Home Entertainment 2024 — Transactional: PVOD, Collectors and Launch Parties

A growing number of studio executives and other industry observers say they believe transactional home entertainment — the traditional, a la carte method of bringing a movie or show into the home, either to watch or to own — may be in the early stages of a resurgence.

The realization that subscription streaming is not sustainable on its own has prompted studios to take a second look at what was once the primary “second window” for movies fresh off their theatrical runs, and the result is that more and more films are being released for digital or physical purchase or rental before they are handed off to the streaming services.

SEE ALSO: Home Entertainment 2024, Part 1 – Streaming: Bundling, Ads, Reruns and Live Sports

Through much of 2022, as the world was still grappling with fallout from the COVID-19 pandemic, Warner, Disney and Paramount were still releasing the majority of their films to their streaming services on the same day as their traditional home entertainment release. Today, all three studios have brought back windows. New theatrical movies are typically available transactionally several weeks before their subscription streaming debuts.

Bob Buchi

“It’s about maximizing the content life cycle through windowing, just as it’s always been,” said Bob Buchi, president of Paramount Home Entertainment,

At Universal Pictures Home Entertainment, division president Michael Bonner notes that both The Super Mario Bros. Movie and Oppenheimer “yielded new benchmarks in digital and physical, demonstrating some of the highest transactional performance levels across the business that we have seen this year. The performance of The Super Mario Bros. Movie was especially standout, earning more digital revenue than any other theatrically released Universal movie ever. Results for Oppenheimer’s 4K Ultra HD release were equally notable, currently tracking in its debut window to be Universal’s biggest-selling 4K title of all time.”

David Decker, president of content sales at Warner Bros. Discovery, also said his division “had a successful 2023, driven by Barbie‘s ‘pink wave’ and the health of the WBD catalog, and punctuated by our ‘WB 100th Anniversary’ promotion. We are finishing the year with digital sales up over pre-pandemic levels.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Digital Deluge

Given the higher margins of digital releases — and fewer headaches because there are no manufacturing or shipping costs, not to mention returns — studios in 2023 began focusing on making films available for digital sale or rental much sooner than in the past, often at a premium price. This past year has seen a significant uptick in premium video-on-demand, or PVOD, releases, with films fresh from their theatrical runs becoming available to rent or buy at higher prices as early as 18 days after their big-screen debuts before the price is lowered to the standard transactional price of $5.99 for a rental and $19.99 for a sale. Universal Pictures Home Entertainment’s Trolls Band Together, for example, was released Dec. 19 — just one month after its theatrical debut — at a rental price of $19.99 and a purchase price of $29.99. Six days earlier, Taylor Swift: The Eras Tour was released for digital rental only at $19.89, also by UPHE, about 60 days after it opened in theaters — still much shorter than the traditional 90-day window.

Michael Bonner

Even Apple allowed its high-profile film Killers of the Flower Moon, directed by Martin Scorsese, to be released via PVOD prior to its debut on Apple TV+.

UPHE’s Bonner said 2023 “reinforced our view of the importance of the home entertainment category, led by some impressive title successes across both premium and traditional windows. When studios release titles under a compressed window framework that includes an exclusive home entertainment offering, consumer engagement for transactional formats is very strong.”

Taking Aim at Collectors

The disc business, meanwhile, continues to decline, kept alive by a growing reliance on the collector market and a hope among some for a vinyl-like resurgence.

“Initially, the disc market was driven by families with kids,” said one insider. “Now, the business is being driven by collectors, as evidenced by continued year-over-year growth in 4K Ultra HD Blu-ray sales.”

Still, 2023 was a tough year for the disc business, with total consumer spending this year expected to come at less than $2 billion — less than 10% of what consumers spent on DVDs and Blu-ray Discs in the peak year of 2006.

In early September, Ingram Entertainment, once the largest distributor of physical home entertainment product, announced it is getting out of the DVD and Blu-ray Disc business. “Expenses are exceeding sales [so it’s] time to exit,” chairman and CEO David Ingram told Media Play News. Later that month, Netflix shut its legacy disc-rental business and let customers keep whatever discs they had out. And in October, the Best Buy retail chain announced it would exit the DVD and Blu-ray Disc business beginning in the first quarter of 2024.

But things may be looking up for the disc, which once was such a crucial revenue stream that DVD sales projections were factored into the movie greenlighting process.

The streaming services’ content purge may prompt more consumers to consider a la carte options, studio insiders say. And the tendency of digital purchases to sometimes disappear from consumer libraries — a hurdle in getting more people to shell out $20 for a digital movie — may also drive disc purchases.

Critics contend a primary reason disc sales are in a protracted slump is studio indifference. They say the number of theatrical catalog releases has plummeted in recent years, paving the way for pirates. And while fresh new theatrical films continue to be released on DVD, Blu-ray Disc and 4K Ultra HD, special features are becoming increasingly scarce while quality issues abound.

“The studios have checked out,” said industry analyst Ralph Tribbey, who has been tracking discs sales through his DVD & Blu-ray Disc Release Report since DVD was launched in 1997.

But that’s not entirely true. Paramount continues to create collectible disc offerings for a wide array of titles in its vast and storied library, such as a deluxe anniversary package with hours of bonus content for Titanic, new additions to its acclaimed Paramount Presents line such as Terms of Endearment, and newly remastered 4K Ultra HD releases of classics from Roman Holiday to The Truman Show.

Demand for the 4K Ultra HD Blu-ray release of Oppenheimer was so great that retailers were running out of copies, prompting Universal Pictures Home Entertainment to issue a statement promising to “replenish those retailers quickly so fans can watch the film at home in the best picture quality possible.” Meanwhile, retail-exclusive editions of the film commanded big prices on the secondary market, with Best Buy’s 4K Steelbook edition of the film listed on eBay at an average asking price of well over $100.

And then there’s Walt Disney Studios Home Entertainment, the latest name for The Walt Disney Co.’s home entertainment operation. The division made headlines in August when it announced it is exiting the disc business in Australia. But just days later, Disney announced plans to roll out several of its popular Disney+ series, including “The Mandalorian,” “WandaVision” and “Loki,” as “Collector’s Edition” 4K Ultra HD and Blu-ray Discs in Steelbook packaging.

Since then, Disney has packaged 100 of its animated films into a massive Blu-ray Disc boxed set retailing for $1,500 and issued Snow White and the Seven Dwarfs, the first of its iconic animated classics, on 4K Ultra HD.

David Decker

WBD’s David Decker says the physical business “continues to represent a meaningful portion of our transactional revenue, and WBD remains committed to the category. We will keep reaching casual consumers and avid fans where and how they want our content: from best-in-class 4K Blu-rays to remastered and re-released films on 4K UHD from our 100-year library of titles.”

Independent film distributors such as Ed Seaman, CEO of MVD Entertainment Group, also see opportunity ahead.

“In disc sales, as studios and brick-and-mortar retailers continue to bail, the opportunity grows for both independent distribution and retail/e-commerce,” Seaman said. “Savvy dealers will pick up more and more great movies and shows and feed the strong demand for the end user, who has a huge appetite for collectible content.”

Keeping the Party Going

Studios have also resumed a practice that subsided years ago when streaming became the dominant form of home entertainment consumption: gala release parties celebrating the disc debut of high-profile new theatrical films.

Disney in January 2023 threw a release party for journalists and social-media influencers to promote the Blu-ray Disc release of the thriller The Menu. The party was held at the Blockbuster pop-up on trendy Melrose Avenue in Los Angeles and included as guests stars Aimee Carrero, Arturo Castro and Mark St. Cyr. Guests enjoyed drinks that they could order by presenting bartenders with an appropriately labeled Blockbuster videocassette box and “well-made” cheeseburgers from Irv’s Burgers, the historic West Hollywood burger stand.

In September, Disney hosted a dance party at the California Science Center in Los Angeles to celebrate the digital and disc release that day of the live-action feature The Little Mermaid.

And November saw two disc release parties. To promote the DVD, Blu-ray Disc and 4K Ultra HD release of Oppenheimer, Universal Pictures Home Entertainment held a screening of a making-of documentary, introduced by director Christopher Nolan, at the Linwood Dunn Theater at the Academy of Motion Picture Arts and Sciences’ Pickford Center for Motion Picture Study in Hollywood. And over in Venice Beach, Disney held a “Haunting in Venice … Beach!” party for A Haunting in Venice, highlighted by trivia for Agatha Christie and murder mystery fans, typewriter poets who wrote on-the-spot personalized poems for partygoers, and sessions with medium Christina Engelhardt.

Lastly, Paramount Home Entertainment in December held a party at Pizzeria Mozza to celebrate the 4K and Blu-ray Disc release of Teenage Mutant Ninja Turtles: Mutant Mayhem. Guests included filmmakers Seth Rogan, Evan Goldberg, James Weaver and Jeff Rowe.

Distribution Issues

One big development on the disc front that occurred in 2023 is word that Walmart, the biggest physical retailer of DVD and Blu-ray Disc with a market share of 45%, is looking to consolidate distribution through Studio Distribution Services (SDS), the joint venture formed by Universal Pictures and Warner Bros. back in April 2021 to sell and distribute DVDs, Blu-ray Discs and 4K Ultra HD Blu-ray discs in North America. The venture is headed by Eddie Cunningham, a former president of UPHE, a steadfast champion of physical media.

Eddie Cunningham

Cunningham is calling for the elimination of the window — typically two weeks — between a film’s digital release and its physical release, a practice instituted more than a decade ago by the studios in the hopes of jump-starting the electronic sellthrough, or EST, business.

“I do think it is time to closely align disc and EST release dates,” Cunningham said. “While it was clearly the right decision to give EST a short window in the early formative, and massive growth, stages of that developing business, both EST and disc are now mature businesses. I would now let the consumer decide how they want to view content in home entertainment. I believe many of studio our partners are looking at this issue objectively and that we will see some significant movement in that direction in 2024.”

Speaking privately, studio executives say the key obstacle to such a move is one of logistics. Since so many new films are being released through PVOD, there simply isn’t enough time to prepare a disc release on the same day. Traditionally, films come to home entertainment about three months after their theatrical bow; with PVOD, the window can be as short as 18 days.

But Cunningham maintains that at the very least the window should be eliminated between a film’s disc and standard digital release, “where materials can be prepared early enough to work through the much more complex compression and authoring, manufacturing, and distribution challenges unique to the disc business.”

Prospects for 2024

Looking ahead, studio executives are looking at the transactional business with guarded optimism for 2024, particularly on the PVOD front.

 “We expect that extended studio and retailer support of early availability, in addition to strong consumer demand for accelerated theatrical-to-home releases, will continue to fuel meaningful growth of the premium window, offsetting the decline of physical and delivering significant value to the home entertainment ecosystem,” said UPHE’s Bonner.

Adam Frank

“We are seeing strong growth in the transactional marketplace across new releases as well as the weekly and monthly catalog run rate for our own business,” said Adam Frank, EVP of global partner management, sales and distribution for Lionsgate. “The industry is moving away from release-strategy fragmentation as studios prioritize a healthy ‘free-and-clear’ transactional window post-theatrical. This trend should lead to higher engagement from our core transactional audience and an influx of new consumers.”

Paramount’s Bob Buchi agrees. “We know that fans still love to own and collect their favorite films and television shows, which is why we continue to support the physical disc business,” he said. “At the same time, we live in an increasingly digital world so we are exploring some enticing and novel ways to augment both the collectability and gift-ability of digital content. There are exciting developments on the horizon, and just as the home entertainment industry has always done, we will continue to evolve and adapt to changing technologies and consumer behavior.”

Warner Bros. Discovery’s David Decker said that in 2024, WBD is looking to build “on our 2023 momentum. We have exciting new releases coming with titles such as Dune 2, Furiosa (the “Mad Max” prequel) and Beetlejuice 2.”

Decker added that he believes windowing of new releases “is finding its footing. Barbie had one of the biggest premium windows of the year, and the release strategy also helped the film’s historic box office success. We will evolve our strategy in 2024 with more data-driven analysis, working closely with our colleagues at WB Pictures and Max on each individual title. We are relentlessly focused on getting these incredible movies in front of as many people as possible, through the best possible viewing experiences, and at price points that satisfy consumer demands. For us, Barbie said it best: ‘It is the best day ever. So was yesterday, and so is tomorrow and every day from now until forever.’”

Warner Bros. Discovery Ups David Decker to President, Content Sales; Jim Wuthrich Resigning at Year’s End

Warner Bros. Discovery on Dec. 1 announced a leadership change following longtime executive Jim Wuthrich’s decision to resign at the end of the year.

David Decker has been promoted to president of content sales for Warner Bros. Discovery effective Jan. 2, 2023. The appointment was announced by Bruce Campbell, chief revenue and strategy officer for Warner Bros. Discovery, to whom Decker will report as he takes on oversight of the division responsible for licensing and distributing all WBD-produced film, television, animation, and digital content to all third-party platforms across North America, as well as direct-to-consumer digital and physical retail sales.

Decker, an 18-year veteran of legacy Warner Bros., was previously EVP of content licensing, and was responsible for the distribution strategy and licensing of WBD content to third-party platforms and networks, brokering several landmark distribution deals, including the successful sale of “The Jennifer Hudson Show” to local television stations across the United States.

“I’m excited to see David’s expertise and collaborative leadership style applied to the whole of our content distribution business,” Campbell said in a statement.

Jim Wuthrich

Outgoing content sales president Wuthrich played a critical role at Warner Bros. and in the home entertainment industry over his 24-year career. He drove the development and growth of in-home entertainment, from the introduction of DVD to the ongoing transition to digital. He pioneered the development of digital ownership formats and the global licensing of Warner content and ran WB Interactive for many years. He also led the team responsible for the theatrical windowing strategy that maximized the exposure and value of WB Pictures’ films after they left the theater.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

“Jim brought tremendous value and industry-defining strategy to Warner Bros.,” Campbell said. “It is truly remarkable, and we thank him for that. If you know Jim, you know it will be interesting to see what he does next. I know I’ll be watching.”

Wuthrich serves as Chair Emeritus of DEG: The Digital Entertainment Group, the industry group that advocates and promotes entertainment platforms, products, and distribution channels that support the movie, television, audio, consumer electronics and IT industries.