‘Frozen 2’ Theatrical Success Bodes Well for Home Entertainment

Walt Disney Animation Studios set a global opening weekend box office record with Frozen II, the sequel to the equally successful original Frozen from 2013.

That release went on to generate nearly $1.3 billion at the box office for Disney — the 15th largest worldwide theatrical tally in history — and help launch a global brand across theme parks, merchandise, cruise ships and ice shows.

Frozen II generated $350 million through Sunday, Nov. 24 and is on course to become Disney’s sixth billion-dollar movie in 2019 following a string of Marvel hits and live-action remakes.

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For home entertainment, the initial box office success of Frozen II could portend greener days for transactional retail, including packaged media and electronic sellthrough.

That’s because the 2014 home entertainment release of Frozen generated combined DVD/Blu-ray Disc sales of $335 million from more than 18 million discs, according to The-Numbers.com.

That’s more discs sold than the combined total for the next three years’ top-selling packaged-media releases: Universal Pictures Home Entertainment’s Jurassic World (2015), Disney’s Star Wars: The Force Awakens (2016) and Moana (2017).

The electronic sellthrough release of Frozen also established a record for fastest-selling digital release of all time.

“If Frozen was happily ever after, then Frozen II is the day after happily ever after,” Jennifer Lee, who wrote and co-directed both films, said in a statement.

SVOD Again Fuels Consumer Home Entertainment Spending in Q3 2019

Consumer spending on home entertainment rose 11% in the third quarter of 2019, according to the latest quarterly report from DEG: The Digital Entertainment Group.

Spending on digital purchases and streaming was up 19%, the DEG reported, fueling total Q3 consumer spending on all forms of home entertainment to more than $6.3 billion.

Subscription streaming, according to the DEG, solidified its position as the dominant way consumers watch movies, TV shows and other filmed content on demand, with subscription streaming leading the way at $4.1 billion, up nearly 25% from the third quarter of 2018. Earlier, data from digital measurement firm Conviva found a 63% increase in third-quarter (ended Sept. 30) video viewing hours.

During the third quarter of 2019, DEG says, consumers spent just under $700 million on digital purchases, up 13.1% from the third quarter of last year. A la carte streaming, the digital equivalent of renting a disc, fell nearly 10% to an estimated $448 million.

Total spending on digital came in at nearly $5.3 billion.

On the physical side, consumer spending on purchased Blu-ray Discs, DVDs and 4K Ultra HD discs came in at an estimated $736 million, down 13% from the prior year’s Q3. Including electronic sellthrough, consumers spent more than $1.4 billion to own content, about 2% less than in the third quarter of 2018.

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Disc rentals at physical video stores suffered another big drop, coming in at just $56.2 million, down 21.5% from the prior year. Kiosk rentals, mostly Redbox, generated an estimated $214.4 million, down 21.4%, while subscription disc rental — carried mostly by Netflix’s legacy disc-by-mail rental business — was off 19% to $72.6 million.

The box office value of films that were released for home consumption in the third quarter was down 1.5%, the DEG reported.

Top disc sellers in the third quarter of 2019 included Disney’s Avengers: Endgame and live-action Aladdin remake, along with Lionsgate’s John Wick: Chapter 3 — Parabellum and Warner’s Shazam!, according to NPD VideoScan data.

For the first nine months of 2019, consumers spent an estimated $18.34 billion on home entertainment, an 8.3% uptick from the first nine months of 2018. Subscription streaming accounted for more than 63% of total home entertainment dollars spent, or $11.6 billion. Total digital spending accounted for nearly 82% of total consumer spending, or just under $15 billion, while packaged-media sales and rentals trailed at 18.4%, or $3.4 billion.

Bob Iger: Home Entertainment Key to Pixar Acquisition, Movies to Netflix, Disney+ Launch

With Walt Disney Co. CEO Bob Iger in the final years at the helm of the global media brand, the executive has been making the media rounds peddling his memoir, The Ride of a Lifetime.

In an interview with BBC Studios, Iger recounts many aspects of his life and career, including discussions with the late Steve Jobs about acquiring Pixar Animation, which counted the Apple co-founder as its majority stakeholder at the time.

But before that $7.4 billion transaction could be approached, Iger said he had to develop a relationship with the often mercurial Jobs. According to Iger, it was his willingness to put select Disney and ABC TV shows on the upstart Apple iTunes platform, which had just started selling videos, including an iPod capable of playing video in addition to music, that paved the way toward the 2006 Pixar acquisition.

“Steve was immediately impressed with my knowledge of  [iTunes], or my interest in it, my willingness to disrupt using technology current business models, [and] my ability to do a deal very quickly without too much bureaucracy,” Iger said.

The iTunes pact helped migrate the home video industry from purely packaged media distribution to transactional video-on-demand and electronic sellthrough.

As of January 2017, iTunes offered more than 35 million to 40 million songs, 2.2 million apps, 25,000 TV shows and 65,000 films.

Through June 30, 2019, digital sales and rentals of movies and TV shows topped $2.2 billion, according to DEG: The Digital Entertainment Group.

Iger said the key is “owning and controlling content that is so valuable, so important, so loved by consumers that they’ll access it, buy it almost anyway they possibly can.”

Separately, Iger confirmed the pending Disney+ subscription streaming service would be launched in Western Europe within the next year. Calling over-the-top video distribution a “nascent market,” Iger said there remains plenty of room for other players besides Netflix and Amazon Prime Video to succeed.

“You have to launch [your OTT product] when the technology is right and when you have enough content. It takes time to get both of those right,” he said.

The executive reiterated that he does not consider Netflix to be a rival to Disney+, calling the SVOD pioneer a “volume play” service with a lot of quality in it.

“They created the market in the direct-to-consumer space in video — and brilliantly, by the way,” Iger said.

At the same time, he doesn’t regret licensing Disney movies exclusively to Netflix in 2012 — a landmark deal that helped broaden Netflix’s appeal on a global basis.

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“It was an enormously profitable deal for us at a time when we had no ability to launch a Netflix-like service,” he said. “We didn’t have the technology and we didn’t have enough content. We’ve never second-guessed the decision.”

Iger said Disney+ will offer much less volume of content than Netflix, which he contends makes the service less of a direct competitor.

“There may be room for people to have more than one [SVOD] subscription,” Iger said. “I don’t think we know how large the global market is for these products yet.”

When asked about the proliferation of Marvel-themed movies released by Disney, Iger said the comic book brand is as popular as ever. He admitted that Disney has released too many “Star Wars” movies over a short period of time.

“I have not said that they were disappointing in any way. I’ve not said that I’m disappointed in their performance. I just think that there’s something so special about a ‘Star Wars’ film, and less is more,” he said.

Report: Kids Multitask While Watching Video

Children are consuming increasing amounts of content from a wider variety of sources, and often multitasking to fit more in, according to new data from Futuresource Consulting.

In a study of 9,800 consumer interviews carried out with children aged between three and 16 years in Brazil, China, France, Germany, Mexico, the U.K. and U.S., London-based Futuresource found  multi-tasking is becoming the norm for entertainment consumption, with 52% of children in the survey saying they engage with another device while watching TV.

Of these, 61% play video games, 32% watch video on a second screen and 28% are on social media.

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“Children are constantly finding more time for entertainment consumption,” Carl Hibbert, associate director at Futuresource Consulting, said in a statement. “From watching online video, to playing video games; from consuming music, to interacting with social media, the hours of engagement continue to climb.”

Despite a rise in non-video activities, this does not seem to be cannibalizing TV viewing on a large scale. Linear TV is still reported as the most popular viewing platform in China, France and Germany across all age ranges, with free online video becoming increasingly important for kids of 11 and above.

In the U.K. and U.S., SVOD and free online video consumption is becoming comparable to free linear TV. In Brazil and Mexico, there is a significant migration towards new media, with free online video the most popular viewing platform across all ages.

According to the study, 45% of parents stated ease of use was the main feature as to why their child used a specific video platform. It ranked number one across kids that used linear TV, free online video and transactional video services, ahead of the quantity of content available recognised/preferred brand and safer content.

“As an example, our survey shows that children who interact with TikTok, the free social media app that lets you watch, create, and share short videos, [most respondents] are looking for a combination of consumption and creation,” Hibbert said.

 

Analyst: French Home Entertainment Third-Largest in Europe

The French TV and video entertainment market has struggled in recent years as over-the-top video undermines traditional distribution.

Now, the French, along with every other home entertainment market, has embraced SVOD as home entertainment — if for no other reason than statistics.

Futuresource Consulting says total video entertainment consumer spend is expected to exceed €7 billion ($7.7 billion) this year, making France the third-largest video entertainment market in Europe.

“Despite the closure of CanalPlay, SVOD has started to take off in France driven by Netflix’s fantastic performance,” analyst Tristan Veale, said in a statement.

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Veale attributed Netflix surge among French consumers due to part to the service spending freely for the rights to key local language TV shows, which have been well received and have created a buzz around the service.

“From 5 million subscribers at the end of 2018, representing half the market, we are expecting their sub base to grow further in 2019,” Veale said.

Indeed, SVOD revenue is expected to hit €827 million ($918 million) this year.

According to a Futuresource consumer survey, viewing Netflix on a TV is now the dominant way to watch the service in France.

“Over two-thirds of Netflix users now say viewing on any TV is their most preferred way, with Smart TV’s in particular a key driver, a trend we are seeing in many other markets we survey,” Veale said.

Notably, as myriad consumers worldwide subscribe to multiple SVOD serivces, the practice is still relatively uncommon in France, with less than 40% of SVOD households taking more than one service, with no significant challenger to Netflix since CanalPlay exited in mid-2018.

Futuresource contends the competitive landscape is expected to change as Amazon Prime Video ups its activity in the country and expected new SVOD entrants such as Disney+, Apple TV+, HBO Max and others target the French market over the next couple of years.

While these new services provide consumers more choice, Futuresource believes this trend will ultimately become frustrating for consumers, as programming choices become increasingly fragmented.

The research firm believes service providers that aggregate multiple services, provide pan-service search, navigation and provide a seamless user experience amongst the clutter of SVOD services will rise to the top.

Aggregation of other entertainment content, including video games and music, could also be a differentiator moving forward.

Companies like Apple with a broad range of TV/Video, music and games content could offer attractive “triple play” content bundles – Apple +, Apple Music and Apple Arcade, according to Futuresource.

“Gaming in particular is taking an increasing share of the consumer wallet, the French gaming software market will hit €3.5 billion ($3.88 billion) in revenue this year, with strong growth anticipated over the next few years,” Veale said.

DEG: Home Entertainment Spending Posts 7% Gain in First Half of 2019

Consumers spent nearly $6 billion on home entertainment in the second quarter of 2019, a 7% gain from the same period last year.

The gain came despite a nearly 10% year-over-year decline in the box office value of movies that became available for in-home viewing during the quarter, according to DEG: The Digital Entertainment Group.

Granted, the rising reliance of subscription streaming services like Netflix on original content, mostly digital TV series, has made comparisons between home entertainment spending and the box office earnings of movies a bit less relevant.

But the disparity still suggests a growing number of consumers prefer to enjoy their entertainment at home.

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For the first six months of the year, consumer spending on home entertainment came in at just over $12 billion, a 6.7% uptick from the first half of 2018.

The box office value of films released to the home during that same period, meanwhile, fell more than 15.5% to just over $5 billion.

As expected, increases in consumer spending on streaming were largely responsible for the gains in overall home entertainment spending.

DEG estimates consumers spent nearly $7.5 billion on subscriptions to Netflix, Amazon and other streaming services in the first half of this year, a 22% increase from the first half of 2018. Spending in the second quarter, which ended June 30, rose more than 23% to $3.89 billion.

The only other category to post an increase in consumer spending during the first half of 2019 was electronic sellthrough (EST), or the digital purchase of movies and other content, which generated an estimated $1.2 billion in consumer spending, up 3.3% from the first six months of 2018.

Breaking the numbers apart, DEG says first-half spending on theatrical EST was up nearly 8%, while spending on video on demand for theatrical movies rose more than 9%. Total transactional VOD spending in the first half of the year came in at just over $1 billion, a decline of nearly 4% from the prior year’s first half.

Combined DVD and Blu-ray Disc sales for the first half of 2019 amounted to an estimated $1.5 billion, down about 21% from the first six months of 2018. In the second quarter, disc sales generated $716 million in revenue, down 19.3% from the second quarter of 2018.

Combined disc and digital ownership for the half-year was $2.75 billion, down 11.8% from the previous year. Content ownership in the quarter was $1.27 billion, down 12.1% from the same period a year ago.

Lionsgate Q1 Home Entertainment Revenue Declines

Lionsgate Aug. 8 disclosed it sold $56.4 million in combined DVD/Blu-ray Disc movies in the first quarter, ended June 30. The tally was down 26% from revenue of $76.5 million during the previous-year period.

Sales and rental of digital titles dropped less than 4% to $83.3 million from $86.2 million.

Total motion picture home entertainment revenue dropped about 14% to $139.7 million from $162.7 million last year.

Home entertainment revenue from television content plummeted nearly 60% to $7.3 million from $18.1 million last year.

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Disc revenue topped $1.4 million, down about 23% from $1.8 million. Digital revenue fell almost 64% to $5.9 million from $16.3 million.

Meanwhile, theatrical revenue skyrocketed to $121.8 million from $50.3 million, driven by the box office success of John Wick: Chapter 3 – Parabellum, which has generated $320 million at the global box office.

“[John Wick] reaffirmed our thesis that mid-priced action films have a valuable place in the market,” CEO Jon Feltheimer said in a statement.

The title’s box office success bodes well for home entertainment.

John Wick 3 is slated for retail digital release on Aug. 23, with packaged media bowing Sept. 10.

Janice Marinelli Leaving The Walt Disney Company

In a surprise move, Janice Marinelli July 16 announced that she will step down from her role as president of Global Content Sales & Distribution for The Walt Disney Company’s Direct-to-Consumer & International (DTCI) segment, ending a 34-year career at the media giant.

Marinelli previously headed Disney’s home entertainment operations, which she continued to oversee in her latest role, which she assumed in December 2018.

Industry sources had anticipated a big announcement from Disney on July 15, with speculation that Marinelli on that date would announce the new home entertainment team behind both Disney and 20th Century Fox product. Longtime Fox home entertainment chief Mike Dunn left shortly after the March 20 completion of the merger, while James Finn, one of the division’s two top marketers, announced his departure earlier this month. Julia Howe, the other top home entertainment marketing executive, is still there, sources said.

“It has been an honor to work for this company and a privilege to work with so many outstanding professionals,” Marinelli said in a statement. “I’ve observed many changes in our industry over the years, and it is changing at a speed never seen before. While I have been considering this decision for some time, I was committed to seeing our team through the acquisition and integration of 21st Century Fox. Now that we’ve reached these important milestones, I believe the time is right for me to step down.”

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At the December 2017 Video Hall of Fame ceremony in Beverly Hills, Marinelli drew solid applause — and more than a few chuckles — when she advised her fellow home entertainment executives to “just keep swimming.” As Media Play News observed at the time, “The line, from the hit Disney film Finding Nemo, seemed to resonate with the several hundred execs in the room, many of whom have been contending with increasingly choppy seas for the better part of a decade.”

Kevin Mayer, chairman of DTCI, said Marinelli contributed “immeasurably” to Disney over the past three decades architecting and successfully negotiating “thousands of innovative” deals that benefited the company.

“I am so grateful for her insightful counsel and steadfast collaboration over the past year as we laid the foundation for DTCI and the upcoming launch of Disney+,” Mayer said. “I especially appreciate her willingness to stay on and see us through this time of tremendous change.”

As president of Global Content Sales & Distribution for Disney’s DTCI segment, Marinelli oversaw Disney’s program sales operations and distribution of the company’s direct-to-consumer apps to global accounts and broadcasters worldwide. She led the global distribution of film and television programming via home entertainment, broadcasting platforms, digital platforms, SVOD, pay networks, Hulu, the Movies Anywhere app and the upcoming Disney-branded direct-to-consumer streaming service Disney+.

Marinelli’s sales and distribution teams worked across domestic and international media markets by providing high-quality content created by Disney’s Studio Entertainment and Media Networks groups.

Under her direction, the division distributed properties from Disney, Walt Disney Animation Studios, Pixar Animation Studios, Marvel Studios, Lucasfilm, 20th Century Fox Film, Fox Animation, Disneynature, ABC Studios, ABC Entertainment, National Geographic, FX Productions, 20th Century Fox Television, WABC, Freeform, Disney Channel, Disney XD and Disney Junior to broadcasters, digital services and other distributors around the world.

Marinelli and her team gave consumers in domestic and international home entertainment media markets myriad viewing choices while providing the most compelling and entertaining films in the industry.

Fueled by the studio’s box office success, the division implemented new technologies and created a superior in-home viewing experience for its customers to drive both digital and physical ownership.

She also oversaw product development and marketing strategies for Disney’s portfolio of brands and franchises across all in-home platforms. Most recently, the in-home division vigorously expanded into the 4K UHD premium format and her team also managed the re-releases of the powerhouse classic titles from the vault as part of The Walt Disney Signature Collection.

As the architect and dealmaker behind Movies Anywhere, Marinelli drove the development of the free app and website that has revolutionized digital ownership by bringing the film libraries of five studios together in a virtual one-stop movie-watching shop.

After Marinelli and her team successfully launched Disney Movies Anywhere in 2017, she subsequently brokered deals with Sony Pictures, Twentieth Century Fox Film, Universal Pictures and Warner Bros. to join the initiative to transform digital movie purchase and engagement. She also spearheaded negotiations with digital retailers including Amazon Video, Google Play, iTunes, Vudu, FandangoNow, Microsoft Movies & TV, and Comcast Xfinity.

Marinelli joined Disney’s Buena Vista Television in 1985 as an account executive. She later served as director of sales, western division before assuming the role of senior vice president of sales. She was named executive vice president in 1996 and president in 1999. Marinelli was appointed as president of Disney/ABC Home Entertainment and Television Distribution in 2013 and was promoted to her role with DTCI in 2018.

Lionsgate Fiscal-2019 Home Entertainment Revenue Falls

Fiscal 2019 (ended March 31) was not a good year for Lionsgate home entertainment.

The distributor saw revenue decrease $181.8 million, or 23.5%, to $592.2 million in the sales of DVD, Blu-ray Disc and digital content. Revenue topped $774 million in fiscal 2018.

For the quarter, packaged media revenue declined nearly 36% to $257.5 million from $400 million last year. Digital sales declined nearly 11% to $334.7 million from $373.7 million.

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Lionsgate attributed the drop primarily due to a decrease of $153.9 million in home entertainment revenue from the studio’s feature films. Box office revenue topped $388.9 million in 2018, down 56% from $885 million in ticket sales in 2017.

In particular, home entertainment revenue generated in fiscal 2019 from retail releases of A Simple Favor, Robin Hood and The Spy Who Dumped Me from the theatrical slate and The Commuter from the fiscal 2018 theatrical slate was significantly less than the year before.

The fiscal 2018/17 theatrical slates released in home entertainment included The Hitman’s Bodyguard, La La Land, John Wick: Chapter 2, and Power Rangers. The four titles generated $75 million in combined DVD/Blu-ray Disc revenue.

In addition, home entertainment revenue from non-feature films decreased $27.9 million, driven by lower revenue from a distribution arrangement acquired as part of the Starz acquisition, partially offset by higher home entertainment revenue from ancillary-driven platform theatrical releases.

On the TV side, home entertainment revenue decreased $33 million , or 30.7% , as compared to fiscal 2018, primarily driven by a significant contribution of revenue from a digital media licensing arrangement in fiscal 2018 for the Starz original series, “Power” Seasons 1-4.

Packaged media revenue dropped 32% to $7.6 million from $11.2 million in 2018.

Lack of Home Entertainment Releases Contribute to 39% Drop in Q2 Disney Studio Operating Income

A lack of home entertainment releases in the second quarter (ended March 31) contributed to Disney reporting a 39% drop in studio operating income to $534 million compared to operating income of $875.4 million during the previous-year period. Revenue fell 15% to $2.1 billion from $2.4 billion last year.

The decrease in home entertainment results was due to lower unit sales reflecting the performance of Thor: Ragnarok and Star Wars: The Last Jedi in the prior-year record quarter compared to no comparable Marvel or Star Wars titles in the current quarter.

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Other significant titles included Ralph Breaks the Internet in the current quarter and Coco in the prior-year quarter.

The results do not include Marvel Studios’ Avengers: Endgame, which was released in the current third quarter.

Growth in TV/SVOD distribution results was due to a benefit from the adoption of new revenue accounting guidance and increases in domestic pay television title availabilities and rates, partially offset by lower free television sales in part in anticipation of the launch support of Disney+.