Fast Forward Awards 2024: Danny Fisher — Leading the AVOD/FAST Pack

It’s lunchtime at the Beverly Wilshire’s THE Blvd restaurant, and Danny Fisher hustles in with the look and mannerisms of a film director straight from Central Casting. He’s stylish and hip, with a shock of red hair, designer glasses and sport coat, and jeans.

He sits down and immediately beckons the waiter, ordering a hearty egg breakfast that remains untouched the entire 90 minutes we’re there. He’s here for an interview, and he’s laser-focused on telling his story — and explaining the “secret sauce” that he’s used to build FilmRise into what he says is the largest provider of AVOD content and syndicator of FAST channels in the world.

Since launching the company in the basement of his Brooklyn, N.Y., brownstone in 2012, shortly after filing for personal bankruptcy, Fisher has grown FilmRise from a DVD distributor of forgotten TV shows such as “Forensic Files” and “Unsolved Mysteries” into a global enterprise with 100 employees, a library of 25,000 titles and a network of nearly 400 FAST channels — as well as a proprietary AVOD service comprised of a growing number of apps that typically mirror FAST channels, such as FilmRise True Crime and FilmRise Western. He won’t say what the privately held company is worth, but speculation is that annual billings are approaching $200 million — virtually all of it from ad revenue shared with such major AVOD and FAST platforms as YouTube, Amazon’s Freevee, the Roku Channel, Tubi and Pluto that regularly turn to FilmRise for content.

Fisher is being honored this year with the sixth Media Play News Fast Forward Award, which is presented each year to people, technologies, organizations, products or services that move the home entertainment industry forward.

And moving forward is precisely what Fisher excels at, from that fateful day more than a decade ago that he took a deep dive into social media and other metrics and came up with a unique way of discovering movies and shows “that people want to see, versus what the industry thinks people want to see.”

“When we started the business, the whole concept was to identify content that people want to see,” says Fisher, an Israeli by birth and New Yorker by choice, and one of three sons of Holocaust survivors. “So we figured out a data analytics methodology that allows us to do precisely that.”

Simply put, this analytics methodology — FilmRise’s secret sauce — consists of analyzing social media and other chatter about old TV shows and movies and comparing it to that of hot new series and films to identify unrealized demand.

“The heart of what we do is find under-the-radar content that performs so much higher than what people expect,” Fisher says. “And since we operate under revenue-sharing, we don’t want a license fee — we want roughly half, 55% or more, of the advertising revenue, and it aligns so well for us because the platforms know we can predict what the viewing is going to be and they basically say, ‘You’ve given us something we’ve never even heard of, and it’s blowing away our originals.’”

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One of FilmRise’s first deals was acquiring the rights to “Forensic Files,” a TLC documentary series about how forensic science is used to solve violent crimes, which is now one of the most popular, and most ubiquitous, FAST channels in the world. “When we first surfaced, honestly, nobody wanted it,” Fisher says. “So when they approached us, I went on Twitter and, with a stopwatch, counted how many times people tweeted out something about ‘Forensic Files.’ Then I used, as a control group, some big, popular HBO show. And I found that every five minutes there was a tweet about ‘Forensic Files,’ while for this big HBO show there was only a tweet about once every hour. I thought, this tells me the interest in ‘Forensic Files’ is so much greater than this big comparative HBO show, so I took that and used other types of social media sentiment and other metrics, pretty much open source research, to figure out what people really want to see.”

Initially brought to market by FilmRise through Amazon’s disc-on-demand service, “Forensic Files” became a huge hit, both on disc and, later, on YouTube, through the early Partner Program. So did another vintage TV series, “Unsolved Mysteries,” launched on NBC in 1988 and hosted by Robert Stack.

“There are two types of conventional analyses where people analyze a movie or show,” Fisher says. “One is where you get a committee together, look at the content, and then people make subjective decisions — ‘Wow, I really love that’ or ‘I really hate that.’ We don’t do that. Another method is a financial analysis — how much money has this made over the last five years? We don’t do that, either. We don’t feel how much money something has made means anything in terms of how much money it’s going to make in the future — it might have made lots of money on cable TV or broadcast television, but we’re in a whole new world.”

Time and time again, Fisher says, FilmRise’s proprietary data analytics methodology has helped the company strike gold. “It’s taken Netflix, up until a few months ago with ‘Suits’ really blowing up, all these years to really understand what we’re able to bring to the table,” Fisher says. “I was at a luncheon recently and was incredibly flattered when two major studio executives came up to me and said they used to sit around at these think tank meetings and say, ‘How do we do what FilmRise is doing?’ I hear that a lot. Honestly, the platforms and OEMs are always calling me and saying, ‘What are we missing out on? What’s going to be the next big thing?’ People have really come to respect FilmRise for what we’ve done.”

One of FilmRise’s most recent acquisitions is “Death Valley Days,” an anthology Western TV series that ran in syndication from 1952 to 1970, was executive produced by Gene Autry, and counted among its hosts Ronald Reagan. “You wouldn’t think of that as a ‘Squid Game’ or ‘Succession,’ but I can tell from the kind of consumer sentiment we’re seeing that it’s going to be a blow-away hit,” Fisher says of the series, which FilmRise will begin rolling out through the first quarter of this year. “It’s never been on AVOD — only SVOD, on Starz, I believe. And it’s just one more example of this boutique kind of content we find. We’re looking in a different place, and most of the time we’re the only bidder in the room. Seriously, can you see Netflix picking up ‘Death Valley Days?’”

From time to time, Fisher says, one of FilmRise’s investors will question this strategy. “They’ll say, maybe your audience is going to die out, because this is kind of like nostalgia stuff,” Fisher says. “But take ‘Unsolved Mysteries.’ There was a study last year of the most popular FAST channels by demographic, and for the youngest demographic, 18-24, the No. 1 FAST channel was ‘Unsolved Mysteries.’ That tells me these shows that FilmRise has — ‘Dick Van Dyke,’ ‘The Rifleman’ — are picking up new audiences.”

Early to the AVOD Table

Content alone, however, isn’t the only factor behind FilmRise’s steady rise. While the company began in the DVD sellthrough business, it soon steered toward digital distribution, becoming an early mover in the ad-supported streaming space — a lucrative market that according to Digital TV Research estimates is expected to generate a whopping $69 billion in global revenue by 2029, up from $39 billion last year.

“We identified the AVOD opportunity at a time when everyone was focused on SVOD,” Fisher says. “I remember years ago talking to people in the industry, investors, and everybody thought I was insane. They were like, ‘What are you talking about? There’s pennies to be made.’ Well, I never look at the pennies. If something makes one penny, and then the next month it makes two pennies, I don’t say I’m in the penny business, I say I’m in a business that’s doubling every month.”

Fisher foresees further growth in AVOD, particularly on the international front. That’s why expansion into other markets, which now account for less than 10% of FilmRise’s overall revenues, is critical — and at the top of Fisher’s to-do list.

“I think AVOD is going to blow everything away,” he says. “Let’s take a worldwide perspective on AVOD. How many people around the world can afford even a low-tier, ad-supported SVOD subscription, let alone 10 of them? You can’t beat free. Cheap is not free — free is free. Sometimes I wish we could go back to the days of Milton Berle and just three networks — no log ins, no credit cards, no privacy issues — you just turn on and watch. The U.S. market is more mature than anywhere else, but there are something like 200 countries and territories and in the vast majority of them people are less well off than we are and they simply can’t afford to pay for SVOD.”

Danny Boy

Fisher was born to Holocaust survivors Alan and Esther Fisher in Haifa, Israel. His parents had moved to Israel shortly after it was established in 1948, and soon had three boys, Joseph, Jack and Danny. “My mother had been in Auschwitz when she was just 16,” Fisher says. “And the fact that they had survived the Holocaust informs every sense of my being. I don’t take anything for granted, and every time I hit hard times, even when I went bankrupt, I think of what they went through and I think, ‘Oh God, this is nothing.’”

In 1959, the Fisher family emigrated to the United States, settling first in the South Bronx and then moving to Brooklyn. Alan Fisher worked in the garment industry; Esther was a teacher.

As a boy, Fisher had a split personality of sorts. On the one hand, he was a math whiz, placing third in a citywide math contest while in the 11th grade at Abraham Lincoln High School in Brooklyn. But on the other, he developed a keen appreciation for the creative arts, taking up stone sculpture and regularly taking the subway to the Museum of Modern Art to marvel at the works of Constantin Brancusi, a Romanian artist who is considered one of the most influential sculptors of the 20th century and a pioneer of modernism. “I would just look at [Brancusi’s works] and say, ‘Wow, this is perfection,’” Fisher recalls.

In the end, the creative side won out. “I was offered a free ride to MIT, but I didn’t want to do that,” Fisher says. Instead, he enrolled at the State University of New York at Binghamton, studying psychology and spending much of his free time tooling around with an 8mm film camera his father had given him in his freshman year.

“I had this fear of speaking in public, this phobia about speaking and getting in front of the class, so I decided to make films — any term paper or presentation could be a film,” Fisher says. “I got straight ‘A’s in college because nobody had a projector to watch this stuff — they just figured, ‘This guy must be brilliant — he made a film.’”

After college, psychology degree in hand, Fisher decided he wanted to become a film editor. “I knew I’d be good at it,” he says. “I knew some people who had film editing shops, all union shops, and I went to visit them and said, ‘I want to get into the union — will you sponsor me?’ And they said no, you’ll never get in, you can’t get in. Well, when people say no, when people reject me, when they say you can’t do this, you won’t do this, you’ll never do this, all that does is fire me up. So I got depressed, I got angry, I hit my head against the wall, and a day later I said, OK, you know what? They said no, and I’m going to make it a yes.

“I looked up who was the president of the film editors union, and I went to their headquarters at 630 Ninth Avenue and walked right up to his secretary and I said I want to speak to the president. She asked me if I had an appointment, and I said no, but I’ll just wait in the waiting room. And that’s what I did. Eventually he comes out and he’s looking at me like ‘Who is this guy?’ so I told him who I was and that I really want to be a film editor and he said, ‘You’re in’ — just like that. A week later, he called me and said, ‘I got you a job at ABC Sports.’”

At first, Fisher thrived at his new job, but he soon tired of the routine. “I worked on the Olympics, a lot of sports films, the movie The Night the Lights Went Out in Georgia, but I never became a big-shot film editor — and do you know why? Because I realized I didn’t want to. So after six months I went to my boss and said, ‘I’m quitting,’ and I told him that with all this overtime I was making a lot of money but it’s not my thing to punch the clock. He offered to double my salary, and as I was walking out the door he said, ‘What if we tripled it,’ but it really wasn’t about the money. I remember thinking this might have been a dumb move, but I had saved up a lot of money so I didn’t work for half a year — I got married, traveled, and only then started thinking about what comes next.”

Danny Fisher as he appeared in the 1984 documentary ‘A Generation Apart,’ a film about his Holocaust survivor parents and their descendants.

What came next was a partnership with brother Jack in directing and producing movies. The two made what Fisher calls “some pretty fantastic films,” including A Generation Apart, a film about their own family and the impact of the Holocaust on both survivors and their descendants. The film, shot in cinema verité style, was highly praised by critics as well as fellow filmmakers and was even shown on PBS.

“We didn’t make it for money or fame — we made it because we wanted to express what our parents went through and what our family dynamics were,” Fisher says. “Our view of success would have been showing it to 16 people in our garage. Instead, it went on to PBS and theatrical showings and we even heard that Steven Spielberg and George Lucas were admirers, saying, ‘Wow, this is an amazing film.’” (A Generation Apart is currently available for free viewing on Tubi and as a $3.99 digital rental on Amazon’s Prime Video service.)

And yet, at a certain point, Fisher says, “I realized that as much as I wanted to be a director, a producer, a creative, I would never be a Coen Brothers or Spielberg or Tarantino. So I found my strength more as an entrepreneur — I was good with people, good with investors, so the reality is I just went with that.”

Bright Lights

The Fisher brothers opened their own company, City Lights Media. “We took on editing jobs, commercials and eventually corporate video jobs like training films or films for financial firms and brokerage houses,” Fisher says. “Our third brother, Joseph, joined us at a certain point — he’s an artist, a talented painter — and we eventually got an office and opened up a post-production facility.”

City Lights soon moved from corporate films into creating and producing television shows and movies. “We created 63 TV shows that went to the pilot stage, 20 of which went to actual series production — including ‘Chopped’ for the Food Network, which is still a massive hit,” Fisher says. “And our movies include The Ten, with Paul Rudd, Jessica Alba and Winona Ryder, and A Dirty Shame, from director John Waters.” City Lights customers included ABC, Disney, MTV, Lifetime, The History Channel, Oxygen, AMC, and others. The company also moved into distribution, licensing dormant TV shows and pitching them to syndicators and other potential buyers. Another revenue stream was webisodes for TV networks and sponsors, including “Book Obsessed” for Barnes & Noble, which won the company an Emmy.

But then came the Great Recession, and almost overnight, the heavily leveraged City Lights went bust. “On the macro side, we weren’t alone — everybody was going out of business,” Fisher said. “But on the side that I could have controlled, I should have done a better job managing the overhead. We had 400 employees and $25 million in annual revenue; now, with FilmRise, we have 100 employees and my annual billing is many, many, many times more — so we have much greater revenue and a quarter of the staff.”

As City Lights began its swift descent into insolvency, Fisher took a look at the content the company had produced and distributed over the years and noticed an interesting discrepancy: There were movies and shows that had cost millions to produce that wound up tanking, while some of the licensed series he had acquired for peanuts performed almost as well as the company’s biggest hit productions.

“I saw niche shows we bought for $50,000 were making as much money as something that cost us $5 million to produce,” Fisher says. “And I said to myself, ‘You know what — there’s a disconnect somewhere.’”

He dove into social media and other available research and put his math skills to use to figure out a methodology to predict consumer demand and identify content people wanted to see. He tested the model over and over again, scribbling on the back of envelopes and entering data on spreadsheets.

“I had a lot of investors who were crawling around and freaking out, and I approached them, saying, ‘Look, instead of closing up shop I have this idea — here we’ve spent millions of dollars on content, and here is some very small, niche content that’s making the same amount of money. I see a business model in finding content that doesn’t cost a lot of money but that people want to see. But my existing investors were like, ‘Oh, great,’ and then they thought about it and said, ‘Danny, you’re losing us a lot of money, we’re just not interested.’ And then the company just kind of imploded.”

Fisher had personally guaranteed some $15 million in company debt, and City Light’s collapse sent him into personal bankruptcy — and brother Jack onto his brownstone basement couch. Fisher was left with $1,700 in his personal checking account but managed to maintain a positive attitude.

“When I filed for bankruptcy, a lot of people called me and said, ‘Oh, God,’ and I just said, ‘It’s nothing. It’s, like, OK. There was money, and now there’s not — but we kept the house, my wife was still working [as a psychologist], and there’s food on the table.”

The brothers took on odd film editing and production jobs to support themselves. “We basically hustled,” Fisher says. “I called up people I knew and said, hey, I can make you a commercial for $5,000.”

Fisher also turned to Facebook in an attempt to restore his tarnished reputation. He friended everyone in the entertainment business he could think of, then friended their friends, and soon reached Facebook’s 5,000-friend limit. He started writing about his new business model and the demand metrics he had developed, and before long one of his prior contacts, Alan Klingenstein, a producer with a background in investment banking, contacted him.

“He took me to lunch at the Brooklyn Diner on 57th Street and said he was really intrigued by some of the stuff I was saying,” Fisher recalls. “He said, ‘You really have it in you and I don’t think you were treated fairly,’ and then asked me how much I needed for a proof of concept. I told him $200,000, and he said ‘if you can find another investor, let’s do this.’”

The Comeback Kid

FilmRise was launched as Fisher Klingenstein Ventures LLC in 2012, three years after City Lights collapsed. Danny Fisher became CEO, his brother Jack was president, and Klingenstein became chairman of the board. They spent the better part of a year refining their business model, hiring staff and acquiring content before officially announcing the new company in an October 2013 press release. By then, the company had already acquired more than 2,500 film and television titles in a wide range of genres, including “Forensic Files,” “Unsolved Mysteries” and We-TV’s “Women Behind Bars.” Film acquisitions included digital rights to catalog titles such as John Landis’ American Werewolf in London and Franco Zeffirelli’s Endless Love.

The new company was an immediate success, initially earning most of its revenue from online DVD sales but soon transitioning to digital distribution long before the advent of major ad-supported streaming platforms such as Tubi, Pluto and Freevee.

Danny Fisher

Today, Fisher says, “there is no company like FilmRise, and this is not a sales pitch, but the truth is there is no one like us. We’re an incredibly profitable company, perhaps the most profitable company, by margin, in the entire media industry.”

Believing change must be constant, Fisher has recently steered FilmRise into several new directions, including stitching short-form creator content, primarily from YouTube, into 23-minute segments and licensing them as half-hour episodes to AVOD networks, FAST channels, and even some SVOD services and regular television networks.

“It’s a high-growth area,” Fisher says. “Some of these creators have followings of like 20 million, and they are enormously successful as TV shows. One incredibly popular one we have is called ‘Unspeakable’ — he’s the creator and it’s sort of a reality show with pranks and stuff. Last year, ‘Unspeakable’ was one of our top AVOD shows. We also have a lot of game-oriented shows, like ‘PrestonPlayz,’ and more really popular creators and channels. We’ve found incredible success to the point where right now, in some of our top platforms, if we look at our top 10 shows, creator content accounts for three of the top 10.”

Initially, Fisher says, “platforms were very resistant to creator content. They say, ‘We’re producing shows for $100 million and you want us to put on something that somebody shot in his basement with a camcorder? We can’t do this side by side — we deal with premium content, flashy content.’ So I tell them my definition of premium content, flashy content, sexy content is content that people want to see. And it’s taken a while for platforms to understand this — although to this day I get some who say, ‘We won’t touch this — we can’t put this side by side with content on the level of ‘Game of Thrones.’”

As more and more of this creator content racks up impressive AVOD and FAST viewership, Fisher says, he expects this resistance to crumble — particularly since “the quality of some of this creator content has gotten so high that it’s like a regular TV show — you can’t tell the difference.”

FilmRise also has begun producing original content, mostly unscripted television series such as “Bloodline Detectives,” hosted by Nancy Grace, a veteran of CNN Headline News and Court TV. “We like bringing hosts into it,” Fisher says. “We’re working on some other projects with Nancy Grace. We just announced another true crime series, “The Interrogation Room,” with Vivica Fox, and then we’ve got “Meet, Marry, Murder,” hosted by Michelle Trachtenberg, and “Statute of Limitations,” a show in which real life criminals tell their crime stories, which is hosted by The Situation from ‘Jersey Shore.’”

But FilmRise’s bread and butter, at least for the time being, remains the vintage TV shows and movies that constitute the bulk of its huge library.

“Our thesis is we buy content that people want to see, and it tends to be this content has millions of dollars of marketing built into it,” Fisher says. “We have movies like The Illusionist, with Edward Norton, Paul Giamatti and Jessica Biel — how many millions of dollars went into promoting that? So we don’t have to promote it, because people have heard of it. We don’t have to promote ‘The Dick Van Dyke Show’ or ‘Heartland,’ because people know about them.”

He takes a breath and then, finally, a bite of egg from the dish the waiter has tried to take away at least half a dozen times. Then: “Should we order dessert?”

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Fast Forward Awards 2023: Bill Rouhana — AVOD Pioneer

Bill Rouhana walks into the conference room of his modest office suite in Cos Cob, Conn., out of which he runs Chicken Soup for the Soul Entertainment (CSSE), the biggest AVOD network not owned by a major media or technology conglomerate.

A spry 70, he extends his hand and flashes a warm smile, the sincerity of which is echoed in his piercing blue eyes. He appears genuinely glad to meet a visitor. It’s this trait, along with a sharp mind and a keen, strategic vision, that has helped keep him relevant in media and telecommunication circles for more than 40 years.

A Brooklyn, N.Y., native, Rouhana began his career in entertainment law, developing new financing models for film producers such as Blake Edwards. Later, he founded Winstar Communications, an early broadband services provider known for the huge promotional blimp that flew over trade shows. After going public in 1994, the company saw a 600% stock gain, only to collapse during the dotcom bubble. In 2008 he bought a small book publishing company called Chicken Soup for the Soul, the cornerstone for the pioneering ad-supported streaming network that includes Crackle, Chicken Soup for the Soul and Popcornflix. Chicken Soup also acquires and distributes video content through its Screen Media and 1091 Pictures subsidiaries, and produces original video content through the Chicken Soup for the Soul Television Group. Last August, CSSE acquired Redbox, which brought it more than 145 free ad-supported streaming television (FAST) channels, a transactional video-on-demand (TVOD) service, and a network of more than 34,000 disc-rental kiosks, all supported by original film and television production and distribution divisions.

For his groundbreaking efforts in AVOD as well as his legacy as an innovator in media, tech and broadcast, Rouhana is being honored with the fifth Media Play News Fast Forward Award, which is given out to people, technologies, organizations, products or services that move the home entertainment industry forward.

“Bill is an amazing executive with the foresight to accumulate a disparate set of puzzle pieces and assemble them into an aggressively competitive model enabled to support the future of media content and distribution,” says Mark Fisher, president and CEO of streaming trade association OTT.X. “He also has the instincts to assemble a super-talented leadership team to support and further develop his vision for Chicken Soup for the Soul.”

“Bill Rouhana has assembled an interesting group of companies whose combined potential portends a sweet spot of growth,” adds Amy Jo Smith, president and CEO of digital entertainment trade association DEG: The Digital Entertainment Group. “We’re all looking forward to seeing what the Chicken Soup for the Soul team does next.”

The Redbox acquisition, Rouhana says, was a key cog in his overall game plan, which is “to build the best AVOD network that there can be.”

“And that means the greatest quality of content, the best user experience, serving people what they want to watch, instead of what they might want to watch, and creating an experience that is really seamless and perfect for the consumer,” he says. “So that’s our overall game plan.”

AVOD is currently on a roll, with usage skyrocketing and both Netflix and Disney+ recently rolling out cheaper, ad-supported streaming plans to complement their existing subscription streaming models. A report released last November by British research firm Digital TV Research projects that global AVOD revenue for movies and TV series will soar to $91 billion in 2028, up from $38 billion in 2022.

“If you look at the history of the media business, it’s been crystal clear that you need a variety of sources of revenue in order to have a sustainable business, one that’s able to deliver quality on an ongoing basis,” Rouhana says. “And advertising is a key part of that. When the subscription video players decided to abandon the advertising business and think they could replace that with just subscriptions and avoid monetizing content in other ways, it was obvious that wasn’t going to work. It was only a matter of time before that became obvious.”

Some observers question the longevity of AVOD, noting that for years consumers have been weaned off of watching commercials, first through the videocassette rental business and, later, through DVD, Blu-ray Disc, TVOD and subscription streaming. But Rouhana remains confident he’s on the right path.

“I’d argue with the premise that we weaned people off of watching commercials,” Rouhana says. “Some people stopped watching commercials, and that’s fine. But even the people who are watching subscription video services were also watching other services with commercials on them all through that period of time. No one’s been weaned off of watching content with commercials — you need to pay for the content, and there’s got to be a way to pay for it. We can’t afford to pay for it out of pocket. We need advertisers to help. It’s really critical.”

The $375 million Redbox acquisition, Rouhana says, was prompted by a desire to acquire more high-quality content, as well as the company’s diversified revenue stream and huge database of value-conscious consumers.

“That was an obvious fit from the very first time we saw it,” Rouhana says. “We first started talking about this over two years earlier. And if you looked at what Redbox had and what they were building, and compare that to what Chicken Soup for the Soul Entertainment had, you could see it was a perfect fit. There were operating synergies, there were capital savings, there was an acceleration of the business plan implicit in it. Plus, I believe the kiosks are really a perfect way for us generate working capital and cash flow that will help us grow the AVOD business over time.”

Wedbush Securities analyst Michael Pachter agrees. “We don’t cover CSSE yet, but their model is unique,” he says. “I don’t see disc rental going away as long as there are people behind the tech curve and as long as the studios keep making them, so they [CSSE] have a good source of cash for the next several years.”

Integration plans are proceeding smoothly, Rouhana says. Last November, three months after the acquisition of Redbox closed, entertainment and streaming industry veteran Phil Oppenheim was appointed to the newly created role of chief content officer. He is charged with leading all facets of content strategy across physical and streaming brands, including Redbox and Crackle. Then, in January, former Redbox CEO Galen Smith, who had helped engineer the sale, left the company, paving the way for further streamlining.

“The first thing you’ll see is that we will have the Redbox app — what I call the ‘super app,’ the app that has TVOD in it, the free live-TV channels in it, and the Redbox AVOD service — also include the Crackle, Popcornflix and Chicken Soup for the Soul streaming services,” he says. “They’ll be inside of that app as well. They’ll also all be available separately, as they are today, on all the different as we call them touch points, places where people can go to watch television. But the first thing you’ll start to see is we’ll have that super app have even more stuff in it for people, and it’ll be an even more valuable app.”

Rouhana’s blueprint for building Chicken Soup for the Soul into the premier AVOD network is built around the premise that the No. 1 mistake paid-subscription streamers have made was “abandoning the window strategy that people use for content to maximize the value of content. When they tried to accelerate everything onto subscription services and avoid other ways of monetizing their content, they made it economically unviable. It couldn’t be done. You can’t run it that way. You need to maximize the return on content in every way possible. You see them coming full circle now — you see them starting to emphasize the fact that they need to monetize their content in different ways. You can’t be in the content business without getting as much money as possible from every single way it’s exploited.”

Rouhana maintains Netflix “never had a viable business plan to begin with, if you want to get right to the heart of it. There was never a way to get a return on an $18 billion-a-year content spend, when the content would be watched for two months, and then not be watched ever again. That’s not a viable business. And yet that was the business that Netflix was in. I don’t care how many countries you go and do it in, you’re not going to get a return on your investment. You can’t do it.”

Netflix’s rise to dominance, even over traditional Hollywood, “is basically Wall Street’s fault, because Wall Street does this all the time,” Rouhana says. “Wall Street overfunds fads, big, fad ideas. They reward behavior that’s not fundamental, that’s not long-term; they get excited by eyeballs, or monthly active viewers, or whatever metrics they find that get them excited, that get their juices flowing, and they overpay. And that causes managers to not think long-term, too, because they want the stock to go up today. They want it to go up tomorrow. And it’s really a problem in business in general.”

Chicken Soup for the Soul, Rouhana says, “has taken a very different approach to growing our business, which has been to grow it in a very thoughtful and methodical way without paying much attention to what the current view is of what we’re doing, Redbox being the ultimate example of that. We scared our investors to death when we bought Redbox because they had no idea what it really was. They didn’t understand it. They didn’t understand how it fit. They didn’t understand what it did. All they could see is DVDs, and that has to be going away in their minds because they live on the coasts and all that matters is what people do in their neighborhood. So it’s a very different philosophy we’ve had from the beginning.”

He pauses. “I want to come back to the physical media thing, because I have some friends who really like vinyl records, for example. And those people have brought this full circle — we’ve gone from digital streaming of music, the end of the record business, and back to vinyl records being current.
“There’s a value to physical media that doesn’t go away. So let’s not lose sight of that just because it’s not fashionable to talk about it.

“There is a value to physical media. It actually delivers a higher-quality product. And that’s been true, really, for all time. And it’s been proven to matter in the music business. But forgetting that for a moment, the Redbox kiosks are a critical part of our future. They’re a place where we can generate meaningful cash flow, we have a marketing capability that’s represented by those 34,000 kiosks across the country, and that group of people are perfect adopters for our AVOD business. So we are using the customer loyalty program to reach out to those people, learn what they like. And to try to give them the opportunity to find the kinds of things they want to watch in the digital world more easily than they would otherwise is really the key to this. The biggest problem that there is in VOD is it’s hard work to find something to watch. And that’s not why people watch TV — they don’t watch TV to do work, they watch TV to enjoy, to be entertained. We managed to make a big mess out of that, the VOD guys. Discovery is horrible.”

As a result, he says, consumers turn to Google, “and the problem with that is that you have to already know what you want to watch because you’ve got to put something in to get the search back. You can’t just say ‘good TV show.’ I mean, you can, but you’re not going to get much of a response from that. A good VOD system would show you, when you came to the home page, only choices that it already knew you liked — things that were interesting to you because they were in the genres you like that you’ve shown from prior experience that you were interested in. In order to get to that, we have to know a lot about the people, and we have to have the artificial intelligence, and we have to have a dynamic home page that actually can be created, so that you get a different home page than someone else with different tastes.”

Big subscription streaming services such as Netflix, Rouhana says, have a basic problem: “They know what you do on Netflix, but nowhere else. And I’m pretty sure that nobody lives exclusively on Netflix, despite their hope that you would. People engage in reality in a lot of different ways, not just through Netflix — and you also watch and consume entertainment in a variety of ways. All Netflix knows is what you consume on Netflix — that’s it. So the best they can do is give you stuff that they have that’s like stuff you’ve consumed with them before, but it’ll never be complete. They’ll never have a root view of what you actually like to see because they’ll only see one subset of your life. One of the great things about the Redbox acquisition for us is the customer loyalty program, the kiosks, TVOD, AVOD, FAST —we see what people are interested in across a whole series of viewing experiences in a way that most people never see. If we learn how to handle that information, we could deliver a dynamic home page that was much more in tune with what you like to watch. But that’s a big if — we have a lot of work to do. Everybody does. But that’s our goal.”

Bill Rouhana

William J. Rouhana was born June 23, 1952, in Brooklyn, N.Y. His father was an importer and distributor of fine wine. As a boy, Rouhana loved baseball and fantasized about one day playing professionally. “But I couldn’t hit, so that would be a limiting factor,” he says. “And I couldn’t pitch. So that would be pretty fatal to that aspiration.” He decided to pursue a career in law, instead, and after earning an undergraduate degree from Colby College in 1972 Rouhana set off for Georgetown University in Washington, D.C., where he earned a law degree in 1976. He went into business as a founding partner of the New York City law firm of Beinhauer, Rouhana & Pike, and for the next eight years maintained several partnerships and private practices in the Big Apple.

His entry into entertainment, Rouhana says, “was an accident. I never really thought about it one way or the other. I was a lawyer. I was practicing law in Manhattan. A friend of mine became the president of Blake Edwards Entertainment — Blake Edwards being the famous director of the “Pink Panther” movies, Days of Wine and Roses, 10, Breakfast at Tiffany’s, just a fantastic director. He called me one day and said, ‘Bill, I’ve got to get $200 million for Blake, can you help me?’ I said, ‘Well, first of all, what are you talking about? Blake Edwards, who’s that?’ I had no idea. He explained it to me, and I said, ‘Sure, I’ll get you 200 million bucks.’ I was in the corporate finance law practice, so I knew lots of investment bankers. But I had no idea what I was taking on. But it turned out that at that moment in time, and this is a long time ago, HBO and Showtime were competing for programming. And they needed really top-notch movies to come through their systems so that they could attract viewers. And so they were both willing to compete to get Blake’s movies on their networks. And we used that, with a company called First Boston Corp. that was subsequently called Credit Suisse First Boston, to raise the money for Blake. And once that got done, the next thing I know, we had a parade of people who wanted money to make their own movies coming through my door in New York, and I was an entertainment finance lawyer from that moment forward.”

Rouhana was on the cusp of a new way to finance movies. “Well, it was interesting,” he says. “The idea of breaking up rights in movies — it was just beginning to happen for the first time.

“Up until that point, the studios made movies, and rich people made movies. But nobody ever made what you call independent films because there was no way to finance them.

“But as a result of the work we did, foreign pre-sales started to happen on independent films, pre-sales to cable started to happen. And then pretty soon thereafter, there was this idea called home video that came along. And the next thing we knew there was another revenue stream we could tap into, so we could fund independent movies that way, too. So it was a gradual breaking up of rights into various windows that allowed the financing of independent films.”

One day in 1984, Rouhana recalls, a lawyer friend, Peter Dekom, called and said, “You know, one of these days, you’re going get all of your movies over your telephone.” “And I’m looking at my phone and thinking, ‘I don’t see how I’m going to get movies over this thing — this is like a little black, circular thing,’” Rouhana says. “So I asked him, ‘Peter, what are you talking about?’ and he said, ‘They’re building these big networks all across the country that are capable of moving all kinds of information, and these things are going to be huge. This is going to be the future.’ I said, ‘OK, I don’t know what you’re talking about, but let me think about it.’”

Rouhana had already decided to shift his focus from law to investing, and was in the process of starting his own merchant bank. After several months of research, he says, he began to dabble in media investments. Some five years later, he says, “I started this little initiative inside of my firm to understand how you would take these big networks that were being built across the country, and actually connect them to people.

“They were going from one big switch in a city to another big switch in a city. Unless you were a switch, you had no broadband. So the question became, how do you extend this to people? How do you extend this broadband network — it wasn’t called that, back then — this big pipe to where people actually were living and working? And it was pretty clear that it would take 100-plus years to actually extend it if you tried to do it with wires because you’d have to undo the cities — you’d have to break them up and dig stuff and put things under them. So I was trying to figure out how you would accelerate what they call that the last mile.”

In 1993, Rouhana says, “I came across some licenses in a super high frequency called 38 gigahertz. And as a lawyer, of course, I had no idea what that meant. But in reading the business plan for them, there was a line in there that said, ‘This is the functional equivalent of fiber optics in the air.’ That’s what I had been looking for. And the more I investigated the super-high frequencies, the more it became clear to me that you could use them in a different way than people thought — and that was to extend this fiber optic network to at least big buildings and businesses.”

Rouhana bought the licenses and created Winstar Communications, which he says “became really the cutting-edge company in the use of wireless to deliver broadband. Today, pretty much every handheld device that you have is a grandchild of what we did at Winstar because we were looking at and creating the ability to use wireless to extend broadband. And it started as super-high frequencies and it came down — the frequencies — until finally it arrived at the places where cellular would work. And we drove every bit of that — we were an integral part of that from 1993 to 2001.”

Winstar went public in 1994. The following year, the company acquired a home video distributor, Fox Lorber Home Video, from New Video and became a familiar presence at the annual Video Software Dealers Association (VSDA) convention, generally held in Las Vegas, where its huge promotional blimp (think Goodyear) would tower over the Las Vegas Convention Center.

Ultimately, Winstar owned and operated a broadband network in 60 major markets throughout the United States and another 15 markets in Europe, Asia and Latin America. The company ended 1999 with a market capitalization of more than $4.4 billion and revenues of $445.6 million.

The end came in 2001. Despite its impressive growth, Winstar wasn’t generating enough sales to cover the huge capital expenditures incurred in building out its infrastructure. The company turned to outsiders for money, including banks, investors and other large telecoms, including Lucent Technologies. When Lucent pulled the plug on a partnership agreement, the company had no choice but to file for Chapter 11 bankruptcy protection in April 2001. That same month, Winstar filed a breach-of-contract suit against Lucent and laid off half its workforce. The cuts weren’t enough, and in January 2002 the Chapter 11 filing was converted into a Chapter 7 liquidation.

In December 2005, a federal bankruptcy judge ruled in favor of Winstar and awarded the bankrupt company $244 million, plus other costs. His ruling was based on his finding that Lucent had induced Winstar to purchase unneeded telecommunication equipment. But it was a hollow victory, Rouhana says, both too little and too late.

The whole saga, Rouhana says, “was so unnecessary and so sad. When I first met Lucent’s CEO, they were the third-most-valuable company on Earth. And they gave us $2 billion to help us accelerate the rollout of our business because they really believed in our business plan and thought it was fantastic. We used that to build a major network in 70 countries and 100-plus cities. We had millions of customers, we really had a good, good business going. And then they got into trouble. And they never told anybody. The way they handled it was by not meeting their commitments. One of their commitments was to us, and when they didn’t meet it, they destroyed us. And while we ultimately won the lawsuit, it was too late to bring the company back to life.”

Rouhana still looks back with pride on Winstar Communications.

“It was truly an innovator,” he says. “We had a lab in Vienna, Virginia, with about 1,400 engineers. And in that lab, in 1996, 1997, 1998, you could have found video conferencing equipment, you could have found small cell phones that were capable of video conferencing, you could find prototypes of pretty much every single device that you use today. We had an amazing engineering team, fantastically talented people, and a view of the future. And that’s something that really matters in business — you have to have a view of the future. You have to know you’re going somewhere, and you have to know where that somewhere is.

“And I think we’ve deployed that same concept as we built Chicken Soup for the Soul Entertainment. We had a view of the future, that AVOD would be important, and that it could be just as good as any other part of the media business and more valuable and more accessible for consumers, being free.

“And I really think that if you do this right, you can create value from the advertising, not just cash flow.

“Over time, AVOD should give us the ability to deliver people only ads that they are actually interested in seeing, good ones, and they should be more interactive, more value adding. We have the ability to create a superior customer experience over broadcast because broadcast doesn’t have the capability of creating a one-to-one relationship between the viewer and the programming.”

The Winstar blimp

After the unceremonious collapse of Winstar in 2001, Rouhana says, “I spent a good number of years, probably three or four, trying to buy another company because I really enjoyed building Winstar. There’s something about building a business that just makes me feel great. I like it. I enjoy it. You put the team together, you create the resources, you have a plan, you do a lot of great things. I wanted to start with something interesting, so I looked around telecom, I looked around media, but it was very hard to buy anything. Between 2002 and 2007, these things were incredibly expensive. Companies were really overvalued, and there were a lot of crazy things in the economy.”

Then, in 2007, Rouhana says, “I was invited to a barbecue at one of my wife’s friends’ houses. I was drinking a glass of red wine in the backyard, watching a guy cook the lamb chops on the barbecue. He started telling me about Chicken Soup for the Soul. And he said I can buy Chicken Soup for the Soul. And I didn’t exactly know what to say. … Congratulations? Shortly thereafter, he made it clear what and why he was telling me — he wanted to buy the company, but he didn’t have the money. And that’s when I realized I had been invited to the barbecue because I’m a potential source of capital. And that was great, because I was looking for something interesting.”

The two sat down and had a serious conversation about Chicken Soup for the Soul, which at the time was a small book publishing company that also owned a pet food line. “It’s the craziest thing in the world — books and pet food,” Rouhana says with a laugh. The more he researched the company, he says, the more he found that “not only has it been a source of so much inspiration and hope and reassurance for people, but it was also a decent business, with millions of books sold every year, profitably, and a big pet food license.”

With an eye toward a connected world that would consume more and more content, making brands “increasingly important because they would help people filter what it is that’s coming at them,” Rouhana wound up buying the company himself, in April 2008, just before the collapse of the housing market and the Great Recession.

“We leveraged it, and about six weeks later the world came to an end,” Rouhana says. “Lehman collapsed, the dollar was worthless, everything was worthless, nobody went to stores anymore. We all thought the world was coming to an end, the thin veneer of civilization was deteriorating, and we didn’t know whether we were going to live together, kill each other, or what we were going to do.”

Bill Rouhana (left) with U.N. Secretary General Ban Ki-moon (right) and Don Cheadle at the 2011 Global Creative Forum.

The first few years of owning Chicken Soup were tough, Rouhana says, “because even though people needed Chicken Soup for the Soul more than ever, they also didn’t go to stores and spend money, and so we struggled. Happily we were able to right-size things, get things going, and gradually build from there.”

At the time, Rouhana says, he knew he wanted to grow the company, but he had no idea into what. “I certainly didn’t think we were going to be in the media business the way we are,” he says. A chance conversation with Peter Dekom, the same entertainment lawyer who had sparked Rouhana’s concept for Winstar, set the wheels in his friend’s head spinning once again.

“He calls me one day and he says, ‘You know, all these guys have these subscription companies, and they’re not right. Advertising is the answer.’ I said, ‘What are you talking about, Peter?’ And he says, ‘You know, this video-on-demand stuff. You’ve got to do advertising.’ I said, ‘Nobody’s doing that.’ He said, ‘You’ve got to do it.’ So I hung up, and I said, ‘Peter’s always right, so let’s figure it out.’ And on a very high level, a billion feet, he’s always right. It’s just that there’s a lot of distance between the billion-foot level and Earth, and making things real is really tough to do.

“But as I looked around, I began to believe that, in fact, he was right once again because, if you look at the media business, you just can’t get around the fact that you have to have multiple ways to monetize content to stay in business. And advertising is just a part of it. The more I looked at the SVOD business model, the more convinced I was of that.

“There is not a business model that supports just putting content straight on SVOD and never monetizing it anywhere else. That business model does not exist.

“And so that caused me to really start to try to understand what AVOD would look like, and to construct a company that I thought would be sustainable. So I set out to find the right pieces of the puzzle.”

The first piece, acquired in 2017, was Screen Media, a film distributor with a more-than-20-year history, a library of 1,300 movies, and a solid distribution network. The plan, Rouhana says, “was to use that monetization capability that they had to sell things in all media across the globe as a way to reduce the risk of stuff we have to eventually get for our own AVOD services — which, by the way, at the time only existed in my head. But I knew what I was trying to build. And so we bought Screen Media, and that turned out to be an unbelievably good deal. We paid $6 million for it, and last year it generated $40 million of EBITDA for us.”

The next big purchase, in March 2019, was a majority stake in Crackle, which Chicken Soup for the Soul acquired from Sony Pictures. The two companies established a new joint venture, Crackle Plus, to house the ad-supported streaming service, which would be bolstered by the ability to license movies and TV series from the Sony Pictures Entertainment library and also incorporate six of Chicken Soup’s own ad-supported networks, including Popcornflix and Truli.

Sony had been wanting to sell Crackle for some time, Rouhana says, and yet getting the company to the negotiating table was a challenge. “We were a new company, and nobody had even heard of us,” Rouhana says. “But it turns out we actually had a good plan for Crackle once we saw the books and realized we could run it more efficiently, that it could be run in a different way, that it could be grown, and that with our library and our ability to monetize content and our ability to make things happen, maybe there was really a big opportunity there. And we convinced them to basically become our partners in the company they owned.”

The next big acquisition was in April 2021, when Chicken Soup for the Soul Entertainment bought the assets of Sonar Entertainment, the production company built by Robert Halmi Sr., for $19.5 million. According to the deal announcement, about $1 billion had been invested in film and TV projects controlled by Sonar.

Its current series include “Mysterious Benedict Society” on Disney+ and Prime Video’s “Hunters.”

“That’s another really interesting company, a terrific, first-class production organization with a beautiful, deep library of award-winning movies and television shows,” Rouhana says.

“But they were in trouble because of the way the industry had changed. The company had been built on the premise that you could deficit-finance television and still make money doing it. And as the market shifted on them, they were out over their skis.

“And so we were lucky enough to get to be the people the bank chose to work with to work through that and create value out of that set of assets. So we ended up with all that library, basically for free. I think the most interesting thing about that transaction was not only was it great financially, but it gave us the base on which to start our Chicken Soup for the Soul streaming service. We always viewed the Chicken Soup for the Soul streaming service as a combination of Lifetime and Hallmark and HGTV — you know, good, wonderful, nice movies, combined with a lot of really cool unscripted programming, and travel and home and family and things of that sort. And there were 700 Lifetime and Hallmark movies in the library of Sonar. So that gave us a great base on which to launch that network.”

A little more than a year later, in August 2022, Chicken Soup for the Soul acquired Redbox, which had gone public in the fall of 2021 and soon encountered a series of financial challenges that sent its stock price plummeting. An acquisition made sense, Rouhana says, because not only was the price right — $375 million — but Redbox also was in the process of a digital transformation that played right into Chicken Soup for the Soul Entertainment’s strategy of getting gobs of content while minimizing the risk through monetization diversification.

What’s next? “We will always keep an eye on acquisitions, so long as the industry is in the state of flux that it’s in,” Rouhana says. “It really comes down to opportunities. Whenever there’s disruption, there are winners and there are losers, and we are trying to be on the winner side of that as much as possible. If you take a look at every transaction we’ve done, it’s kind of remarkable in that we were always taking advantage of some abrupt change that was causing the sellers to need our help in some way. And then getting compensated in the way we purchased these assets, for bringing help, really goes all the way back to Screen Media — every one of them has been a similar formula. In the case of Screen Media, we bought a company for $6 million that people were looking at for $100 million-plus a year earlier. In the case of Crackle, we were helping somebody straighten out something that was hard for them as an organization to get right because of cultural issues. The studios are not entrepreneurial, venture-funded type organizations, and that’s the kind of culture they needed in Crackle. In the case of Sonar, we were helping mid-cap straighten out a balance sheet issue that needed somebody else to help.

“And in the case of Redbox, we did the same thing, didn’t we? We went in at a time when Redbox needed help because it had been in default on its bank line, because the SPAC transaction that they engaged in didn’t work, and because of COVID. We provided the pieces of the puzzle they needed to be OK, which we are, we’re OK, we’re in good shape. But it required a combination of assets and a moment in time to be able to do that transaction and the way we did it. We had tried two years earlier to buy it. And we had offered to pay much more money for the company. We ended up buying it for less and getting it at a better moment in time. Just because we took advantage of the disruption, it was good for everybody.

“You notice I never say take advantage of the seller because that’s not really what we’re doing. We’re actually helping the seller in these situations. But the disruption has done something to damage what they’re selling. And we’re able to help them reposition it in a way that it’s valuable. It’s worked well for us. So the answer is, of course, we’re going to do more of that. If we can find more of that, we’re going to do more of it.”

PBS Distribution’s Andrea Downing to Be Honored With Fourth Annual ‘Fast Forward’ Award

Media Play News Jan. 22 announced that Andrea Downing, co-president of PBS Distribution, will receive the fourth annual Media Play Fast Forward Award, which honors people, technologies, organizations, products or services that move the home entertainment industry forward.

With more than 25 years’ experience in the home entertainment business, industry leader Downing is being honored for her exceptional, broad and groundbreaking role at PBS Distribution. She has led the evolution of the organization from a start-up focused on physical goods to a global distribution company of public media content around the world. Her focus on adapting to the media landscape has led to five subscription streaming channels — PBS Masterpiece, PBS Kids, PBS Living, PBS Documentaries and PBS America (U.K.). In addition to licensing content on DVD and Blu-ray, she has also spearheaded the company’s move into transactional video-on-demand; subscription video-on-demand; theatrical releasing; and educational, non-theatrical, inflight and international program sales and co-productions.

“I am extremely honored to be recognized by Media Play News with the Media Play Fast Forward Award — particularly when I consider how many of my peers are doing incredible work in extraordinary times,” said Downing. “The home entertainment market has changed dramatically over the last 10 years, and we have all had to learn to pivot quickly and anticipate what will come next. But no one anticipated a global pandemic, and we have been tested mightily this past year.

“I also recognize that I would not have received the award without the incredible dedication and talent of the PBS Distribution team. I am so proud that they continuously pivot to face our challenges and opportunities and develop innovative ways to address and capitalize on them, all while supporting each other and maintaining our company values. It is an honor to lead this team each and every day and contribute to the public television system’s mission of giving voice to all Americans.”

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Last year, the Media Play Fast Forward Award went to Eddie Cunningham, president of Universal Pictures Home Entertainment. In 2019, the 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 the Fox Innovation Lab and Movies Anywhere.

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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.

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

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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Luncheon Fetes Fast Forward Award Honorees

FandangoNow VP of home entertainment Cameron Douglas, Redbox CEO Galen Smith, Google Play head of media and entertainment Jonathan Zepp, and the team at Apple iTunes were honored with Fast Forward Awards at a luncheon April 4 in Los Angeles at the Universal Hilton.

The awards, presented by Media Play News, recognize people, technologies, organizations, products or services that move the home entertainment industry forward.

The luncheon was produced by Media Play News and hosted by the Entertainment Merchants Association, which used the occasion to announce a new Leadership Development Foundation to foster executive talent.

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“All of today’s honorees are truly worthy of recognition for their leadership in our industry,” said EMA president and CEO Mark Fisher.

Media Play News publisher Thomas K. Arnold noted that all of the honorees are involved in the digital transactional business. Not all consumers want to get their entertainment buffet-style with the content curated for them as offered by subscription streaming services; many consumers would like to choose the content they would like to see a la carte, he said.

Warner Bros. Entertainment SVP of sales Michael Rweyemamu presented the award to Smith of Redbox, which has nearly doubled the selection of films and TV shows available on its year-old digital movie store, Redbox On Demand, and last December announced a new deal in which its app is featured on all Vizio Smartcast TV. Rweyemamu noted the irony of the occasion, considering the rocky relationship between the studio and the kiosk company several years ago when the two fought over release windows for low-priced rentals.

“Ten years ago, had you told me I’d be presenting an award to Redbox, I’d have said, ‘Hell, no!’” Rweyemamu joked.

He praised Smith for his leadership.

“Galen, you’ve been a great partner,” he said. “We started off on a rocky road like some relationships, but we’re in a really good place right now. And a lot of that has to do with the fact that you were really tenacious. You were really disciplined, really open to conversations to allow us to be where we are today.”

Smith also noted the evolution of the relationship between the two companies.

“In a similar vein, receiving an award from Warner Bros. I didn’t think was ever going to happen,” Smith said.

The company’s Redbox on Demand digital service “is a real natural evolution for our business,” Smith said.

“We’ve got 50 million customers that rent from us every year; it’s an opportunity for us to help them move to digital,” he said. “This is the last bastion of customers who haven’t moved yet. We have an opportunity to bring them over.”

He also praised the transactional model.

“We did a stint in a more of an SVOD-type business, and it didn’t really work,” he said, in reference to a failed joint venture with Verizon. “Our consumers are transactional, and so we want to do everything we can to support the business.”

In presenting the award to FandangoNow’s Douglas, industry veteran and former DreamWorks home entertainment chief Kelly Sooter praised him for his ability to anticipate trends and forge strong partnerships and lasting relationships — and for always being in touch with the consumer.

“He knows everything about … how consumers behave,” she said.

FandangoNow has been revving up its promotional muscle and is aggressively tying in digital purchases and rentals with its movie-ticket-selling sister company.

Douglas noted he got involved in the digital business at DreamWorks when he was asked to help with a startup (M-GO, which eventually was acquired by movie service Fandango and became FandangoNow).

“As we finally refined what we were doing and launched in 2013 as a transactional service, I truly felt like I was now building the future of digital home entertainment,” Douglas said.

He noted FandangoNow’s early and strong support for 4K and initiatives such as binge bundles and the “Fresh Picks” program, which curates titles deemed “Fresh” by sister service Rotten Tomatoes.

Praising Google Play’s Zepp, who was unable to attend, Paramount Pictures president of worldwide home media distribution Bob Buchi said, “He truly has the talent and the vision to market very impressively to consumers and really change the way that they behave.”

Buchi noted that Google Play, which is in its seventh year, “really put a movie store in the hand of millions of consumers with the Android mobile platform [and] really elevated and streamlined the experience of purchasing or renting a digital product, and opened up a whole new world in literally over 100 countries.”

“They continued to enhance the product day in and day out,” he said. “It’s now on every major television manufacturer and streaming sticks, so it’s really never been easier to rent or to purchase a movie.

“They’re also super champions of 4K which is great for adoption and great for all of our futures.”

Google Play Movies & TV is currently on a big 4K push, automatically upgrading customers’ past movie purchases to the new format, so they can stream them in 4K, even if the movies were originally purchased in standard or high definition.

Google Play’s Bill Kotzman accepted the award on Zepp’s behalf and read a statement from the honoree: “Transactional home entertainment is and will remain a key part of the media and entertainment business.… Google continues to invest heavily in transactional, and we’re excited to continue to grow the category in partnership with all of you.”

The EMA’s Steven Apple accepted the award for the iTunes team. Apple’s iTunes service began the year with a game-changing deal with No. 1 TV manufacturer Samsung. New Samsung SmartCast TVs will allow consumers to access their iTunes movie and TV show libraries through a new app.

Photos of the event are here.

Fast Forward Awards 2019: Keeping the Faith

Digital retailers are revving up their promotional engines and helping studios chase down the Holy Grail: transactional sales and rentals of movies over the Internet. These four Fast Forward honorees are the leaders of the pack.

The rise of subscription streaming has revolutionized home entertainment consumption — and music, as well.

We still pick and choose what we want to watch (or hear), along with when, where and how. But instead of paying for a specific movie, TV show or song, we pay one price for a month’s worth of access to whatever happens to be
available.

The problem with Netflix and other streamers is that while the buffet of entertainment choices appears endless, the really good dishes are conspicuously absent. Big theatrical movies, in particular, don’t show up on subscription streaming services for years, if ever. And the continued appeal of big-screen blockbusters among home viewers is what’s keeping the traditional “transactional” model alive.

As disc sales continue to decline, digital movie sales and “rentals” (a la carte streaming) are on an upswing, thanks in large part to aggressive and innovative digital retailers.

Four standouts are being honored in the second-annual Media Play Fast Forward Awards, which recognize people, technologies, organizations, products or services that move the home entertainment industry forward.

This year’s honorees are Cameron Douglas, VP of home entertainment at FandangoNow; Google Play’s Jonathan Zepp, head of media and entertainment; Galen Smith, CEO of Redbox; and the team at Apple iTunes (the company asked that no individual be singled out).

FandangoNow has been revving up its promotional muscle and is aggressively tying in digital purchases and rentals with its movie-ticket-selling sister company Fandango.

Google Play Movies & TV is on a big 4K push, automatically upgrading customers’ past movie purchases to the new format so they can stream them in 4K, even if the movies were originally purchased in standard- or high-definition.

Redbox has nearly doubled the selection of films and TV shows available on its year-old digital movie store, Redbox On Demand, and last December announced a new deal in which its app is featured on all Vizio SmartCast TVs — in addition to TVs from Samsung and LG.

And Apple’s iTunes service began the year with a game-changing deal with No. 1 TV manufacturer Samsung. New Samsung SmartCast TVs will allow consumers to access their iTunes movie and TV show libraries through a new app. They’ll also be able to buy new movies or TV shows directly through the app.

As an added benefit to consumers, Google Play Movies & TV, iTunes and FandangoNow have also joined Movies Anywhere, the cloud-based movie locker service that allows consumers to access their digital libraries.

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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, back in 2002. Other honorees have included Sony Pictures’ Ben Feingold, Samsung’s Tim Baxter, and Walmart’s Louis Greth and Chris Nagelson.

The first Media Play Fast Forward honorees, recognized last year, were Movies Anywhere and Fox Innovation Labs.

FandangoNow

Cameron Douglas

FandangoNow is a transactional VOD service owned by Fandango, the nation’s leading movie consumer destination, which also owns Rotten Tomatoes and MovieClips, the top multi-channel network for trailers and movie-related content. FandangoNow serves millions of visitors a month, with more than 80,000 new-release and catalog movies, next-day TV shows, and a growing library of 4K titles available to watch on more than 200 million connected, over-the-top and mobile devices.

The business is split fairly evenly between electronic purchases and rentals, says VP of home entertainment Cameron Douglas, and the service’s heavy push into 4K has resulted in 20% of transactions coming from the ultra HD format when available.

FandangoNow — which prior to its January 2016 acquisition by Fandango was known as M-GO, a joint venture launched three years earlier by DreamWorks Animation and Technicolor — doesn’t rely on algorithms. Instead, its entertainment options are hand-picked by in-house film experts, celebrity guest curators and further spiced up by Rotten Tomatoes’ Tomatometer scores and editors’ picks.

The service also boldly plays up the fact that it offers high-demand content not available on Netflix and the other streaming services.

“We’re proud of our differentiated offerings that you can’t find on iTunes or Amazon,” Douglas says. “For instance, each month we highlight a selection of ‘Fresh Picks,’ critically-acclaimed titles that you’ll want to see but aren’t available on Netflix or other streaming subscription services. Each title is rated fresh on Rotten Tomatoes and is only $2.49 to rent. We also innovated a first-of-its-kind rental initiative called ‘Binge Bundles,’ offering multiple titles from fan-favorite franchises and themed collections, bundled together to rent and binge for one low price.”

What might be FandangoNow’s trump card is its ability to tie in digital movie sales and rentals with movie ticket sales. Most recently, FandangoNow offered a free DreamWorks Animation movie to fans who purchased Fandango VIP tickets to early access screenings of How to Train Your Dragon: The Hidden World. Another recent promotion offered a free movie ticket for every $20 spent on FandangoNow. “We are a full-service destination for film fans,” Douglas says.

Douglas had been SVP of content at M-GO prior to FandangoNow’s 2016 launch. Before that he held senior positions at top entertainment media companies including DreamWorks, Paramount, Fox and Disney. He began his career in 1986 as manager of affiliate marketing and programming at Showtime Networks, and later held operations, product and merchandising posts at Musicland and Disney Stores. Douglas began his involvement with home entertainment in 1993 when he joined Buena Vista Home Video, at the time Disney’s home video distribution arm, as senior sales analyst and, later, assistant marketing manager. Today Douglas also serves as the chair of the home entertainment industry group, the Entertainment Merchants Association (EMA).

Google Play Movies & TV

Jonathan Zepp

Google Play Movies & TV is an online video store that sells and rents movies, TV shows and other filmed content. It is part of Google Play, which launched in March 2012, bringing together the Android Market, Google Music, and Google eBookstore under one brand. Other services operating under the Google Play banner are Google Play Books, Google Play Console, Google Play Games and Google Play Music. Google Play gives customers one place to find, enjoy and share their favorite apps, games, movies, TV shows, music, books and more, on the Web for any device.

Google Play Movies & TV, like the other Google Play services, uses the power of the cloud to manage digital entertainment — so customers can access their movies and TV shows on their phones, and have them available instantly on their computers, tablets or connected TVs.

Google Movies & TV has been particularly aggressive on the promotional front, offering 99-cent movie and TV show rentals around holidays such as Thanksgiving and to power users of its site. In advance of the 91st Academy Awards last month, Google Play offered deals on past Oscar-winning movies as well as the latest Oscar-nominated films. Google Play also featured apps and games inspired by the Best Picture nominees.

The biggest buzz at Google Play, at least among movie enthusiasts, is its 4K upgrade feature. The digital retailer last October announced in a blog posting that when 4K titles are available, the service will automatically upgrade customers’ past movie purchases “so you can stream in 4K, even if you originally bought the movie in SD or HD. It’s all on us, just open the Play Movies & TV app and we’ll let you know which titles have been upgraded.”

Google Play also announced a price drop for 4K movies, with prices as low as $14.99 to own (and $4.99 to rent).

In addition to 4K Sony Bravia TVs, Google announced “you can now watch in 4K using the Play Movies & TV app on most 4K Samsung Smart TVs, and we’re working on adding support for LG as well.” In addition, the Google Play app for Samsung, LG and Vizio TVs was updated.

Jonathan Zepp leads Media & Entertainment for Android & Google Play. He describes himself as “an entertainment content enthusiast fortunate to find my way to Google at a time when the company was broadly considering how to think about entertainment content.”

Zepp is charged with looking after partnerships and business strategy for entertainment, sports and news video content. He and his team also drive business and content operations for Google Pay Movies & TV. He previously led content partnerships for YouTube in the Americas. Prior to joining Google Play in June 2011, Zepp held key digital entertainment leadership roles at Sony Network Entertainment, Paramount Pictures and Napster. A graduate of the Boston University School of Law, he began his career as a corporate and intellectual property lawyer.

Redbox On Demand

Redbox CEO Galen Smith

If you only think of Redbox for its fleet of more than 41,500 bright-red DVD and Blu-ray Disc rental kiosks, stationed outside Walmarts, supermarkets and drugstores, you’re only getting half the picture.

Redbox also operates a digital movie store, Redbox On Demand, that since its launch in December 2017 has “surpassed major milestones to become a real player in the competitive digital home entertainment space,” says Redbox CEO Galen Smith.

Redbox On Demand was established as a complement to the disc-rental kiosks for which the Redbox brand was known. “Our customers come to us for that transactional experience — it’s Friday night, and they want to watch a specific movie,” Smith told Media Play News in January 2018. “We try to satisfy them with our kiosk network, but there are occasions where you might not want to go out and rent a movie from a kiosk. So rather than lose that transactional occasion, we’re giving them the chance to get it online.”

Consumers are seizing that opportunity, Smith says. Nearly 60% of Redbox On Demand consumers are people who have either stopped renting discs at Redbox kiosks or never patronized Redbox before, Smith says.

“We’re seeing hundreds of thousands of customers, including bringing back folks we haven’t seen in a while,” he says. The On Demand service has even surpassed expectations in its ability to bring customers back to the box.

Last December, Redbox On Demand celebrated its one-year anniversary with a most welcome development: Redbox apps are now featured on all Vizio SmartCast TVs. Without apps, it’s hard for digital retailers to sell or rent movies over the Internet. Redbox apps are also available on TVs made by Samsung and LG, and the addition of Vizio — also a top 10 brand — is significant, says Chris Yates, general manager of Redbox On Demand.

Redbox continues to aggressively seek out partnerships with consumer electronics companies to install Redbox On Demand apps on new TVs and devices.

The company also continues to expand its library of content “to include more titles we know our customers want to watch,” Smith says. “Since launch, we’ve added about 5,000 titles, and now have more than 12,000 curated titles in our library. We are focused on providing consumers the content they want most.

“As the industry continues to evolve, consumers are inundated with more entertainment choices, but Redbox and our Redbox On Demand operate in a unique position offering choice across a wide variety of formats and price points. We’re pleased with the momentum we’re seeing with Redbox On Demand — particularly in bringing people back into the Redbox ecosystem.”

Smith was named CEO of Redbox in 2016 and is the architect behind many of the company’s major achievements, including Redbox On Demand and removing delays in studio windows at the kiosk. A former Morgan Stanley investment banker with an MBA from the University of Chicago, Smith, 42, joined the finance team at Redbox in May 2009 as director of corporate finance. Coinstar, the operator of a network of coin-cashing machines, had just acquired the other half of Redbox from the McDonald’s Corp. Within two years, Smith had become SVP of finance for Redbox. “I loved being in the business,” he told Media Play News. “I started negotiating studio contracts and building relationships across the ecosystem.”

Smith was the CFO of Outerwall (Coinstar’s new moniker) when the company was sold to private equity investor Apollo Global Management in September 2016, and Smith was named CEO of Redbox.

“With this offering, we are giving consumers more choices than ever before,” Smith says of Redbox On Demand. “We are bringing them back into the Redbox ecosystem and reminding them of the great value we offer at the box at $1.75 a night.”

Apple iTunes

Less than three months after the June 2006 launch of Blu-ray Disc as the next-generation physical media product, Apple’s then 3-year-old iTunes Store birthed the digital movie sales business.

“Today, we are making more than 75 films available online, and we will be adding more every month,” the late Apple founder Steve Jobs told reporters at a September 2006 press event. The first batch of films were from Disney, Pixar, Touchstone and Miramax, “including Pirates of the Caribbean and Cars,” he said.

Two years later, in his Macworld 2008 keynote, Jobs announced iTunes would begin “renting” movies over the Internet, as well.

Since then, the iTunes Store has continued to be among the most aggressive digital retailers, with a growing library of what now numbers about 112,000 movies and 300,000 TV shows for sale or rent, playable across a broad swath of Apple devices. A “Family Sharing” feature lets up to six people in a family share each other’s iTunes purchases.

Two years ago, the Wall Street Journal reported that Apple’s share for selling and renting movies, TV shows and other video content had dropped to between 20% and 35% — down from over 50% as recently as 2012. Despite the percentage drop, Apple told the Journal that its movie rentals and purchases had risen over the previous year and had reached their highest level in more than a decade.

Apple keeps a sharp eye on what’s going on in theaters. For the release earlier this month of Captain Marvel, the iTunes store discounted numerous Marvel movies, dropping the purchase price to $14.99 for such recent hits as Black Panther, Avengers: Infinity War and Ant-Man.

On the eve of the January CES in Las Vegas, Samsung Electronics announced it will offer iTunes movies and TV shows, and provide Apple AirPlay 2 support, on 2019 Samsung Smart TV models beginning this spring. In what is believed to be an industry first, a new iTunes Movies and TV Shows app will debut only on Samsung Smart TVs in more than 100 countries. AirPlay 2 support will be available on Samsung Smart TVs in 190 countries worldwide.

Speaking at the Samsung “First Look CES” preview event at the Aria Resort & Casino, Andrew Sivori, a VP of TV product marketing at Samsung Electronics America, told members of the press, “For the first time, users in more than 100 countries will be able to access the iTunes Movies and TV Shows app. … Users will be able to access their iTunes Movies and TV Shows purchases as well as buy or watch something new from the iTunes store.”

Q&A: 10 Questions

We sat down with three of our Fast Forward-winning retailers — in a virtual way, of course — for a discussion of key points affecting the digital movie sales-and-rental trade. (Jonathan Zepp was traveling; his quotes are from an earlier interview with Thomas K. Arnold in Variety.)

How do we get across to consumers the value proposition of buying or “renting” a digital movie when they are used to an all-you-can watch “buffet” from Netflix and the other streaming services for a little more than $10 a month?

Cameron Douglas, FandangoNow: “Premium content for purchase has always coexisted with subscription services. When I worked at the studios, we always knew our titles would hit the pay window on HBO or elsewhere at some point, but we still had reliably significant volume for the physical DVDs and Blu-ray Discs for a long retail lifecycle. As subscription offerings continue to grow, so too does consumer comfort and familiarity with streaming. You soon discover that the breadth of content out there requires the frequent tap of a ‘Buy’ or ‘Rent’ button, even if you already have access to one or more subscription services, because those subscription services often don’t have the movie you want.”

Galen Smith, Redbox: “Redbox — at the box and On Demand — offers new-release movies that subscription services won’t have for months, years or ever. ‘Back to the Movies’ is a Redbox initiative that was soft launched in August 2018. It speaks to and reminds people what movie watching used to be, the nostalgia it creates for so many people, and why we need to get it back. Entertainment consumption has become a solo event of endless scrolling, binging for hours, or sitting in a room with everyone on their own devices. But being together is missing. So with our Back to the Movies initiative, we are encouraging consumers to take a step back. Watching a movie used to bring people together, and we need to make an effort to do it again. And just because you have an all-you-can-eat solution, some of the best content is not available in subscription. Redbox provides the best content at the best value.”

Jonathan Zepp, Google Play Movies & TV: “The subscription streaming model offers a compelling value proposition for many users, but a lot of great content is not available in that model. That is especially true for users who value earlier access to the most popular new-release movies. I’d love to see the industry articulate the value proposition of the transactional model relative to subscription and ad-supported options, especially around content availability. We are thinking a lot about how to make this awareness more intuitive within our ecosystem.”

What makes your digital service unique?

Douglas: “Fandango is the only company out there in our space solely dedicated to the full entertainment lifecycle, from pre-release awareness and trailer buzz through Fandango MovieClips to the first reviews on Rotten Tomatoes, advance tickets on Fandango to home entertainment on FandangoNow. One might guess that’s just an internal operational benefit, but it’s actually a boon for consumers too. For example, this year we were able to be a big part of the awards season conversation, across Fandango, FandangoNow, and of course Rotten Tomatoes as well. Fans flocked to our network looking to catch up with the year’s best movies, knowing that Fandango could give them access to all the awards contenders in one place, whether the films were only playing on the big screen or already available at home.”

Smith: “Three things. First, choice. Redbox is dedicated to making Movie Nights memorable and meaningful events that can be enjoyed across a wide variety of formats and price points. DVD rentals start at $1.75 a night, Blu-ray Disc rentals start at $2 a night and 4K UHD rentals in select markets for $2.50 a night. Via Redbox On Demand, Video On Demand rentals start at $3.99 a night for new releases. Consumers can also purchase previously rented movies and games at the box or through On Demand via electronic sellthrough.

“Second, value. Enhancing our value at the box, our loyalty program ‘Redbox Perks’ rewards customers with points for free rentals when they rent or purchase movies at the box or On Demand. The program now has more than 32 million members, with more than 3 million new customers joining in 2018 alone.

“And, third, marketing. Recent promotions, such as ‘Stream On Demand, Get a Free Physical Rental’ have proven to drive both On Demand and physical rentals from new and lapsed customers. Redbox Perks includes three tiers (Star, Superstar, Legend) to recognize our most valuable customers with special benefits; and badging that gives them fun challenges to earn serious bragging rights. Related to our Back to the Movies initiative, a new ‘Family Fun’ badge is earned when Perks members watch three movies that bring the family together for Movie Night. Also, our incredibly popular ‘Spin’ series offers gamified promotions like Summer Spin and Winter Spin that give customers the ability to win instant prizes and be entered for larger prizes (entertainment packages and fun trips).”

Zepp: “Since our launch we have worked to constantly iterate and improve the experience for consumers. This includes establishing a global footprint. We are … available in more markets than any other transactional service in the world right now.”

What key moves/strategies have helped grow the transactional business at large and at your service in particular in the past year?

Douglas: “We were early adopters of 4K back in 2014, and it was a good bet for us to be first-to-market in 4K in those early days. That part of our business has grown over the years to become a truly significant part of FandangoNow in the past year. 4K has become one of the main ways that mainstream consumers make the transition from physical to digital. Last year, we also began a concerted effort to converge the FandangoNow experience across all of our apps, whether you are using Web, mobile, one of our connected TV apps, or of course our native experience on Roku. I’d say right now, our 10-foot experience on connected TV’s is the best in the market.”

Smith: “We’ve built out a talented and dedicated team to support the Redbox On Demand business across product management, technology, content acquisition, merchandising and marketing. Further, our service offers access to consumers that no other digital retailer can provide, which makes us an incredibly valuable partner. We are expanding the category, and for that I am excited about the year ahead.”

Has the studio strategy of giving digital movies a two- or three-week window over the DVD and Blu-ray Disc release proved effective? What else would you like to see the studios do?

Smith: “Each of the studios would need to opine on its effectiveness across the broader base. For our segment of the market, many of our consumers simply cannot or are not willing to pay $15 to $20 for a movie. It’s one reason our rental business is much larger than our electronic sellthrough business. There is a marketing benefit in letting our consumers know a movie is on its way to the kiosk and VOD.”

What have been your key marketing/promotional efforts in the past year?

Smith: “Redbox recently relaunched the brand, including digital and TV spots as well as sponsorships, such as the Redbox Bowl on New Year’s Eve. Our Perks loyalty program has become a major marketing engine for Redbox with new badging opportunities that range from seasonal and title-specific marketing to promotional support. We’re proud of our Back to the Movies initiative that has launched across Redbox social media channels and through media partnerships with Attn: and Scary Mommy (media companies leveraging social media).”

Netflix has made content recommendations a hallmark of its service. Can that technology be applied to the digital retail market?

Douglas: “Recommendations are already part of what we do at FandangoNow, and it continues to get better and better. In the case of Fandango, it comes down to personalization more than discrete recommendations — this is a big focus for us.”

Smith: “Definitely. Personalizing an experience for a consumer is important. Even though we try to curate content for consumers, we want to make sure that the most relevant content is recommended to improve their experience. To accomplish this, we have a new recommendation engine rolling out to all of our platforms that leverages our history of rental occasions over the past 16 years to suggest the content the consumer may want to watch most.

“To augment this, we have invested heavily in our Marketing Analytics team to help refine the algorithms that drive our recommendations. In 2018 we developed an enhanced customer segmentation and targeted marketing programs aligned with these segments. These campaigns are designed to drive repeat visits for new customers, increase frequency for engaged customers, and grow retention among our long-tenured customers. We continue to build additional machine-learning models (artificial intelligence) to optimize our promotions and deliver personalized recommendations to our customers across our storefronts. In the process, we are driving incremental trips and making the customer experience better by surfacing the most relevant titles to our customers in our outbound marketing and on our storefronts.”

Uniform pricing remains a mandate among digital platforms — unlike among packaged-media retail. Will there ever be loss-leader pricing on new-release digital titles?

Smith: “Redbox is in a unique position to drive value through our Perks loyalty program that earns physical rentals for On Demand and box transactions. We also work closely with studios to offer and promote promotional temporary price reductions on specific titles.”

A hallmark of packaged media has been special features and bonus material. Why aren’t those features included and/or marketed for digital?

Douglas: “They are included to some extent, and most of the digital retailers, including FandangoNow, have tried and tested various ways of surfacing this content. It certainly was a great way to entice consumers to buy in the physical era, whether or not the content was ever watched by most buyers. I think the bar is higher for digital and as an industry we need to make this marketing tactic even more relevant in the digital era.”

Smith: “That’s a great question. We love having the special features on our physical discs but would also love to have them on digital purchases as well.”

The Sky Store in the U.K. includes a DVD with any digital movie purchase. Any plans to replicate that strategy in the United States?

Smith: “We don’t have that strategy specifically, but if you think about our loyalty program, we are trying to encourage consumption on both digital and physical by awarding points for digital transactions that can be used on physical product. We think we can uniquely bring the two worlds together.”
Netflix is partnering with telecoms and pay-TV operators to offer discounted and/or free service in exchange for access to new subscribers.

Would digital retail consider partnering with SVOD to sell the latter’s original content in addition to including free Netflix access with each digital transaction?

Douglas: “Everything is on the table, as long as it supports our core Fandango consumer brand promise, which is to provide premium content, whenever and wherever fans want to see it, whether it’s the theater or at home. We’re seeing new models — and more acronyms! — every day, and I’m so grateful to be a part of such an exciting era of growth and innovation at Fandango.”

Smith: “Unlikely. It makes sense for someone selling bandwidth and data to partner with Netflix so that their consumers use more bandwidth (Comcast, T-Mobile). For Netflix originals (or Hulu or Amazon, for that matter) we would happily offer their content to our consumers at the kiosk or on VOD as available. In fact, we offer a number of their originals today. It is great for us as it offers consumers the opportunity to try an original at a great value, and if they like it, we can be a great acquisition channel for the respective SVOD service. Not every consumer will want to commit to a monthly fee, let alone multiple services, so we think we can stand in the gap and offer content on a transactional VOD and physical basis to help extend reach.”

Science Meets Art

The iconic Fox Plaza building will be forever remembered in pop culture for its role in the 1988 action movie Die Hard, known for its over-the-top special effects.Thirty years later, something just as explosive is happening in a quiet suite of rooms on the 20th floor of the Century City high-rise, adjacent to the 20th Century Fox movie studio.

A pair of double doors with a small “Fox Innovation Lab” placard, along with the suite number (2000), leads into a network of 11 rooms where the future of home entertainment is being discussed, dissected, debated and, ultimately, developed by a full-time staff of five — joined, on occasion, by interns and various other Fox employees.

The high-tech think tank and lab was launched in 2014 — under the auspices of Mike Dunn, now 20th Century Fox’s product strategy and consumer business development president; Danny Kaye, 20th Century Fox’s research and tech strategy EVP; and the studio’s chief technology officer, Hanno Basse — as a way to meld the often disparate worlds of technology and entertainment, of Silicon Valley and Hollywood.

“The notion of the Fox Innovation Lab is simply to work with technology companies to figure out what the next generation of the consumer entertainment experience could be and would be, so we are constantly innovating on new platforms and new technologies that drive the next-gen experience,” says Kaye, a former UCLA psychology professor who serves as the Lab’s managing director. The Lab played a key role in advancing 4K Ultra HD with high dynamic range (HDR), which offers a more life-like picture. Most recently the Lab has led the charge to HDR10+, an open, royalty-free HDR technology featuring “dynamic metadata,” which more precisely adjusts content to the capabilities of different TVs.The Lab is also experimenting, and innovating, with virtual, augmented and mixed reality. The Lab’s VR work led to Fox’s first commercial VR product, The Martian VR Experience, a 20-minute interactive experience that lets viewers “become” Matt Damon in the 2015 Ridley Scott-helmed sci-fi film The Martian.
As an outgrowth of the Lab’s VR work, Fox last year launched a new business unit, FoxNext, which not only works on VR and AR, but also on location-based entertainment and gaming.
Fox Innovation Lab is now looking at ways to harness artificial intelligence and machine learning to advance the consumer entertainment experience even more.

And this is why Fox Innovation Lab is one of two honorees in the inaugural Media Play News Fast Forward Awards, honoring people, technologies, organizations, products or services that move the home entertainment industry forward.

The 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, back in 2002. Other
honorees have included Sony Pictures’ Ben Feingold, Samsung’s Tim Baxter and Walmart’s Louis Greth and Chris Nagelson.

With a nod to Dunn and Basse, Kaye says the Lab was initially a studio-only endeavor — but based on its early successes its scope has since expanded to work across the entire 21st Century Fox company, from Fox Sports to FX Networks, from the Fox Networks Group to National Geographic.

“We’re cutting across all film and TV areas as they currently exist,” Kaye says. “And perhaps the most important part of the lab is that we work with technology companies. Samsung was an initial partner in many projects — both of us were the first to introduce HDR TVs and content, physical and digital. Then Ericsson came on board, focused more on mobile entertainment, as the younger demographic depends more on the mobile entertainment experience. And then we’re working with other companies on artificial intelligence and machine learning — the Intels and the Microsofts of the world — and with Technicolor on VR.

“There’s really no limit to the kinds of things we cover, as long as they are relevant to where the consumer experience is being taken.”

Takashi Nakano, director of business development for Samsung Electronics America, says, “Samsung and Fox began working together to create a bridge between technology and media. Many products and initiatives like the UHD Alliance and HDR10+ were the direct result of our partnership with the Fox Innovation Lab. The Fox Innovation Lab creates an open forum for both companies to discuss and debate the intersection between media and technology with the hopes to create an immersive consumer experience and new business opportunities. Our joint initiatives through the UHD Alliance have opened up new markets and provided viewers the ability to
experience content and move closer to experiencing true creative intent. Key technology advancements have led to new and unique opportunities and challenges like 4K and HDR initiatives through OTT and new direct-to-consumer initiatives that open new monetization vehicles. As technology and media continue to converge, our partnership with the Fox Innovation Lab will become increasingly important. Whether it is at the movies or in your home, the partnership advances the screen experience in new and exciting ways.”

Mark Russell, CTO and head of strategy at Ericsson Media Solutions, agrees. “The Lab is a great sandbox,” he says. “We can take these amazing Fox assets and experiment with Ericsson’s global operator base on next-gen viewing experiences. We can test new consumer engagements and find out if they are reliable, high quality and secure.

“We are bringing the content creator closer to the consumer than ever before. This partnership allows us to test and build the networks, video processing and delivery specifically for home entertainment in a way we know the studio intended because we are literally sitting at the table with them.”

Russell said Ericsson’s partnership with the Fox Innovation Lab is an ongoing venture. “We were approached by Hanno Basse at Fox in 2016 about participating in the Lab,” Russell says. “His goal then, as it is now, was to explore innovative consumer engagements and find a way to implement them in the real world.

“From an Ericsson perspective, we were clearly interested as our operator customers look to us to help them implement UHD HDR, VR/AR and machine learning into their networks. Having the Fox Innovation Lab as our partner in this was incredibly welcome.

“We signed up as an official partner in 2017 and are still actively engaged today.”
Kaye says the Fox Innovation Lab is carrying on a tradition of innovation that has been a characteristic of Fox for years.

“If you go back to the early 2000s, that’s when we as a company began to be very actively involved with technology companies,” he says. “We were the first studio in the Blu-ray Disc
Association; we worked closely with all the technology companies that were working on Blu-ray, from the big consumer electronics companies in Japan, Korea, and Europe, to the various tools companies.

“Even before that, we worked with JVC on things like Digital VHS, which was really the first high-definition format. And subsequently, when we developed 3D along with the BDA, we again worked closely with JVC on high-quality 3D conversions.

“So I think we developed an attitude and a habit, really, of not waiting for technology to be given to us in the marketplace and then react with content that matched, but, rather, to co-develop content with technology companies — so that when those technologies are ready to be commercialized they are already sensitive to issues we’re familiar with, in regard to the consumer experience and consumer behavior.

“It’s not a matter of ‘build it and they will come,’ but, rather, build an experience through co-development.”

Those early years of innovation and partnerships with technology companies laid the groundwork for what would become Fox Innovation Lab.

“In the early part of this decade,” Kaye recalls, “I became involved in the Innovation Outreach Program that Microsoft was putting together. They brought very large companies from around the globe, in different industries and sectors, together, and all of us were working on innovation of some sort, from autos to pharma to entertainment to chip manufacturers, across the board. The idea was to share innovation developments, experiences and visions across industry sectors. And that gave us the idea that, as an entertainment company, we could actually do something similar.
“So we established our own Innovation Lab in 2014, with the notion of getting influential partners onboard to attack problems we felt would be germane over the years. Our first project, with Samsung, on 4K and HDR proved to be very successful. We essentially initiated what is now a pretty successful part of the business, with tens of millions of 4K TVs and Blu-ray disc players being sold, and of course the content business, the ultra-high-definition disc, which is certainly larger than anybody had predicted at the time.

“That may have happened on its own, but I think through innovation we accelerated that quite a bit.”

Kaye says his focus “is on the living room experience, the mobile experience, of filmed entertainment” — and in using new technologies such as VR and AR to improve and enhance that experience.

“One of the things we try to work on, for example, is how do you use a mobile device in AR to increase the value of the experience. Let’s say, for example, that you’re watching a NASCAR race on TV, and you’re not just seeing what you’re looking at on the TV, what the cameras are showing, but if you have a tablet or phone you can have a whole different experience — a different perspective on the race. You could have the perspective of being in the pit, with an overlay of all kinds of interesting data about the driver, about the car, and just by pointing the device at different objects on the screen that data will pop up.

“And we have to think of similar things in filmed entertainment, and that’s where things like mixed reality come in — where you have the potential to have an experience similar to virtual reality, but instead of being completely in a virtual world, isolated from your surroundings, you’re also seeing your own environment and overlaying other environments through the lens of a headset.
“You could be in this particular room and I could be playing a game in this room and the game would map out in the room and take advantage of the walls and furniture as they exist, so I could see objects through the lens in an environment I know, because I know the room.”

At this point, one of Kaye’s lieutenants, director Clayton Biele, demonstrated Microsoft’s futuristic HoloLens, a pair of mixed-reality smart glasses. The headset goes on, and when you look at blood spatters that have been painted onto a wall in one of the lab’s demonstration rooms a holographic “memory” comes up that shows how the blood spatter got there — specifically, through a brutal murder.

Danny Kaye, managing director of the Fox Innovation Lab

Kaye is undisputedly one of the best-educated studio executives. A native of the Bronx, he earned a bachelor’s degree in psychology from Cornell University and went on to earn a Ph.D. in psychology from Syracuse University, with specialized experience in statistics and methodology, human perception and cognition.

He continued post-doctoral studies at Yale University and taught there, as well, before moving out west in 1981 to join UCLA as a psychology professor, focused on visual cognition and visual perception in both children and adults.

“When I decided to move into the business world, I at first worked at Mattel Toys, which was heavily represented by psychology Ph.D.s, doing research on kids and parents.”

After five years at Mattel, Kaye in 1994 joined Applause Inc. as VP of strategic planning and research. In May 1996 he began a three-year run as VP of research and strategic planning at Universal Studios Consumer Products. He landed at 20th Century Fox in 1999, rising to EVP of research and technology strategy, and in 2014 played a key role in establishing the Fox Innovation Lab.

“One of the reasons the lab works the way it does is because in our Fox tradition we have also had a seamless relationship internally between the business folks and the engineering and technology teams,” Kaye says. “Most of the projects are driven by the engineers, with Fox engineers working with engineers at the other companies. But even beyond that, through my business and research and Hanno’s technology teams driving development, we’re also involved with the creative community internally. That is certainly demonstrated with VR and AR, where we brought the whole film community in to develop those technologies.”

It’s the same thing with HDR, Kaye says. “The project started as an engineering project to create this new high dynamic range technology, but rather than let Samsung develop the technology in a vacuum, making sure the bees and flowers look good on the screen, we brought in our creative teams, as well as our directors and colorists, to make sure we were utilizing that technology to reflect the creative intent of the filmmakers.

“Back with Blu-ray Disc, we worked with people like Ridley Scott — Blu-ray was the only format for the home that reminded him of what he intended to film on the set, he told us. And now with HDR10+, we again have something that brings the best experience into the home — and not just on high-end TVs, but also on mid-range TVs that most people buy.

“It’s because of this intersection of business, technology and creative that we are able to see where this business is going. And as long as we continue to combine those three segments, we’ll be ahead of the curve. We don’t predetermine projects; we keep track of trends and prioritize trends that we think we will be able to make an impact on in a relatively short period of time.

“At the same time, we also keep an eye on technologies beyond that, and that is why we have an interest in 5G, and why we dabble in artificial intelligence and machine learning.”Through it all, in both the short term and the long term, Kaye says his ultimate goal is to enhance the entertainment experience and, in the words of Paul Simon, keep the customer satisfied.

“We still believe that people will consume our entertainment, in part, because of the quality of the experience, visual and audio,” he says. “And, again, if you track back, starting with DVD, there was a great increase in quality of the viewing experience, and then we did it again with Blu-ray Disc and then we went to 4K with HDR, and all along, at the same time, TV manufacturers were making better and better products.

“So we have to keep pace or move even further forward with the quality of the content we are giving the consumer. We’ve done it with physical formats, and now we’re doing the same thing with digital formats.

“If you compare digital files today with digital files 10 years ago, they’re night and day in terms of quality. And at the same time we’re working on improving the speed of delivery, on how to get high-quality content more rapidly into the home or on whatever device the consumer is using. This is where the new 5G networks come. And devices are getting better, so you’re going to keep having better experiences on almost any device.

“Continuous improvement — that’s really what we’re all about.”

Betting on Movies Anywhere

Movies Anywhere may well be the catalyst that finally ignites digital movie sales.

The digital movie sales and rights-locker storage service launched last October with support from five of the six major studios, four of the biggest online retailers, and an opening library of more than 7,300 movies.

Two months later, at the January CES in Las Vegas, GM Karin Gilford proudly announced that consumers’ accounts have accumulated nearly 80 million movies.

More than one astute industry observer has noted that Movies Anywhere could be a game changer for electronic sellthrough (EST), the spark that will light the fuse on movie sales over the Internet becoming a big, big business.

And this is why Movies Anywhere is one of two honorees in the inaugural Media Play Fast Forward Awards, honoring people, technologies, organizations, products or services that move the home entertainment industry forward.

The 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, back in 2002. Other honorees have included Sony Pictures’ Ben Feingold, Samsung’s Tim Baxter, and Walmart’s Louis Greth and Chris Nagelson.

In an interview with Media Play News, Gilford states, “It’s doing great. Consumers are using and enjoying the product and we continue to see it grow. We’re really happy with its performance to date, and I feel like 2018 is going to be an exciting year for the product.”

Gilford’s glee is understandable. In an industry where hype often exceeds reality, Movies Anywhere just might be one of the rare exceptions.

The coalition behind Movies Anywhere is one reason. The service launched with support from digital retailers Amazon Video, Google Play, iTunes and Walmart-owned Vudu, with movies from Disney (including Pixar, Marvel Studios and Lucasfilm), Sony Pictures, 20th Century Fox Film, Universal Pictures and Warner Bros.

“It’s great to have so many of the major studios and digital retailers participating in a shared entitlement system, which fulfills the promise of making digital ownership easier and more accessible to consumers,” says Jim Wuthrich, president of the Americas and global strategy for Warner Bros. Home Entertainment. “Because of its wide availability and ease of use, Movies Anywhere has quickly and successfully been adopted by consumers and we look forward to the system’s continued growth.”

Ease of use, as Wuthrich notes, is another reason for Movies Anywhere’s success. The service is centered on an app, which takes consumers to a simple and visually appealing interface that lets them buy movies — or redeem codes included with Blu-ray Discs — with the touch of a finger.

Purchased films pop up instantly, and, stored in the cloud, are available for immediate viewing on any connected platform, from the phone to the home TV. Movies can also be downloaded for offline viewing when there is no Internet connection available.

“Movies Anywhere is an important evolution in the EST marketplace that makes it easier for consumers to purchase, manage and enjoy movies online,” says Mark Fisher, president of the Entertainment Merchants Association (EMA). “It simplifies the EST process to make it more like purchasing a disc. If a consumer wants to purchase a DVD or a Blu-ray Disc, they can choose from a multitude of retailers and know that the disc will play on any authorized player for the format.

“Up to now, EST has been more challenging than that. By making the EST experience more consumer friendly, Movies Anywhere promises to be the vehicle to increase EST utilization and promote greater ownership and collections of digital content. And its impact will increase as more studios and retailers participate.”

Over the past four months, Gilford says, Movies Anywhere has been refined through close monitoring of consumer feedback.

“We are lucky, in this day and age, to have so many great tools to listen to customers,” Gilford says. “From social media to app reviews — love them or hate them, they are a great way to get feedback from our customers.”

Acting on this feedback — promptly and efficiently — is critical, Gilford says.

“We’ve set up a system where our tech team gets an alert every time someone reviews the app, so we are able to tighten the circle between feedback and response time,” she says. “One small but important thing we heard back from our customers was the need for better communication about what studios are supporting our product, so now we have that information right at the bottom of the library where you make those transfers. We’re letting them know what studios aren’t in, so they aren’t hollering about something being broken; we’re communicating with them before that frustration level sets in.”

Gilford says her team is also starting to look more at library management.

“We’re adding more ways to sort movies so as people build their digital collections they are also better able to organize them. We’re employing crawl-walk-run: We’re experimenting with the ability not just to organize by genre, but also by franchises, or even what they might like to watch next.

“The best ideas come from the user base, and we want to be in a position where we can respond to suggestions and fill those needs.”

Executives at Movies Anywhere’s studio partners are eager to watch the service grow and evolve — and are hopeful for its impact on digital movie sales.

“Audience expectations for content experiences are evolving rapidly,” says Keith Feldman, president of 20th Century Fox Home Entertainment. “Movie fans are passionate and engaged, and they’re demanding great quality, scope and originality, with all their favorite movies available on demand.”

“Movies Anywhere is a huge win for the consumer, providing them with more freedom, flexibility and utility, and their digital library can now be viewed through a range of devices and digital retailers, anytime and anywhere,” adds Janice Marinelli, president of Disney/ABC Home Entertainment & Television Distribution, for The Walt Disney Studios. “The strength of the studios and digital retailers that have come together at launch is unprecedented.”

Jason Spivak, EVP of worldwide digital distribution and North America at Sony Pictures Home Entertainment, agrees. “Movies Anywhere marks a great step forward for consumers to collect and enjoy digital movies,” he says. ”We are so pleased to be working with our retail partners to make it a reality.”

Michael Bonner, EVP of digital distribution for Universal Pictures Home Entertainment, notes that “digital sellthrough has been growing year over year, and we continue to see increased consumer engagement in the category. Movies Anywhere is just the latest example of studios and distributors working together to provide more value to the consumer and setting a new bar for digital movie ownership.”

Building a digital movie sales business hasn’t been easy, as any studio executive will candidly concede. When you’re going up against Netflix, with its enticing all-you-can-watch menu for just 10 bucks a month, it’s hard to get people to pony up even more than that for a single movie.

But selling movies and other filmed content to consumers has always been Hollywood’s holy grail, dating back 40 years to the birth of home video. Studios initially intended only to sell movies on videocassette to the public. But they were undercut by a veritable army of “rentailers” who sprang up seemingly overnight and, under the protection of the First Sale Doctrine to federal copyright law, began renting movies to consumers for as little as a buck a night. The sales business didn’t stand a chance.

It took the studios more than 20 years to finally get a viable sales model in place — the DVD, which was launched in 1997 and within a few years became the most successful consumer electronics product launch in history.

But then came Netflix, and the sales model once again took a hit — particularly after Netflix in 2007 introduced subscription streaming. Year after year, disc sales plummeted as consumers planted themselves on their sofas for a nightly steam of at first ‘B’ movies and then an increasingly compelling menu of original programming.

By 2017, according to DEG: The Digital Entertainment Group, annual consumer spending on discs had fallen to $4.7 billion, down from $8.5 billion just five years earlier. Consumer spending on streaming, meanwhile, had mushroomed to $9.5 billion, up from $2.3 billion in 2012.

In an attempt to recapture some of these lost sales dollars, studios began selling movies digitally, but it was a hard sell.

To encourage consumers to make the digital transition, the studios in October 2011 launched UltraViolet, a digital movie storage locker that was supposed to streamline the purchase process. The service was supported by all the major studios except Disney, which two years earlier, at the January 2010 CES, had announced its own technology, KeyChest, to enable consumers to buy films or television shows from various distributors, access them from the cloud, and play them on multiple platforms ranging from TVs to computers and phones. According to a Reuters story at the time, Disney “also said a third-party company will operate KeyChest, and that it expects other studios to make their content available through the authenticating technology Disney has developed.”

The other studios never did. Instead, they banded together with various consumer electronics and tech firms to form the Digital Entertainment Content Ecosystem (DECE), which ultimately developed a competing concept, UltraViolet.

To further boost the appeal of EST, studios — led by 20th Century Fox — adopted a sexier name for the format, Digital HD, and began releasing movies digitally several weeks before they came out on disc.

Initial gains were impressive, with digital movie sales posting annual growth rates in the double digits. But UltraViolet’s promise as the great unifier never materialized, hit on one end by the conspicuous absence of Disney and retailers such as iTunes and Amazon, and on the other by its own complexity (individual studio portals, multiple passwords) and clunky technology.

In February 2014, Disney launched its own digital movie service, Disney Movies Anywhere, built on KeyChest technology, and made deals for retail access from the likes of iTunes, Amazon, Vudu and Google Play. And as digital movie sales growth once again slowed to the single digits, there was grudging consensus that Disney might have had the right idea all along.

And so it was that studios quietly agreed among themselves to give the Disney Movies Anywhere platform a try. As Gilford recalls, “When I joined Movies Anywhere in mid-January 2017, we were forming the core team. We had to quickly hire the full stack of engineers and designers who would power Movies Anywhere. We were lucky to have a head start by utilizing the KeyChest platform, but really the app, the website — that all accelerated around the time I started and led up to the launch.

“I’ve never worked with a more passionate, focused and top-notch team. Anyone who understands technology, even at a cursory level, and looks at what was accomplished with five studios, four retailers, on nine platforms in nine months, knows how remarkable this is.”

Coming from Gilford, that’s saying a lot. Before coming on board at Movies Anywhere in January 2017, she spent seven years as SVP of digital media at the Disney ABC Television Group. Before that she was SVP of Fancast and online entertainment for Comcast Interactive Media (CIM), a division of Comcast Corp. There, she oversaw CIM’s online video and entertainment site, Fancast.com, and was also charged with pursuing other opportunities in the online entertainment space.

Before joining CIM in 2008, Gilford worked for eight years at Yahoo!, most recently as VP and GM of Yahoo! Entertainment, where she led all programming, content and business strategy for entertainment consumer websites Yahoo! Movies, Yahoo! Music, Yahoo! TV, omg!, Shine and Yahoo! Games. Prior to Yahoo!, Gilford held business development and finance positions at Paramount Pictures International Television, working full time while pursuing an MBA at the University of Southern California’s Marshall School of Business. She began her career at Ernst & Young LLP, one of the “Big Four” accounting firms.

Now that Movies Anywhere is 4 months old and the proverbial kinks have been ironed out, Gilford says, the focus is split between improving the user experience through sorting and other functions and boosting Movies Anywhere’s profile.

In addition to its own paid media campaign, Gilford says, “We’re getting amazing support from our studio partners. Most big home entertainment releases are now tagged with Movies Anywhere on the advertising creative, and if you go into a store you’ll see we’re on-pack with all physical product from our five studio partners. So we’re driving consumers in on most of their touchpoints.”

The Movies Anywhere team is also planning more programs, promotions and special offers, and has extended its launch promotion of five free movies for connecting to at least two retailers.

Also high on the agenda is bringing more content owners on board, particularly Paramount Pictures, the sole major-studio holdout, and Lionsgate.

“I’ve been in digital for a long time,” Gilford says. “It’s exciting to watch how the pace has evolved. We can build use cases for everybody, for every segment of the population that enjoys and buys feature films. Developing technology for all consumers is a challenge, but with Movies Anywhere I think we really nailed it. We took aim at the mass audience, regardless of equipment, regardless of how tech-savvy they are. You don’t have to have the latest device — no matter what technology you have in your home we want to be there for consumers.

“There shouldn’t be a lot of hassle or friction involved, when all you want to do is kick back and watch a great movie.”