CES has become something of a proving ground for tech firms engaged in a game of one-upmanship – resulting in a parade of technological marvels that, like concept cars, may never come to market.

Indeed, the show floor at CES 2018 was something of a theme park, with people lined up outside several of the bigger booths for scheduled shows.  At the LG booth, visitors were led through a winding canyon of curved TV screens showing majestic waterfalls and other natural wonders. At the Panasonic booth, visitors were treated to an elaborate stage show highlighted by a woman dressed as a robot. And at Samsung, the star attraction was a 146-inch TV, dubbed The Wall, that through modular MicroLED technology can be adjusted to better fit your room by removing or adding pieces.

This focus on futuristic technologies rather than new and improved CE gadgets prompted show producer the Consumer Electronics Association to officially change its name to the Consumer Technology Association in November 2015.

At the time, CTA president Gary Shapiro said in a press release, “Several years ago, our executive board directed us to focus on promoting innovation….The name Consumer Technology Association addresses that.”

For show attendees from the home entertainment sector, prospects of an HDR (high dynamic range) format competition came out into the open. On the eve of the show, Twentieth Century Fox, Samsung and Panasonic announced a push for HDR10+, a non-royalty HDR technology also supported by Warner Bros. Panasonic and Sony displayed 4K UHD Blu-ray Disc players with Dolby Vision’s HDR technology, which is not royalty tree.  And Philips/Technicolor (aligned with LG) touted Advanced HDR by Technicolor, which representatives said promises a cheaper HDR solution that is especially convenient for broadcasters because they  don’t have to employ multiple teams to shoot the same live event. (Shooting in HD as well as 4K with HDR requires two sets of cameras/teams with HDR10+ or Dolby Vision, the Technicolor reps said.)

“CES was just a preview of the tremendous technological innovations to come in augmented and mixed reality as evidenced by the proliferation of devices and experiences being touted at the show,” said Danny Kaye, EVP of 20th Century Fox, and managing director of the Fox Innovation Lab. “Couple that with the onset of 5G and the broad range of support shown for HDR10+, and we’re on the brink of a fundamental shift in the way in which consumers view our content across all of their devices.”

At an event highlighting the Fox Innovation Lab’s VR project Isle of Dogs and HDR10+ support, Karen Gilford, GM of digital locker Movies Anywhere offered an update on its progress since the October launch. At 81 days after launch, consumers had placed nearly 80 million movies in lockers and had streamed more than 3 million hours of content, she said. The locker launched with more than 7,500 movies from five studios — Walt Disney (including Pixar, Marvel Studios and Lucasfilm), Sony Pictures Entertainment, Twentieth Century Fox, Universal Pictures and Warner Bros. Entertainment — and with retail support from Google Play, Amazon Video, iTunes and Walmart’s Vudu.

“Movies Anywhere gives fans more control over their libraries with innovative product features that deliver a great experience,” Gilford said. “As the app continues to gain traction, consumers can expect to see the integration of new partners and a continued evolution of product features that serve them in unprecedented ways.”

New release and seasonal titles have been the top performers across redemptions and purchases, she said.

Added Keith Feldman, president, worldwide home entertainment, Twentieth Century Fox, “Movies Anywhere advances the experience of our most avid consumers and serves these highly engaged movie fans with relevant and unique content when their interest is at its peak, strengthening the entire entertainment ecosystem.”

In other show news:

  • Chinese TV manufacturer TCL announced plans to join Roku’s “Whole Home Entertainment Licensing Program,” a new platform enabling OEM brands to incorporate voice-activated Roku Connect software as a home entertainment network. TCL manufactures Roku-branded TVs. “Consumers will love the benefits of … having more affordable options –using their voice, having a simplified set up and Wi-Fi connectivity, and holding just one remote control,” said Roku founder/CEO Anthony Wood.
  • LG Electronics  showcased what it said is the world’s first 88-inch 8K OLED display featuring 33 million pixels — four times the clarity of 4K Ultra HD. “OLED is clearly a next- generation technology leader and for this reason, LG Display is accelerating its research and development into OLED so that we can provide  differentiated products to customers and markets,” CTO In-Byung Kang said in a statement.
  • Digital platform security firm Irdeto announced the launch of its next-generation piracy control solution. The new online piracy detection and enforcement solution provides data-driven web video discovery tools with expert analyst oversight, multi-language site searches, integrated social media and search engine discovery, as well as peer-to-peer stream discovery such as SopCast and Ace Stream, according to Irdeto. These new features enable content owners and distributors to quickly and accurately identify and then shut down pirated content across streaming video on demand, direct download and hybrid pirate websites.
  • Media services company Pixelogic announced its London facility is the first in Europe to offer Dolby Vision UHD Blu-ray authoring with its proprietary Dolby Vision authoring tools. Since launching the service last year, Pixelogic has delivered more than 20 UHD Blu-ray Disc titles in Dolby Vision authored in its Los Angeles office, including BBC Worldwide’s first Dolby Vision UHD Blu-ray title, Earth: One Amazing Day. Other titles include Despicable Me and Despicable Me 2 for Universal Pictures Home Entertainment, Lionsgate’s Saban’s Power Rangers, and Sony Pictures Home Entertainment’s Resident Evil: Vendetta.
  • Samsung announced what it billed as “the world’s first QLED TV featuring 8K AI upscaling technology.” This technology upscales standard definition content to 8K by employing a proprietary algorithm to adjust screen resolution based on the image quality characteristics of each scene. The technology “uses a proprietary algorithm to improve the TV’s picture performance regardless of native image,” said David Das, SVP, consumer electronics marketing, Samsung Electronics America. This includes detail enhancement — upgrading standard definition content, noise reduction, edge restoration function — which more clearly outlines on-screen objects, according to Samsung. “The TV intelligently upscales the resolution to an 8K viewing experience,” Das said.

Stephanie Prange and Erik Gruenwedel contributed to this report.