Honoring Eddie — and Hollywood

Eddie Cunningham, in the spirit of Teddy Roosevelt, speaks softly and carries a big stick.

Honored with Media Play News’ third annual Fast Toward Award, Cunningham is the consummate gentleman, both inside and outside of the workplace. Without exception, his employees say he’s a remarkable boss, even-tempered and empowering, encouraging them to do their best and making them want to do their best.

He’s instilled in them a belief that what they do each day in the office truly matters, that they are an essential cog in the wheel, so to speak. Leading by example, you get the feeling that Eddie Cunningham truly loves our industry as well as his company, and that loyalty and reliability are two of his most important traits.

The last time we met for lunch, at the Grill on the Universal Studios lot, he brought a bag of toys for my year-old granddaughter.

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A while back, at CES, we happened to share an elevator. Eddie Cunningham was the last person out, holding the door for nearly a dozen other people.

Now that he’s been tapped to lead a joint venture between Universal Pictures and Warner Bros. that, pending regulatory approval, will market and distribute Blu-ray Discs, DVDs and 4K Ultra HD discs in the United States and Canada from both studios, beginning in early 2021, Cunningham also is leading the charge to ensure the continued viability, and profitability, of the physical disc.

It’s a big opportunity, and a big challenge, as well. Disc sales have been declining, and with the whole world so enamored with streaming, we as an industry need to do what we can to prop up the transactional business – which despite impressive growth rates on the digital side remains tethered to physical media.

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As Cunningham says in this month’s feature, “Discs, alongside electronic sellthrough, are usually the first opportunity to own a film after its run in theaters, with the movie often not being available on SVOD for years. [And] if you want the highest quality picture and sound, disc is still the best way to get that in the home.”

The physical disc is not only the primary into-the-home distribution mechanism for new movies fresh off their theatrical runs. It also remains the best way to preserve, honor and capitalize on Hollywood’s rich cinematic history.

The proliferating streaming services are so focused on original content that older films are hard to find. The theatrical catalog titles we used to enjoy, and which formed the basis for DVD collecting two decades ago, are pretty much out of everyone’s consciousness.

I know from my own experience that whereas in the past I would regularly watch an old classic or two each week, for the last few years I have been so consumed by Netflix series such as “Ozark,” “Orange is the New Black” and “House of Cards” that I didn’t have time for much more than the latest theatrical hit.

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Only since my holiday from streaming began last December have I been watching old movies again on Blu-ray Disc.

That’s why I applaud Paramount Home Entertainment’s launch of a new “Paramount Presents” label to recognize and celebrate films from the studio’s library. As division president Bob Buchi said, “Paramount’s library represents over a century of filmmaking and includes some of the greatest films in cinematic history. We look forward to opening the vault and sharing some of our most treasured films with fans.”

 

Fast Forward Awards 2020: Eddie Cunningham Gets Physical

It was the spring of 2014, and the team at Universal Pictures Home Entertainment didn’t quite know what to make of their new boss.

Eddie Cunningham, after eight years of heading international, had just been promoted to president of the entire division, whose scope had been expanded to global. He was moving his family out from London to Los Angeles, and was shopping around for a house to buy in Hancock Park, so he clearly planned to stay awhile.

The new role was played up in a press release all staffers had seen by then, in which Peter Levinsohn, at the time the studio’s president and chief distribution officer, said, “As the home entertainment landscape continues to evolve, we need to ensure that we’re operating as one global team positioning ourselves for the greatest success. Eddie has had tremendous results as head of our international home entertainment division and he will be a terrific leader for our group as we work to shape the future of Universal’s home entertainment business with an even greater global focus.”

At the division’s first townhall-style meeting with the new boss, Cunningham, an imposing figure known as much for his big strides as his Scottish brogue, walked into the room and faced the crowd. A few welcoming pleasantries, then a slideshow honoring employees who are celebrating anniversaries. First one-year, then five-year, and so on. Cunningham broke the ice by remarking that some veterans were apparently using old photos that made them look a lot younger. “I’d never do that, ya know,” he deadpanned.

Just then, the slideshow hit the 20-year mark and a young black-and-white Eddie Cunningham appeared on the screen, bangs cascading over his forehead and his head tilted forward in a classic Yuppie-era power pose.

The room erupted with laughter. The ice had been broken; the new boss, staffers nodded to one another, would be all right.

Six years later, Eddie Cunningham remains one of the most respected executives in home entertainment — even though unlike most of his peers, his focus is solely on the physical disc: Blu-ray, 4K Ultra HD, and, yes, DVD, the format that started it all and continues to sell among budget-conscious consumers.

That’s why the president of Universal Pictures Home Entertainment gets our third annual Fast Forward Award for his unflagging support of the physical disc in an increasingly digital world.

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“Eddie has always been a great advocate for and leader of the home entertainment sector,” says Ron Sanders, president of worldwide theatrical distribution and home entertainment for Warner Bros. “He is as comfortable talking big-picture strategy with a studio head as he is discussing an out-of-stock with a store clerk. He’s probably one of the foremost experts on all aspects of our business, and his strong results demonstrate that.”

“Eddie is a consummate professional who has been helping to drive the global home entertainment business for the last two decades,” adds Bob Buchi, president of Paramount Home Entertainment. “His vision and expertise raise the bar for everyone.”

Galen Smith, CEO of Redbox, says Cunningham “has been an incredible partner. It’s clear to anyone who works with Eddie that he loves entertainment, understands the value of the physical business to consumers, and is always developing new and creative ways to maximize value of movies for UPHE. His commitment over his career continues to benefit retailers, distributors and, most importantly, consumers.”

Under Cunningham’s leadership, UPHE has scored a steady string of best-selling Blu-ray Discs and DVDs, spanning such global blockbuster franchises as “Jurassic World” and “Fast and Furious” as well as the breakout film sensations Mamma Mia! Here We Go AgainUs and Downton Abbey.

In an effort to further innovate for the industry, UPHE last June unveiled a completely reimagined bonus content menu for its physical disc offerings that is more easily accessible and navigable — a move the studio introduced to provide viewers with a more visceral and engaging experience for Blu-ray Disc and DVD bonus content, which Cunningham and his team believe is a key selling point for its physical product offerings.

And when Warner Bros. and Universal Pictures in January 2020 announced plans to merge their domestic disc distribution businesses, Cunningham was chosen to lead the joint venture that pending regulatory approval will begin operation in early 2021.

“I am delighted to have been asked by Warner Brothers and Universal to lead the proposed joint venture and look forward to building a team to take us into the next exciting chapter for the market, working closely with our retail partners,” Cunningham said.

Cunningham is also known as one of the industry’s true gentlemen, to use a term that might be a little antiquated and not so politically correct, but remains appropriate. People who work for him have nothing but high praise, noting that he has helped create a culture that is at once welcoming and challenging, where everyone feels valued and appreciated.

Asked about his management style, Cunningham says, “I always talk about the three things that I believe will make most businesses successful: the right strategy, the right people and creating the right environment. I spend most of my time making sure those things are in place and that we keep improving. I believe in measuring yourself properly and in keeping yourself honest.”

Cunningham says he likes to think of himself “a bit like a conductor of an orchestra.”

“Some leaders think they can play every instrument better than everyone in the orchestra,” he says. “I prefer an approach where everyone brings their own skills and talent to the team and my job is to point them in the right direction and help them make great music, and in perfect harmony with each other. I prefer to help people build on their natural strengths … and I like to empower people as much as possible. It is often amazing what people can accomplish if you support them and show belief and trust. As a leader, you just need to check every so often that the trust isn’t misplaced. I like to be in it with the team when we try things. I always want people to know that they are not on their own if things don’t go well, provided there was good communication up front and that we haven’t failed because of poor execution. I don’t like the blame game.

“And I have always tried to get myself away from negative people as they drag everyone down. We all need to let off a little steam occasionally, but I always try to have a ‘glass half full’ outlook to both business and life in general. I also love fun. I like a sense of humor. Business is serious, but let’s enjoy ourselves while at work.”

His office reflects that philosophy. Two side-by-side computer screens are flanked by a photo of his family and an NBCUniversal calendar on one side and several binders and a stack of Blu-ray Discs on the other. Up above are shelves packed with more discs, the top two reserved for special editions, boxed sets, promotional mugs and a “Fast and Furious” remote-control car, still in the box.

Fun and games aside, Cunningham says he is “absolutely fanatical” about hiring. “It’s one of the most important things you will ever do,” he says. “Get it right and you are in good shape; get it wrong and you take several steps back. You can’t just hire the most talented people — you also need people who are best suited to your culture.”

Cunningham says that “as a bit of a business student, I studied the late Jack Welch closely in my early career. He used to talk about ‘the numbers and the values.’ Later, that became my guiding principle when hiring. What does it mean for me? The ‘numbers’ is really the day job. A marketing hire might need to combine experience with creativity and some science. An accountant might need to have certain financial qualifications and controllership or compliance experience to help guide the business.

“The ‘values’ are equally important, although too often they don’t get enough attention. I try to have a very clear sense of the values that will be required to be successful in a team that I lead and I often spend as much time looking for the fit as for the technical ability or experience to do the day job.

“Almost everyone tries to get a reference from a potential recruit’s previous bosses. I am just as interested in talking to people who have worked for the recruit. What kind of leader was he or she? What kind of person? What was morale like in the department? Did you feel like you were in an environment where you could contribute and grow? Was there a lot of wasteful nonsense or politicking?”

What advice would Cunningham give to a junior member of his team who’d like to advance and grow professionally?

“Three things,” Cunningham says. “First, do a great job where you are today. Treat each job, even if it is a menial one to begin with, like a degree course that will qualify you for your next bigger role. Be the best at it, always. It’s not a rehearsal.

“Second, build your network inside and outside the company. People can often get too internally focused working through their ‘to-do’ lists, their very busy lives, and don’t keep their heads up and work on building relationships outside their own immediate area.

“And, third, don’t spend too much time thinking about where you will be in five or 10 years’ time. Keep your head up and when you see the next role that you feel is right for you, kick the door down to try to get it.”

Eddie Cunningham (Photo by Bobby Quillard)

Joseph Edward Cunningham was born in a Leap Year, on Feb. 29, in Paisley, Scotland. He was the eldest of three children; his parents were older, his dad 56 and his mother, or “mum,” 41. He loved music and movies, and played a lot of soccer.

He enrolled in the University of Strathclyde, studying architecture. “But after a two-year flirtation with becoming an architect, I joined a retail business in the U.K. — Woolworths,” Cunningham recalls. “I managed several retail operations before being moved into the head office, where I took on a number of buying roles, including music, where, at the time, we had a huge 25% share of the U.K. disc market and an incredible 40% of the singles business.” (This was before CDs, when music was primarily sold on 7-inch singles or 12-inch albums.)

Woolworths eventually bought its biggest supplier, Record Merchandisers, and later renamed it Entertainment U.K.

“I became business development director initially and, later, as commercial director, was responsible for buying and sales and marketing,” Cunningham says. “In that role, we were everyone’s biggest European customer in the music and home video markets, so I was lucky enough to get headhunted across to one of our biggest suppliers, PolyGram, overseeing their fledgling home video business and a couple of catalog music labels.”

In 1999, five years after Cunningham was hired by PolyGram, the company was acquired by Seagrams and integrated into Universal Pictures. Cunningham became chairman of U.K. Operations and regional managing director for the Nordic countries as well as Australia and New Zealand.

Cunningham was promoted to president of Universal Pictures International Entertainment in 2006, overseeing the company’s home entertainment activities across Europe, Asia and Latin America. He played a key role in elevating Universal to market leader in most of its operational territories and introduced groundbreaking, non-traditional growth initiatives in the international home entertainment sector.

“We went to a lot of retailers who weren’t engaged in the category at all and persuaded them to come into it,” Cunningham recalls. “It depended a lot on which territory, but we spoke with clothing stores, sporting goods stores, small grocery chains — any retailers that had significant traffic flow.

“Our theory was that the business was going to plateau and decline at some stage, and if we just sat waiting for existing retailers to take space out, the decline would be faster. Consumers still love physical content, but we were starting to see fewer places to buy it, so we decided to try to broaden distribution.”

So, in essence, Cunningham was thinking “out of the box” before it became a popular catchphrase. It’s also known as being creative or, simply, thinking smart — and being strategic.

That’s how Eddie Cunningham works, and it’s also the best way to get ahead in the entertainment business, he maintains.

“As in any business, you have to consistently achieve results and be highly competitive,” Cunningham says. “You can’t always be the best at everything, but if you’re not, know who is and learn from what they are doing. I see the entertainment business as a people business, so relationships are very important. It sounds a bit obvious but treat everyone the way you would want to be treated yourself. It sounds simple but do what you say you are going to do. Follow up. Be reliable. Build trust. If you screw up occasionally, don’t be afraid to apologize and make it good — and quickly!

“And always remember the second-best answer in the world is ‘a quick no,’ so don’t leave people dangling for answers. If, for example, you say to a distribution partner that you are going to treat their content in exactly the same way as your own, then accept nothing less from your organization and create a culture that believes in this as a core value of doing business. If you promise something to a customer, then make sure you deliver it 100%.”

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Like many high-ranking executives, Cunningham has had his share of triumphs and disappointments. His single biggest achievement, he maintains, “is probably surviving eight major takeovers in my career.”

“While I have likely been close to becoming a casualty on a few occasions, I somehow managed to earn the trust and respect of each of the new owners,” he says. “I could write a book on that one, but you must always remember that the acquirer has usually brought you on to improve you, or maybe even ‘fix’ you. They have usually invested a lot of money acquiring you. What you have achieved prior to the takeover counts for very little, if anything. You need to park any ego you have at the door, start again, and earn their trust and respect. If you are not prepared to do that, then go and do something else. I often say ‘You can stay, or you can leave, but don’t stay if you have a chip on your shoulder.’ That’s no good for you, your family, the company, anyone.

“I think I take the biggest pride in seeing so many people from my various teams over the years progress throughout their careers. Feeling that I played some part in their personal success and development feels good. Seeing someone who was a trainee manager for me at retail go on to become a retail giant, seeing a young marketing assistant progress and go on to become an EVP, is very satisfying for me.”

On the downside, Cunningham says, “I never really focus on failure. Sure, there have been lots of disappointments along the way — we are, after all, in the movie business. But each failure or mistake represents an opportunity to learn something and move on. Winston Churchill once said, ‘Success is walking from failure to failure with no loss of enthusiasm.’ I wouldn’t go that far, but you get what he meant. Someone else said, ‘Failure defeats losers, but inspires winners.’ I genuinely believe that if you are not making a few mistakes, then you are not trying hard enough.”

Reflecting further on his career, Cunningham notes that he has had 18 bosses “and I’ve been really lucky enough to have had a lot of really good ones and some truly great ones — along with perhaps one or two who were not so good! The good news is that you can even learn from the bad ones, by remembering how it felt being on the receiving end and taking those lessons with you and making sure that you act differently when you are in a position of power.

“My first manager in retail was a great, wise, mature leader who left a lasting impression on me. He is now well into his 80s and I still speak to him from time to time, and he still has good advice for me. Ron Meyer is a standout for me. He just has this personal touch which is difficult to explain. If I could bottle it I would. He is incredibly open. He treats everyone as equals. He makes people feel great. He responds to everything. He has built a great culture at Universal. You would follow him to the ends of the earth. Jeff Shell is another one. I was lucky enough to have an office two doors away from him in London for three years after Comcast bought NBCUniversal so I would speak with him most days. He has a planet-sized brain and always challenges you to think differently. He is a great communicator who is prepared to take risks. He is always pushing the envelope, and he is also very open and transparent.”

Cunningham’s rules for life are simple, straightforward — and from the heart.

“For me, life is mainly about family and work,” he says. “I have a lovely wife, Sue, and three ‘grown-up’ children who are great — the oldest graduated from the London School of Economics and works in business development, in London; my daughter just graduated from the University of California, Berkeley; and my youngest is a junior at Pepperdine. I occasionally play golf, but not too much. I always remember Jim Davidson, who was a huge TV personality and comedian in the U.K., once say to me that ‘three into two didn’t go.’ Noting that I had a very demanding job and a big family, and that I enjoyed the odd game of golf, he said, ‘The best one to lose was the golf.’ As Jim had four previous wives at that stage, I took that to heart and therefore my golf handicap is still very high.”

As a business leader, Cunningham says, “I demand loyalty to the company, to the team, to each other — always. Respect is different. I don’t believe that any leader has a right to demand respect. Respect needs to be earned both ways, regardless of the divergence in titles or status within an organization. Leaders can’t just demand respect; they need to work at earning it from even the most junior member of the team.

“I also try to live by the motto, ‘Take the company seriously, but let’s not take ourselves too seriously.’ I abhor big egos. We are all here partly because we are lucky enough to work in a great business. Finally, tell the truth, don’t spin, no B.S. please! Usually, if you can get to the truth, you can manage most things.”

 

Eddie Cunningham Q&A: In Defense of the Disc

Earlier this year, Universal Pictures and Warner Bros. announced plans to merge their physical distribution businesses under Universal Pictures Home Entertainment president Eddie Cunningham through a joint venture that will market and distribute Blu-ray Discs, DVDs and 4K Ultra HD discs in the United States and Canada. The proposed union, which still must be approved by the U.S. Justice Department, is expected to officially launch early in 2021. It covers new releases and library titles as well as television content, and will be operational for up to 10 years.

On the appointment of Cunningham to lead the new joint venture, Peter Levinsohn, now vice chairman and chief distribution officer for the Universal Filmed Entertainment Group, said, “For more than two decades Eddie has been an expert in understanding the evolution of the physical home entertainment landscape. He’s been a dynamic leader in shepherding business innovation and operational effectiveness.”

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Media Play News sat down with Cunningham to talk about the disc business.

MPN: What advantage do discs have over digital media?

Cunningham: Discs, alongside electronic sellthrough, are usually the first opportunity to own a film after its run in theaters, with the movie often not being available on SVOD for years. If you want the highest-quality picture and sound, disc is still the best way to get that in the home, particularly in the higher-definition formats — BD and 4K UHD. Discs still make great gifts and are highly collectible, often with great bonus features.

MPN: In an increasingly digital world, is there still room for physical media? Let’s take a broad look at this — not just movies and TV shows but also music and books.

Cunningham: Of course there is still a place for physical media and I expect that to be the case for many years to come. The retail community is still heavily committed to the category. A number of U.S. retailers have even expanded their book space over the past couple of years. Clearly, the world is moving more toward digital consumption, but this is still a retail disc market worth almost $7 billion globally. Close to 50% of transactional consumers in the U.S. are still physical-only buyers. Of the other 50%, the vast majority still purchases discs alongside their electronic sellthrough and VOD transactions. Very few are digital only. Most consumers are hybrid customers in that they consume in lots of different ways. We view all formats as complementary. We make movies and TV programs. and our role is to provide consumers with content in lots of different ways. They can chose how to view our content and the disc is certainly still very much part of that equation.

MPN: Disc sales have been falling steadily as digital distribution, both transactional and streaming, has grown. What can be done to slow down the decline — or at least manage the decline to ensure that we as an industry are maximizing profitability?

Cunningham: We need to continue to drive shoppers into stores through our marketing and to engage them at retail. That means exciting new-release displays adding theater and fun to the shopping experience. A good example of that would be our corrugate displays on Jurassic World: Fallen Kingdom where we partnered with Facebook to create an interactive AR experience, bringing the dinosaurs to life in stores. We supported this initiative with a big national advertising campaign that drove people into stores. It also means great impulse displays, strong packaging and price offers on library content.

MPN: Is there still room for innovation in the disc business? Can we make DVDs and Blu-ray Disc more appealing to consumers?

Cunningham: Sure. Last June we unveiled a completely reimagined content menu for our bonus material, which makes it much more easily accessible and navigable. I think innovation can be an over-used word, but there is still much we can still do to continue to excite the consumer through our marketing and in the store. Our research tells us clearly that consumers like to shop at retail, like to browse displays in-store, are often collectors, can be heavily influenced by in-store displays and are often very interested in the bonus material included, which is a significant driver of disc purchases. We continue to invest heavily in consumer marketing campaigns and we remain committed to driving engagement in stores.

MPN: We see the percentage of DVD sales not falling off as quickly as some had predicted. Why, in your mind, are some people still buying DVDs rather than Blu-ray Discs?

Cunningham: A lot of consumers have grown up with DVD. It was like the equivalent of digital in the early days after tape. That shiny, sexy, high-quality, indestructible five-inch disc! They still love the format. They collect it. It is compatible with their home tech systems. Heavy DVD buyers tend to be more price-sensitive and respond well to price and other offers, too.

MPN: How fast is 4K Ultra HD catching on? Is it still a niche business or will it become a mass-market item, as 4K TV penetration increases?

Cunningham: 4K UHD catalog sales grew by 20% last year and we expect to see further significant growth in 2020, and it becoming a bigger share of high-definition sales. I don’t see it as mass market in the sense of taking over from the other physical formats, but it is already more than a niche and I expect it to grow.

MPN: Will the disc ever go away completely? In music, by comparison, CD sales are a fraction of what they once were — and yet vinyl is experiencing a resurgence. Still, packaged media accounts for just 4% of total music sales. What do you see happening in our industry?

Cunningham: You can never say never, but I think discs are around for a long time to come. We wouldn’t be proposing creating a joint venture with Warner Bros. if we didn’t believe that. At the high-definition end, it’s the best way to watch a film in the home and that will be the case for a long time. It is difficult to replicate the significant gifting element of physical content in a digital world. It is also a challenge to replace the impulse nature of displays in a brick-and-mortar retail shopping environment, those interesting displays, that ability to browse, to touch the content, to read the notes on the back of the packaging. I think we are going to be here and part of the mix for a long time to come.

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UPHE’s Eddie Cunningham to be Honored With Third Annual ‘Fast Forward’ Award

Media Play News on Feb. 28 announced that Eddie Cunningham, president of Universal Pictures Home Entertainment (UPHE), will receive the third annual Media Play Fast Forward Award, which honors people, technologies, organizations, products or services that move the home entertainment industry forward.

Cunningham is being honored for his innovative and aggressive promotion of packaged media since he assumed his present position in 2014. Under Cunningham’s leadership, UPHE has scored a steady string of best-selling Blu-ray Discs and DVDs, spanning such global blockbuster franchises as “Jurassic World” and “Fast and Furious” as well as the breakout film sensations Mamma Mia! Here We Go Again, Us and Downton Abbey.

In an effort to further innovate for the industry, UPHE last June unveiled a completely reimagined bonus content menu for its physical disc offerings that is more easily accessible and navigable — a move the studio introduced to provide viewers with a more visceral and engaging experience for Blu-ray Disc and DVD bonus content, which Cunningham and his team believe is a key selling point for its physical product offerings.

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And when Warner Bros. and Universal Pictures in January 2020 announced plans to merge their domestic disc distribution businesses, Cunningham was chosen to lead the joint venture that pending regulatory approval will begin operation in early 2021.

Last year, the Media Play Fast Forward Award went to digital retailers Cameron Douglas of FandangoNow, Galen Smith of Redbox On Demand, Google Play Movies & TV’s Jonathan Zepp and the team at Apple iTunes.

The previous year, the inaugural Media Play Fast Forward Award was shared by Fox Innovation Lab and Movies Anywhere.

The Media Play Fast Forward awards are an outgrowth of the Home Entertainment Visionary Awards, which were launched in 2002 by the now-defunct Home Media Magazine. Comcast’s Brian Roberts was the 2017 honoree. Warren Lieberfarb, the father of DVD, was the first Visionary Award winner, back in 2002. Other honorees have included Sony Pictures’ Ben Feingold, Samsung’s Tim Baxter, and Walmart’s Louis Greth and Chris Nagelson.

Cunningham will be profiled in the March issue of Media Play News.

Universal, Warner Bros. To Merge Domestic Disc Businesses

After a year of two gigantic mergers, Hollywood is welcoming the new year with further consolidation — this time, in the home entertainment sector.

Universal Pictures and Warner Bros. on Jan. 15 announced plans to merge their physical distribution businesses.

On the domestic front, the two studios are establishing a joint venture to market and distribute Blu-ray Discs, DVDs and 4K Ultra HD discs in the United States and Canada.

The new unit, which still must be approved by the U.S. Justice Department, is expected to officially launch early in 2021. It will combine the existing domestic disc businesses of Universal Pictures Home Entertainment (UPHE) and Warner Bros. Home Entertainment, and be headed by current UPHE President Eddie Cunningham.

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Internationally, territories will be broken up through licensing arrangements. Warner Bros. will assume distribution duties of UPHE discs in the United Kingdom, Italy, and Benelux (Belgium, The Netherlands and Luxembourg). UPHE will distribute Warner products in Germany, Austria, Switzerland, and Japan.

The digital distribution business at each studio will not be affected.

The proposed union covers new releases and library titles as well as television content, and will be operational for up to 10 years.

The domestic joint venture will include leadership from both UPHE and Warner Bros., and covers trade marketing, sales and distribution.

Consumer marketing remains with each studio.

The announcement was made by Peter Levinsohn, president and Chief Distribution Officer of the Universal Filmed Entertainment Group, and Ron Sanders, president of Worldwide Theatrical Distribution & Home Entertainment and EVP of International Business Operations at Warner Bros.

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“As the home entertainment landscape evolves, we are continuously working to deliver the best entertainment range and value to our fans,” said Sanders.  “The physical business is still an important and active category for the industry.  This proposed joint venture with Universal gives us the best opportunity to foster innovation in this business, optimize the physical offering and extend the lifespan of the format for our fans and consumers.”

“With market conditions and consumer viewing behaviors continuing to evolve, we wanted a partner who shares in our commitment to deliver the best consumer proposition going forward,” Levinsohn said. “This proposed JV presents a significant opportunity to continue to work with our retail partners to ensure the format’s strength and sustainability for years to come.”

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On the appointment of Cunningham, Levinsohn said, “For more than two decades Eddie has been an expert in understanding the evolution of the physical home entertainment landscape.  He’s been a dynamic leader in shepherding business innovation and operational effectiveness.”

This is not the first time studios have joined forces in their home entertainment endeavors. In the early 1980s, Columbia (now Sony) Pictures created a joint venture with RCA to distribute videocassettes to the then-burgeoning rental market. RCA/Columbia Pictures Home Video was in operation for more than a decade; in the meantime, the industry saw several other joint ventures, including CBS/Fox Video and Thorn-EMI/HBO Video.

DEG: The Digital Entertainment Group CES 2020 Event

DEG: The Digital Entertainment Group held its annual CES party for home entertainment executives at the Cosmopolitan in Las Vegas on Jan. 7. The event drew a wide range of guests, including home video presidents from the major studios and leading consumer electronics executives such as John Taylor of LG Electronics.

Home Entertainment Execs Predict More Turbulence as the ‘Roaring’ ‘20s Get Underway

Coming off a year of momentous change, home entertainment executives expect more turbulence to hit their business in 2020.

Streaming has clearly become the dominant force, with two more high-profile subscription streaming services scheduled to launch in 2020. Comcast/NBC Universal in April will bow Peacock, with more than 15,000 hours of content and a free, ad-supported service as well. A month later, WarnerMedia will debut HBO Max, with a large library of titles from across the media titan’s family — including a curated list of classic movies.

And then there’s Quibi, a mobile-centric, short-form video platform launching in April, the brainchild of ex-Disney and DreamWorks chief Jeffrey Katzenberg.

But home entertainment executives, whose proverbial bread-and-butter has always been the transactional model — in which consumers pay a set fee to either buy or rent a movie, TV series or other filmed content, either digitally or on disc — insist there’s enough of an audience for both aspects of the home entertainment (or at-home, or direct-to-consumer) business.

“With an abundance of exceptional content combined with a plethora of platforms, we can expect a ‘roaring’ start to the ’20s as consumers are met with a mass of entertainment options,” says Bob Buchi, president of Paramount Home Entertainment. “It is now the challenge of the industry to focus on marketing and distribution to hone the messaging and delivery to meet the varied needs of consumers across linear, on-demand, subscription and transactional.

“While SVOD has captured the attention of consumers and created an ‘always on’ expectation, the transactional business continues to offer very unique and important consumer propositions: the first post-theatrical home viewing opportunity, the greatest breadth of selection, the highest quality viewing options, and custom bonus content to extend the entertainment experience. The data continues to show that SVOD and transactional can co-exist and thrive. More than half of viewers are involved in both activities, and despite the availability of catalog titles on SVOD platforms, we at Paramount saw record sales numbers for our catalog in 2019.”

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Jason Spivak, EVP of distribution at Sony Pictures Home Entertainment, is similarly optimistic. “As the business evolves consumers are becoming increasingly aware and comfortable with the ways that various distribution models fit together,” he says. “While SVOD delivers great value for many use occasions and types of content, the benefits of transactional models — recency, collectability and image quality — also continue to be prominent, especially in regard to new release theatrical content, and premier catalog titles.”

“Obviously we have been paying very close attention to growth and adoption of streaming services, and we are constantly evaluating their impact on our physical and digital business,” adds Jim Wuthrich, president of Warner Bros. Home Entertainment & Games. “With Warner Media’s HBO Max coming in 2020 the industry will continue to grow.  And as the business grows, so does access to an ever-increasing new consumer base who are familiarizing themselves with digital transactions and streaming, so it opens doors for us to bring in new audiences for our products and content.”

Ron Schwartz, president of worldwide home entertainment for Lionsgate, says “the transactional home entertainment space remains a very dynamic and robust business for our many types of content.” He touts the success on both digital and physical platforms of John Wick: Chapter 3 and Angel Has Fallen, calling those two films “great examples of the type of content that home entertainment consumers want to own. Overall, multiple steaming platforms and transactional, physical and digital will all continue to coexist as the marketplace continues to evolve.”

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Digital retailers agree. “In 2020, we think transactional and subscription will both continue to grow because they complement one another,” says Cameron Douglas, head of FandangoNow. “Nowadays, digital entertainment is a mainstream business. Every TV is connected and OTT services have become the norm for audiences looking for content at home. The growth bodes well for the future of our industry.”

Even at Disney, where much of the focus is on the much-hyped Disney+ service, there’s room for transactional, according to David Kite, SVP of marketing for Disney Media Distribution.

“With this year’s acquisition of 20th Century Fox, we remain committed to both digital and physical ownership,” Kite says. “We successfully integrated the Fox team into the expansive Disney home entertainment organization and have implemented a unified strategy that includes a more synergistic approach across key lines of business. We’re looking forward to another exciting year across both physical and digital platforms with a wide-range slate of home entertainment releases.”

In the first quarter of 2020, Kite says, “We will be releasing two very promising titles — the critically acclaimed awards contenders Jojo Rabbit and Ford v Ferrari.  We’re also excited about the rollouts of Frozen IIStar Wars: The Rise of Skywalker, Marvel Studios’ Black Widow, Disney-Pixar’s Onward and the live-action Mulan as our customers continue to build their libraries.”

While disc sales will likely continue to decline in 2020, no one’s giving up on DVD, Blu-ray Disc or, in particular, 4K Ultra HD.

“The 4K UHD physical market will continue to experience growth throughout 2020,” says Eddie Cunningham, president of Universal Pictures Home Entertainment. “We are encouraged by industry forecasts, which anticipate the sales of that format in North America alone will deliver 25% of Blu-ray Disc dollars in 2020.”

“We will continue to release the majority of our new release titles in the highest possible definition and also mine our vast catalog library for worthy and deserving films to be remastered, as we did this year with The Wizard of Oz,” adds Wuthrich. “The desire for classic titles in the ultimate high-definition format is definitely a factor in the continued momentum of 4K UHD.”

Spivak agrees. “As consumer viewing habits evolve, the disc remains a prominent part of the home entertainment market, particularly given the steady growth for 4K Ultra HD,” he says. “With households nationwide regularly upgrading their TVs to 4K UHD there’s every indication that 4K UHD will evolve beyond a niche audience of format enthusiasts. We will continue to put out most of our new releases and select catalog in UHD, while working with retailers to expand placement and experimenting with features that make the product most attractive to consumers.”

Disney’s Kite is similarly optimistic for the disc business. “Physical ownership remains a robust line of business for us, especially among the collectible consumer,” he says. “There continues to be a healthy appetite for the physical format, particularly with premium, and we already have substantial plans in place for 2020.”

Universal’s Cunningham stresses the importance of retail partnerships in maximizing the transactional model’s potential.

“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.

“It is important for us to continue supporting our retail partners with creative thought leadership and close collaboration to ensure that we collectively continue to capture shopper attention and deliver key, compelling reasons to transact.”

Sony Pictures’ Spivak agrees. “More than ever we must embrace the fact that our retail partnerships are multi-faceted and cross distribution models — from transactional to SVOD and AVOD,” he says. “Ultimately, our mutual objective is maximizing the consumer value proposition and providing the best potential viewer experience.”

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.”

 

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.

Gallagher Tapped to Replace Longwell as MD, North America, at Universal

Universal Pictures Home Entertainment (UPHE) on March 30 announced the promotion of sales and retail marketing executive Kathleen Gallagher to EVP and managing director, North America.

Gallagher will lead UPHE’s physical home entertainment business, including sales, operations, finance, customer marketing and distribution partnerships across the United States and Canada.

“Kathleen’s sharp instincts and expert insights have long been pivotal to UPHE’s evolution of standards, processes and best practices across the nation’s largest retailers,” said Eddie Cunningham, president of UPHE. “She is a talented executive with a deep knowledge of the home entertainment landscape, making her the ideal choice to lead UPHE’s North American retail business into the future.”

Gallagher most recently was SVP of sales, customer marketing, and category management for UPHE’s U.S. physical sellthrough and rental businesses. She began her career at Universal in 2000 as assistant category manager and quickly advanced up the ranks, serving in various sales, category management and customer marketing positions.

Gallagher began her career in 1999 at Sony Pictures Entertainment, where she held sales planning positions within what was then Columbia TriStar Home Entertainment.

Gallagher replaces longtime UPHE executive Dick Longwell, who is retiring. Longwell has served UPHE in senior sales and distribution capacities since joining the company in 1998. Previously, he held similar roles at MGM Home Entertainment and Buena Vista Home Video.

Longwell initially left UPHE in 2012 as EVP of sales and category management for North America, but rejoined the studio in October 2016 as managing director of North America, a position he had been filling on an interim basis since John Morici left in January.

“Dick has been an exceptional leader and collaborator, expertly guiding our domestic business through change during the last two years,” Cunningham said. “While it is tough to see him go, we are grateful for the invaluable contributions he has made to UPHE’s advancement and wish him well in his next chapter.”