Q&A: DEG Chief Amy Jo Smith Reflects on the Trade Group’s Quarter Century

As president and CEO of DEG: The Digital Entertainment Group, Amy Jo Smith heads the leading trade group for the home entertainment industry, representing the interests of the world’s largest media and entertainment companies, consumer electronics manufacturers, platform providers and technology companies.

A former White House communications advisor, Smith since 1997 has led the industry-funded group’s efforts to enhance and promote home entertainment during its evolution from videocassettes to DVDs, Blu-ray Discs and today’s digital age.

Under Smith’s leadership, the DEG is credited with helping to make DVD the fastest-growing consumer electronics product in industry history. In 2019, the DEG launched the D2C Alliance Council as a working community within the DEG to represent the global direct-to-consumer media industry and support its members to help create a robust marketplace to lead the new era of content consumption.

Media Play News asked Smith about the achievements, continuing work and aims of the DEG.

MPN: On the eve of the association’s 25th anniversary, tell us about DEG’s mission and how it has evolved with the industry.

Smith: The DEG’s first mission was to support the product launch of the DVD format. At the time, we were focused on attracting industry support and consumer adoption of the format. Many credit the DEG’s efforts with being a catalyst for DVD’s success as the fastest-growing product in consumer electronics history.   

As consumer interest for physical and digital entertainment has evolved, so has the DEG. We are here to serve the industry in helping to improve the consumer experience with the various ways they consume entertainment content in 2022 and beyond.   

MPN: What do you consider the group’s three major accomplishments? 

Smith: The DEG aims to create a unique, collaborative environment to enable leading content, delivery, device and technology companies to work together to grow the category. Our goal is to help leading media and entertainment companies make informed decisions to grow their businesses. Here are just a few of these:

  • The DEG spearheaded the industry’s efforts for a unified approach in designing and displaying new packaged media and consumer messaging, as witnessed by 4K Ultra HD Blu-ray, Digital Copy and Digital Download.
  • The DEG has led numerous consumer research projects to help demystify the benefits associated with new digital experiences. Some examples include the industry’s first research on the prospects for home 3D, digital collecting and, most recently, the study commissioned by the DEG’s D2C Alliance Targeted Services committee from SmithGeiger to inform on streaming user behavior related to targeted SVOD and AVOD services.
  • More than two decades ago, the DEG was established to support the launch of DVD. This helped to unify a number of fragmented marketing efforts into a single, powerful voice and was largely responsible for the format becoming arguably the most successful entertainment platform in history.

 

But the DEG’s proudest accomplishment is its ability to adjust to the changing dynamics of the industry to support member companies in their efforts to grow the industry and improve content delivery to fans. 
 
MPN: How has the pandemic changed the way DEG relates to and serves its members?   

Smith: With members unable to travel and commute to business meetings, we’ve been able to assemble executives more quickly. This has allowed us to move projects and activities faster. The DEG was quick to launch its virtual Expos, curated video sessions highlighting relevant topics. The Expos were received so favorably, attended by nearly 200 executives representing 50 companies on average in 2021, encouraging staff to produce these events about every six weeks. Our Expo on localization even resulted in the formation of our Advanced Content Delivery Alliance (ACDA) localization committee, which is now focusing on the need for a standard definition of quality across the localization industry.  

The DEG has always been a high-touch organization, providing customized customer care to meet varying needs. We brought this to the forefront of what we do during the pandemic. Members have told us how much this meant to them, to be able to count on us to bring pressing issues into committees, surging trends to Expos and to make introductions to enable networking in a WFH environment.

I’d be remiss if I didn’t acknowledge Marcy Magiera, Andi Elliott and Jean Levicki on our team, who have been key to our success here. Everyone has worked tirelessly while navigating their own pandemic challenges.  

MPN: There are now two major “Alliances” within the DEG — the Direct-to-Consumer Alliance (D2CA) and the Advanced Content Delivery Alliance (ACDA). How are these different from one another? How do they serve the members differently than the core DEG? 

Smith: The D2C Alliance was established nearly three years ago to put a focus on companies with a direct-to-consumer offering. We wanted to shift the conversation away from the “streaming wars” and emphasize the burgeoning business opportunities available and exciting ways for consumers to get their TV, filmed, news, sports and specialty content. 

About a year ago, we analyzed our membership. Originally a content owner-based organization, we had a surge of member companies with products and services that help bring the content to market. We brought their voices to the forefront with the creation of the Advanced Content Delivery Alliance. In ACDA, members explore new ways to improve delivery of content. We are incredibly excited about the enthusiastic and worthwhile discussions and projects taking place in the Alliance. Through its Supply Chain Efficiency and Security committee, for example, the Alliance seeks to address obstructions within workflows due to the narrowing of windows, additional post work required for the home entertainment window, security challenges, and the threat landscape brought on by pirates.   

These Alliances allow the DEG to put a spotlight on pressing issues that members are focused on. We’re pleased with the support and participation we’ve received from members who are joining committees and giving input on agenda items we can tackle as an industry.

MPN: There was no annual DEG reception at CES in Las Vegas this year. When can the industry look forward to that event again? 

 Smith: There is going to be a DEG annual reception! Our annual reception will take place May 3 in Los Angeles at Skirball Cultural Center as part of our inaugural EnTech Fest. Members have been asking us for years to move the annual reception to Los Angeles so that it’s more accessible to L.A.-based folks.
  
Our EnTech Fest is a B2B event on May 3 and 4 built around what’s new and what’s next in content distribution and display technology. This forum will allow companies with products and services that enable distribution of content to showcase their latest offerings. EnTech will be different from other events in that we are focusing specifically on products for entertainment distribution.   

EnTech Fest will also have a special section dedicated to start-ups. Start Up Alley, as we’re calling it, will allow embryonic companies the chance to get in front of leading entertainment and technology companies.   

We’re excited that companies including Blu Digital Group, Dolby, DTS, Google TV, Intel, Looper Insights, NBCUniversal, NPD Group, Paramount, Synamedia and WarnerMedia are already supporting EnTech and, in some cases, Start Up Alley specifically. 

And, yes, EnTech will also be special because our annual reception will be held at that time!

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MPN: And now tell us the Amy Jo story — how did you get involved in the DEG, and why? 

Smith: Prior to DVD’s format launch, I was introduced to Warren Lieberfarb, the “father of DVD.” Warren tapped me to lead the consortium to support the global launch of the disc format for two to three years. As Warren described it, if we’re successful, there won’t be a need for the DEG any longer. And, if we’re not successful, there won’t be a need for the DEG, either.    

The way in which we’ve been able to constantly adjust our agenda to best meet the needs of the industry is what I’m most proud of. There are many DEG board leaders who have been instrumental in this. Our hats off to Bob Chapek, Ron Sanders, Mike Dunn, Mike Fasulo and Eddie Cunningham, to name a few. And our current board directors who have been instrumental in steering the DEG during the pandemic, including Jim Wuthrich, Dan Cohen, Matt Strauss, Andrea Downing, Rick Hack and Bob Buchi.  

The DEG is only as good as the people who participate in it to make it so. The organization is strong because of all the smart, forward-thinking executives who lean into the DEG. We are happy to know they rely on the DEG to be their organization to support the many emerging ways to deliver content.  I’m proud to be part of the DEG family. Our thanks to the many collaborative partnerships we have in the industry, including MPN.

2021: U.K. Home Entertainment Revenue Up 13% to $5 Billion, More than 21 Million Discs Sold

Consumers in the United Kingdom continued to embrace home entertainment in 2021, spending more than $5 billion across physical and digital media, which was up 13.3% from $4.4 billion spent in 2020, according to new year-end data from the British Association for Screen Entertainment. The trade group bases data from the Official Charts Company, Futuresource Consulting, Omdia, and Kantar, among other sources.

More than 21.1 million discs were sold in the U.K., the world’s No. 2 home entertainment retail market — underscoring resilience of disc sales despite challenging retail market conditions. Warner Bros. Home Entertainment was the biggest distributor in the U.K.

Meanwhile, more than 50% of U.K. households have embraced subscription video-on-demand (SVOD), with 16 million households subscribing to at least one service. That said, the growth of SVOD slowed in 2021, with growth of 28%, down from 44% in 2020.

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MGM/UA Releasing’s No Time to Die was the biggest retail title of the year with 1.15 million unit sales, including 717,500 combined DVD/Blu-ray Discs sold in two weeks, generating the largest first-week disc sales since 2017, and the biggest ever on 4K UHD Blu-ray. On Blu-ray, the movie sold 237,000 units, of which 15% was 4K UHD — surpassing the previous No. 1, Disney’s Avengers: Endgame.

The last movie with Daniel Craig as Agent 007 was also the biggest-selling title of the year on digital retail with sales of over 430,000 units.

The cross-format performance of No Time to Die underscores the home entertainment options now available to consumers, with an initial release in theaters, followed by premium video-on-demand (PVOD), electronic sellthrough, DVD, Blu-ray and 4K UHD, with traditional VOD still to come.

“2021 has no doubt been one of the most challenging on record for the U.K. home video sector, but continued consumer thirst for transactional content in 2021 was evident despite a more limited slate, with digital library sales growing year-over-year once more,” David Sidebottom, principal analyst, entertainment at Futuresource Consulting, said in a statement. “The sector remains incredibly robust heading into 2022, with transactional digital video sales set to bounce back, potentially to record levels, boosted by a plethora of new movie releases.”

Indeed, the ongoing impact of the pandemic, including shuttered theaters earlier this year drove home entertainment retail the first six months of 2021, and the consequent lack of big-screen content was felt throughout the
year. The traditional content pipeline was fractured for the first time, and the U.K. gross box office stood at 40% of pre-pandemic levels, with just over half the number of theatrical releases compared to 2019.

With the reopening of cinemas in May, the big screen experience re-emerged and began its build back steadily across the second half of 2021, as audiences grew in confidence and a blockbuster slate began to land.

This culminated in a game-changing $130 million U.K./Irish box office for
No Time to Die. The title’s success across digital and physical formats demonstrated the new landscape of co-existing multi-format screen entertainment.

Across the digital landscape, the final week of 2020 saw the biggest value week ever for electronic sellthrough, at just under $11 million, and the Christmas week saw the biggest combined value for the home entertainment sector since the pandemic began, with a value of $30 million.

The success of PVOD and digital sellthrough underscored the ongoing transactional role at the heart of the home entertainment experience for consumers. There were 17.7 million digital sale transactions in 2021, where Peter Rabbit 2 (Sony Pictures Home Entertainment) was the second-biggest selling title following No Time to Die. There were more than 27 million VOD transactions in the first 9 months of 2021, with Wonder Woman 1984 (Warner Bros. Home Entertainment Group) ahead of the pack as the No. 1 VOD title.

Zack Snyder’s Justice League (Warner Bros. Home Entertainment Group)
was the No. 2 Blu-ray Disc seller with almost 26,000 units in the format. Black Widow (The Walt Disney Company), The Thing (Universal Pictures Home Entertainment), Wonder Woman 1984, The Suicide Squad, Godzilla vs Kong and Tenet (Warner) all sold more than 10,000 units at the higher price-point in the premium format. The Lord of the Rings Trilogy delivered the highest value for 4K UHD sales, with over $1.7 million against 19,200-unit sales.

“The figures released today show what we at Sony Pictures firmly believe: that despite a challenging period for the industry due to the pandemic, the consumer appetite for Film and TV remains as strong and vital as ever,” said Rob Marsh, BASE chairman and SVP of Sony Pictures Home Entertainment.

Official Video Chart 2021 (All Digital; Blu-ray and DVD, EST and VOD)
1. NO TIME TO DIE
2. WONDER WOMAN 1984
3. PETER RABBIT 2
4. GODZILLA VS. KONG
5. TENET

Official Video Chart 2021 (All Digital Retail; Blu-ray and DVD, EST)
1. NO TIME TO DIE
2. PETER RABBIT 2
3. WONDER WOMAN 1984
4. GODZILLA VS KONG
5. ZACK SNYDER’S JUSTICE LEAGUE

Official Video Chart 2021 (All Blu-ray; DVD)
1. NO TIME TO DIE
2. BLACK WIDOW
3. WONDER WOMAN 1984
4. PETER RABBIT 2
5. F9: THE FAST SAGA

Official DVD Chart 2021
1. NO TIME TO DIE
2. PETER RABBIT 2
3. BLACK WIDOW
4. F9: THE FAST SAGA
5. WONDER WOMAN 1984

Official Blu-ray Chart 2021
1. NO TIME TO DIE
2. ZACK SNYDER’S JUSTICE LEAGUE
3. BLACK WIDOW
4. WONDER WOMAN 1984
5. THE SUICIDE SQUAD

Official Film Download Chart: EST 2021
1. NO TIME TO DIE
2. PETER RABBIT 2
3. THE GRINCH (ANIMATED)
4. THE GRINCH
5. ELF

Official Film Download Chart: DIGITAL RENTAL 2021 (JANUARY TO SEPTEMBER)
1. WONDER WOMAN 1984
2. TENET
3. HARRY POTTER AND THE PHILOSOPHER’S STONE
4. GODZILLA VS. KONG
5. A QUIET PLACE

Official Film on Video Chart 2021
1. NO TIME TO DIE
2. BLACK WIDOW
3. WONDER WOMAN 1984
4. F9: THE FAST SAGA
5. ZACK SNYDER’S JUSTICE LEAGUE

Official Children’s Video Chart 2021
1. PETER RABBIT 2
2. RAYA AND THE LAST DRAGON
3. SOUL
4. LUCA
5. PAW PATROL: THE MOVIE

Official TV on Video Chart 2021
1. STAR TREK: PICARD — SEASON ONE
2. THE CROWN: SEASON FOUR
3. THE CROWN: SEASON THREE
4. GAME OF THRONES: COMPLETE 8TH SEASON
5. SUPERNATURAL: THE COMPLETE 15TH SEASON

Looking Back at 2021: Home Entertainment Struggles to Find the New Normal

NEWS ANALYSIS — The shadow of COVID-19 continued to hang over 2021, despite rosy predictions the previous summer that the worst would soon be over.

By mid-year, with a vaccine rollout in full swing, most restrictions were lifted and theaters were welcoming back moviegoers, particularly after studios once again began stepping up movie production. This theatrical recovery continued, unchecked, through the emergence of the summer Delta variant and the beginning of the winter Omicron surge. Indeed, the December 2021 theatrical opening of Spider-Man: No Way Home generated $260 million in domestic ticket sales, the second-highest North American box office opening. Domestic box office revenue for 2021 is estimated at $4.5 billion, more than twice what it generated in 2020 but still down 61% from 2019, the last year before the virus hit.

Meanwhile, the entertainment world in 2021 was rocked by two major announcements: Amazon bought a movie studio, MGM, for $8.45 billion, and AT&T announced plans to spin-off WarnerMedia through a merger with Discovery, resulting in a new media powerhouse, Warner Bros. Discovery, under Discovery Inc.’s CEO David Zaslav. The deal, approved by the European Commission in December, is expected to be completed in mid-2022, pending Discovery shareholder and federal regulatory approval.

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Sadly, the year ended on a down note, with Omicron leading to theater closures in Europe and the cancellation or postponement of several key entertainment-industry events, including The Critics Choice Awards, the National Board of Review’s annual gala, the Palm Springs Film Festival, and BAFTA Los Angeles’ annual tea party for the awards season.

The year also saw the vindication of WarnerMedia’s controversial plan, announced at the end of the prior year, to release its entire theatrical slate simultaneously on its HBO Max streaming service. Initially railed against as a death blow to the movie business, the strategy in retrospect kept the business alive, providing a steady stream of high-profile new product to movie theaters hungry for fresh films, even if they no longer would be exclusive to the big screen.

Jim Wuthrich

“2021 marked the first anniversary of HBO Max and, with it, a whole new distribution pattern for movies,” said Jim Wuthrich, president of content distribution for WarnerMedia. “Due to the pandemic and uncertainty of closures, WarnerMedia made all of its movies available on HBO Max and in theaters at the same time. This was great for movie fans, as they could watch movies such as Wonder Woman 1984 or Godzilla vs. Kong at home or in theaters.”

Mixed Results

On the home entertainment front, 2021 was the proverbial mixed bag for the industry’s two segments, subscription streaming and transactional/physical.

The first few months of 2021 were clouded in uncertainty, as the winter surge of the virus delayed the reopening of movie theaters well into the spring. Studios held back their big releases until their opening strategy — theaters, PVOD or both — could be determined.

Streaming, not surprisingly, continued to flourish at the accelerated pace that began a year earlier with the onset of the pandemic. Consumer spending on subscription video-on-demand services soared more than 20% in the first half, according to DEG: The Digital Entertainment Group estimates — and those numbers don’t include Amazon Prime Video, which is considered in the same league as Netflix.

Amy Jo Smith

“The growth in subscription streaming in 2021 can be attributed to consumers who continued to spend time at home, increasing their engagement with content offered through an abundance of new direct-to-consumer subscription services, including Disney+, HBO Max, Paramount+, Peacock, AMC+ and many others,” said Amy Jo Smith, DEG president and CEO. “These services provide consumers premium content with convenience and value.”

Disc and digital sales of movies in the first half of 2021, meanwhile, were off by more than 25% from the prior year, while combined disc and digital rental (TVOD) revenue suffered a first-half decline of more than 30%, according to estimates prepared by DEG: The Digital Entertainment Group.

TVOD Recovers

As the year progressed, subscription streaming continued to clearly dominate home entertainment, even as the transactional side of the business began to recover in the wake of theatrical reopenings that remained on track despite the summer emergence of the more contagious Delta variant. Final year-end DEG numbers are not yet in, but by the third quarter disc and digital sales had trimmed their quarterly decline to 12% while rentals were off just 14%.

“Factors limiting transactional growth in 2021 include few new theatrical releases, which are historically a key driver of home entertainment spending,” Smith said. ”This was particularly true early in the year. Spending on library titles, however, has been notably strong throughout the pandemic, and with theatrical new releases restarting mid-year, we saw spending on home purchases of new releases beginning to pick up in the third quarter. We expect to see this trend continuing when the full year is tallied.”

“Looking back at the year, 2021 certainly had its challenges, but there were some high notes as well for our business,” notes Jason Spivak, EVP of distribution for North American Television & Home Entertainment at Sony Pictures Entertainment.

Jason Spivak

“Early in the year, we were blown away by the tremendous success of Monster Hunter on both physical and digital formats. We achieved strong PVOD results on The Father and Don’t Breathe 2. And throughout the year we saw consistent strength in our digital catalog,  particularly our drafting efforts around the ‘Spider-Man’ franchise.

“The biggest highlight for our business, however, has been the fourth-quarter theatrical performances of Venom: Let There Be CarnageGhostbusters: Afterlife and, of course, the worldwide phenomenon that is Spider-Man: No Way Home.  These films demonstrate that consumers are excited to return to theaters and that they crave the communal experience that can only be achieved in a movie theater.”

WarnerMedia’s Jim Wuthrich said his company’s strategy of releasing its news films to theaters and streaming on the same day “did add an element of unpredictability to [traditional, transactional] home entertainment in forecasting demand, as it was unique to have streaming as the first window.” Ultimately, he said, “we found that there is robust demand for transactional (EST/TVOD/physical), despite the change in windowing.”

Bob Buchi

Bob Buchi, president of Paramount Home Entertainment, said that while 2021 “certainly did not go as planned, consumers again turned to home entertainment options in record numbers.  Throughout the year’s unprecedented circumstances, Paramount continued to experiment with new release windowing, maximized the power of our exceptional library, and supported the ongoing growth of Paramount+.”

With very different release strategies, Buchi added, A Quiet Place Part II, Snake Eyes and Paw Patrol: The Movie “delivered tremendous results across each studio window thanks to the cumulative marketing muscle and cross-company promotional efforts, which bodes well for the ongoing coexistence of every platform.”

Paramount also saw consumer spending on catalog titles remain strong, “representing nearly 60% of annual revenue and holding steady to slightly up compared to the extraordinary sales in 2020 across physical and digital worldwide,” Buchi said.  “Digital sales, in particular, have been exceptionally strong during the pandemic, with a compounded annual growth rate of over 25% compared to pre-pandemic 2019 levels globally.”

Paramount also scored with the 40th anniversary of the “Indiana Jones” franchise with the first 4K Ultra HD release of the films on both disc and digital platforms, Buchi noted. “And on the television front, home entertainment consumers continue to flock to ‘Yellowstone,’ with nearly 3 million digital transactions for season four, which launched in November.”

Michael Bonner

Universal Pictures Home Entertainment president Michael Bonner said that while 2021 “remained unpredictable and challenging on several fronts … consumers’ engagement with content has never been stronger. During these unprecedented times, the studios have served audiences well by embracing unconventional release patterns and new business models giving consumers more ways to access and enjoy movies.”

Bonner added that “engagement is up, and it’s happening across various services and business models. For Universal, our new release home entertainment business remained very strong in 2021 as we saw with F9, The Croods: A New Age, Let Him Go, Promising Young Woman and several others, with a significant contribution coming from our new PVOD window and followed by our traditional home entertainment offering.  On top of that, similar to 2020, we saw our library business reaching historical levels.”

Distribution Deals

On the physical side of the business, Sony Pictures Home Entertainment and Lionsgate in February 2021 announced a multiyear agreement in which Sony will handle distribution of Lionsgate’s DVD/Blu-ray Disc releases in the U.S. and Canada beginning in July. Lionsgate’s North American packaged-media distribution had been handled by the former 20th Century Fox Home Entertainment, which was acquired in 2019 by Disney.

Lionsgate continues to maintain its own independent sales and marketing teams, but is leveraging SPHE’s supply chain and distribution services. At the time Sony’s Jason Spivak said, “By working together, we can identify and leverage efficiencies in the supply chain that will benefit not only our respective studios, but also retailers and, ultimately, the millions of consumers who enjoy Sony Pictures and Lionsgate feature films and TV programs in the 4K UHD, Blu-ray and DVD formats.”

Two months after the Sony-Lionsgate deal was announced came the official launch of Studio Distribution Services (SDS), a joint venture between Warner Bros. Home Entertainment and Universal Pictures Home Entertainment to distribute packaged media in the United States and Canada.

“Starting any business in a pandemic is challenging, but one that relies on delivering physical goods to stores across two countries during a supply chain upheaval is not for the faint of heart,” WarnerMedia’s Wuthrich said. “The SDS team, along with the studios, did a great job managing through a challenging time.”

Eddie Cunningham, the former Universal Pictures Home Entertainment president who was tapped to run SDS, told Media Play News earlier in the year, “We, with our many supply chain partners in manufacturing, distribution and freight, are doing everything in our power to mitigate those pressure points.

“Sometimes meeting delivery dates and keeping retail on-shelf availability at our usual high industry standards has been difficult. It is a huge focus across our company and everything in supply chain that we used to check weekly is now daily, and everything we did daily is almost hourly, as we constantly re-assess priorities.”

Streaming Fatigue and the Rise of AVOD

While disc sales continue to be a priority for the big Hollywood studios, along with digital movie sales and rentals, streaming clearly remains the dominant force in home entertainment. As of the end of the third quarter, streaming accounted for nearly 80% of total consumer spending this year on home entertainment, or $18.6 billion. Total consumer spending on disc and digital sales and rentals in the first nine months of the year was just $5 billion.

And yet subscription streaming did face several challenges, including consumer fatigue — stemming largely from the rising costs of subscribing to multiple services — and rapid gains in free ad-supported platforms such as Pluto and Tubi. In professional consultancy Deloitte’s 2021 Digital Media Survey, more than half of the respondents said they are re-evaluating multiple streaming subscriptions, and 40% said they planned on terminating at least one subscription. Adriana Waterston, SVP of insights and strategy at Horowitz, told Media Play News in November that streamers are feeling overwhelmed by the proliferation of services, with many struggling to figure out what to watch, and where.

In December, a TVision survey found that time spent on subscription video-on-demand platforms decreased 8.6% from the first quarter to the third quarter of 2021, while time spent on ad-supported VOD increased 9.3%. It should be noted that the SVOD decline may be due, at least in part, to the vaccine rollout and people once again venturing out into the world, while AVOD growth includes not just SVOD dropouts but also linear TV audiences. Regardless, speaking in December at an OTT.X conference, Colin Dixon of nScreenMedia said the FAST/AVOD business is projected to reach $4 billion by 2024.

Mark Fisher

Mark Fisher, president and CEO of OTT.X, the trade association for streamers, said free ad-supported streaming is just one more option that is leading to continued growth for the overall home entertainment business.

“Internet-based delivery today gives the consumer so many more opportunities and more choices to enjoy great content — both on demand and linear,” he said. “Some prefer long-form, some short-form; some prefer to watch without ads, while others watch ads to avoid paying; some like to watch what they want, when they want, while others like the sit-back FAST experience; some want to build their cloud-based collections and others just want to watch once; some like to watch big-budget spectacles and other enjoy good indie-produced stories; and many are adding the diversity of international content and niche content and channels. Opportunity and choice benefit everybody.”

He’s got a point. Overall, the home entertainment business is on track for another record year. The DEG’s estimate of $23.6 billion in total consumer spending in the first nine months of this year is up 6.3% from the spending total at this same point in 2020.

Converging Businesses

And the two sectors of the business, streaming and transactional, are converging.

One of best examples of this is that while Redbox’s legacy disc-rental kiosks remain the company’s cash cow, a massive digital transformation — fueled by the company going public in October — is expanding the Redbox brand into digital, with a particular emphasis on streaming. Redbox Free Live TV, an ad-supported streaming service that launched in February 2020, now has more than 100 channels offering viewers free access to movies and television shows, news, and lifestyle and sports entertainment programming. In December, Redbox began advertising its digital products on its kiosks.

Galen Smith

Asked how Redbox fared in 2021, CEO Galen Smith said that on the kiosk and TVOD side, “ We continued to see a significant impact on the quantity of new release movies due to production being paused as a result of COVID, with fewer movies in 2021 than 2020. The good news is we anticipate the number of new theatrical movies releasing in 2022 should be back to levels not seen since 2019.”

As for streaming, he said, “2021 was a growth year for us — as we rapidly scaled both our AVOD service and FAST channels.”

Redbox going public, Smith noted, “provided us with additional capital to invest in the ongoing digital transformation of Redbox, as we built on our transactional video-on-demand service with growth in AVOD (more than 5,000 titles on demand) and FAST (more than 125 linear channels including five that are Redbox branded) and a subscription channels business coming in 2022.”

On the Indie Front

Independent film distributors, meanwhile, are finding the plethora of streaming services a whole new market for their films, augmenting their traditional TVOD and physical release.

“It’s always a good thing when new channels appear where we can license our films,” said Joe Amodei, president and CEO of Virgil Films & Entertainment. “The major accounts still rule in this area, but as they have dwindled down their buying in favor of original films and series we’ve enjoyed doing business with this new group of folks. It’s great.”

Indies also say they are finding their disc businesses remarkably resilient. Ed Seaman, COO of MVD Entertainment, said 4K Ultra HD Blu-ray “continues to surprise us. Sales are really strong, possibly because there aren’t a ton of products in this space, but mainly because our trade partners/content providers are choosing excellent content and do a great job lovingly restoring and filling these editions with great bells and whistles.

“Compared to last year, 2021 was far more stable. We knew we were in a pandemic and we didn’t have the fear of the unknown like last year, where we didn’t know what impact a lockdown would have on our business and our customers. We learned in 2020 that when everyone is stuck at home during a pandemic, home entertainment products and services are pretty popular. We were able to execute our plans with greater confidence in 2021 that the market was not going to fall apart, and we had a really strong year as a result.”

John Rotella

John Rotella, SVP for Shout! Factory, said the company saw “unbelievable growth in catalog and new-release sales” during the pandemic year of 2020, “and that swell carried forward into 2021.”

Shout! Factory, he said, “saw one of our best years ever on gross shipments and an equally impressive net business. We also saw growth in POS revenue in 2021. The DVD and Steelbook/4K business grew again as Blu-ray sales stayed even compared to 2020. New-release and catalog as a whole all improved from a surprising and productive year, led by our new Western, Old Henry, and 4K ‘Halloween’ releases.”

Some of this success, Rotella said, “can also be attributed to a less competitive new-release marketplace, upgraded and repackaged catalog, developing more valuable collectable products at a higher price and managing the right genre that works for mass [merchants]. Walmart and Amazon continue to offer new-release and catalog opportunities, and we saw an e-commerce surge in business. Looking back, 2021 unexpectedly managed to match 2020 in POS and shipments and remained far superior to 2019 in every area.”

On the downside, the supply chain crisis has compounded ongoing problems with limited replication opportunities, resulting in delays in bringing product to market.

“We were hugely affected by inbound transportation challenges, mostly from the U.K. and Europe, where many of our top clients reside,” MVD’s Seaman said. The situation improved toward the end of the year, he said. “I doubt the Omicron strain will cause lockdowns again, and I’m keeping my fingers are crossed that the labor challenges at the border are mostly conquered,” he said.

New Ways of Doing Things

Another home entertainment trend that continued in 2021 is the consolidation of theatrical and home entertainment teams. Warner Bros., Sony Pictures and Lionsgate went through their respective integrations in 2020; Paramount Pictures followed in March 2021 with a restructuring that led to the exit of 23 home entertainment marketing and distribution personnel, including marketing chief Vincent Marcais, respected publicity head Brenda Ciccone, and Dina Marovich, SVP of worldwide media and interactive marketing.

A new way of doing things sometimes finds home entertainment executives branching out beyond their wheelhouses.

“Somewhat out of the traditional course of business, our team successfully managed the launch of Virtual Reality experiences at the new Harry Potter store in New York City,” Warner’s Wuthrich said. “These two experiences allow Potter fans the ultimate experience of visiting Hogwarts or flying high above London on broomsticks while battling Death Eaters. The experiences have sold out since launching this summer and have been garnering rave reviews.  We look forward to expanding the number of locations in 2022 so more Potter fans will have a chance to live the experience.”

‘The Suicide Squad’ Defeats ‘Paw Patrol’ for U.K.’s Top-Selling Movie of the Week

Warner Bros.’ The Suicide Squad finished No. 1 on the Official Film Chart in the United Kingdom through Nov. 17, following its release on DVD, Blu-ray Disc and 4K Ultra HD.

With 88% of its total weekly unit sales made up of physical copies, the DC film outsold the top five combined titles, denying Paramount Pictures’ Paw Patrol: The Movie a third week at the top.

The week’s highest new chart entry was Disney/Marvel’s Shang-Chi and the Legend of the Ten Rings at No. 3. Universal Pictures’ F9: The Fast Saga (No. 4) and Marvel’s Black Widow (No. 5) both dropped one spot, landing just ahead of Universal’s animated family film The Grinch, which became the chart’s first Christmas top 10 entry at No. 6.

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Disney’s Jungle Cruise sailed down two spots to No. 7, and Warner’s Space Jam: A New Legacy scored another week on the chart at No. 8.

Warner’s Harry Potter: The Complete Collection climbed six spots to No. 9 as consumers celebrated the 20th anniversary of the very first “Harry Potter” film, Harry Potter and the Philosopher’s Stone (Sorcerer’s Stone in the U.S.) — which landed at No. 12. The following four “Harry Potter films” also feature in the top 40, charting chronologically: The Chamber of Secrets (No. 22), The Prisoner of Azkaban (No. 29), The Goblet of Fire (No. 33) and The Order of the Phoenix (No. 36).

Finally, Universal’s The Croods: A New Age rounded of the Top 10 at No. 10.

The Official Film Chart Top 10 – Nov. 17, 2021

Rank Previous Rank Movie Distributor
1 2 THE SUICIDE SQUAD WARNER
2 1 PAW PATROL: THE MOVIE PARAMOUNT
3 NEW SHANG-CHI AND THE LEGEND OF THE TEN RINGS DISNEY/MARVEL
4 3 F9: THE FAST SAGA UNIVERSAL
5 4 BLACK WIDOW DISNEY/MARVEL
6 13 THE GRINCH UNIVERSAL
7 5 JUNGLE CRUISE DISNEY
8 7 SPACE JAM: A NEW LEGACY WARNER
9 15 HARRY POTTER: THE COMPLETE COLLECTION WARNER
10 8 THE CROODS: A NEW AGE UNIVERSAL

© Official Charts Company 2021

Disney Content Sales/Licensing Unit Posts $65 Million Q4 Loss

Disney Nov. 10 said its “content sales/licensing and other” segment posted a fourth-quarter (ended Oct. 2) operating loss of $65 million on revenue of $2 billion. That compared with operating income of $86 million on revenue of $1.8 billion in the previous-year period during the pandemic.

Content sales and licensing includes Walt Disney Studios Home Entertainment and distribution of movies and TV shows to proprietary and third-party streaming services. Disney said the lower results were due to a decrease in theatrical and home entertainment distribution, reflecting the ongoing impact COVID-19 has had on the theatrical slate since March 2020.

The decrease in theatrical distribution operating income was due to a higher operating loss from titles currently in release, and increased marketing expenses for future releases. Jungle Cruise, Shang-Chi and the Legend of the Ten Rings, Free Guy and Black Widow were all released in the current quarter, whereas the prior-year quarter included just The New Mutants.

Specifically, the studio incurs significant marketing costs before and throughout the theatrical release, which often results in a loss during theatrical distribution. Lower TV/SVOD distribution results were due to a decrease in sales of film content, partially offset by an increase in income from sales of episodic content.

Fewer titles sold in retail channels in the current year as a result of the impact of COVID-19, and, not insignificantly, Disney’s shift from licensing original content to third parties and instead to Disney+, combined to undermine revenue, the company reported.

“While theaters have generally re-opened, we are experiencing a prolonged and gradual recovery in this business,” CFO Christine McCarthy said on the fiscal call.

Universal at the Head of the Studio Pack in Q3 Home Entertainment Sales

Universal Pictures Home Entertainment reported third-quarter revenue of $273 million from the sale of physical and digital media — thus far topping all studios that have reported data specific to retail sales. (Disney releases financial results on Nov. 10.)

With a dearth of major new releases due to the pandemic, the home entertainment retail market in the three-month period that ended Sept. 30 continued to be driven by a collection of catalog titles mixed with some new releases.

In addition to F9: The Fast Saga (which streeted in late September), top-selling Universal titles in the quarter included Nobody, The Boss Baby: Family Business and The Croods: A New Age.

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Lionsgate, led by Hitman’s Wife’s Bodyguard, generated home entertainment revenue of $161 million, which included $31 million from the sales of DVD/Blu-ray Disc and digital retail. Sony Pictures Home Entertainment realized physical and digital retail revenue of $130 million — driven by the original Venom, Peter Rabbit 2, Spider-Man: Far From Home and The Unholy.

Neither Warner Bros. Pictures or Paramount Pictures breaks out home entertainment sales, preferring to include the category with the licensing of movies, TV shows and video games — largely to streaming services.

Paramount, which generated $513 million in licensing revenue, saw retail sales led by A Quiet Place: Part II. Warner generated $403 million in licensing revenue, led by Godzilla vs. Kong, The Conjuring: The Devil Made Me Do It, Mortal Kombat, and Rick and Morty: Season Five.

Paramount Q3 Licensing, Home Entertainment Dwarfs Theatrical Revenue

Paramount Pictures Nov. 4 disclosed third-quarter (ended Sept. 30) licensing and home entertainment revenue from movies of $513 million, which was down about 12% from revenue of $584 million in the previous-year period. When including television production, the “licensing and other” segment totaled more than $1.5 billion — up nearly 18% from revenue of $1.28 billion a year earlier.

Paramount, like other studios, no longer calls out home entertainment sales of packaged and digital media separately. The segment is now included in the studio’s licensing business.

That said, the studio’s wholesale distribution of movies dwarfs its box office. Paramount saw just $67 million in quarterly theatrical revenue, which was up from $6 million recorded in the previous-year period when most theaters were shuttered due to the pandemic.

So, while A Quiet Place Part II and Paw Patrol: The Movie performed relatively well at the pandemic box office, Paramount’s underwhelming year-to-date theatrical revenue of $202 million is attributed to just three movies, when including “G.I. Joe” spin-off Snake Eyes.

Major Tom Cruise tentpole theatrical titles Mission: Impossible 7 and Top Gun: Maverick, in addition to a relaunch of the “Scream” franchise, have been pushed back to 2022.

Meanwhile, the studio remains a major producer of TV programming, while also aggressively licensing content to third-party distribution channels, led by streaming, which include Netflix and Amazon Prime Video, as well the branded Paramount+ platform and sister service Showtime OTT.

Paramount generated $893 million in quarterly revenue licensing TV product to third-parties and retail channels. That’s up almost 80% from revenue of $498 million in the previous-year period.

Universal’s ‘F9: The Fast Saga’ Speeds to No. 1 on U.K. Home Entertainment Chart

Universal Pictures Home Entertainment’s F9: The Fast Saga sped to No. 1 on the Official Film Chart in the U.K. for the weekly retail period ended Oct. 20. The actioner made the move thanks to its release on DVD and Blu-ray Disc, which helped it outsell the chart’s top five in combined unit sales.

As a result, Disney’s Jungle Cruise was denied a second week at the top, dropping to No. 2. Disney-owned 20th Century Studios’ Free Guy finished No. 3, while catalog James Bond title Spectre finished No. 4, and Disney/Marvel’s Black Widow ended the week at No. 5. Sony Pictures Home Entertainment’s original Venom moved up five spots to No. 6.

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The week’s highest new entry is M. Night Shyamalan thriller Old (Universal), which entered the chart at No. 7 on digital downloads only. A family vacation is turned into a nightmare when they head to a secluded beach for the day, only to discover it is causing them to age rapidly, reducing their entire lives into a single day.

Universal’s The Croods: A New Age dropped to No. 8, while LeBron James teaming up with the Tune Squad to save his son in Warner Bros. Pictures’ nostalgic sequel Space Jam: A New Legacy, finished No. 9 on just digital download sales.

Finally, Bond catalog title Skyfall dropped three spots to finish at No. 10.

The Official Film Chart Top 10 – Oct. 20, 2021

Rank Previous Week Movie Distributor
1 4 F9: THE FAST SAGA UNIVERSAL
2 1 JUNGLE CRUISE DISNEY
3 2 FREE GUY 20TH CENTURY
4 3 SPECTRE MGM
5 5 BLACK WIDOW DISNEY/MARVEL
6 11 VENOM SONY PICTURES
7 NEW OLD UNIVERSAL
8 6 THE CROODS: A NEW AGE UNIVERSAL
9 NEW SPACE JAM: A NEW LEGACY WARNER
10 7 SKYFALL MGM

© Official Charts Company 2021

‘Black Widow’ Tops U.K. Home Entertainment Chart for Second Week

Disney/Marvel Cinematic Universe’s Black Widow remained atop the Official Film Chart in the U.K. for the second week, ended Sept. 29, driven by packaged-media sales, including DVD, Blu-ray Disc and 4K UHD Blu-ray.

The Scarlett Johansson starrer held off Sony Pictures Home Entertainment’s Monster Hunter, which climbed two spots to No. 2.

The week’s highest new entry was John Carpenter’s 1982 sci-fi horror The Thing, which made its chart debut at No. 3 thanks to a brand-new re-issue on 4K UHD Blu-ray Disc. The movie knocked Lionsgate’s Hitman’s Wife’s Bodyguard down to No. 4, and Universal Pictures Home Entertainment’s Nobody to No. 5.

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Warner’s The Conjuring: The Devil Made Me Do It (No. 6) and Paramount Home Entertainment’s A Quiet Place Part II (No. 7) both fell one spot, while Sony Pictures’ Peter Rabbit 2 (No. 8) and Warner’s Zack Snyder’s Justice League (No. 9) held onto their positions from the previous week. Rounding off the top 10 was Godzilla vs. Kong (Warner), which climbed 11 spots.

Rank Previous Week Movie, Studio Peak
Position
Week on Chart
1 1
BLACK WIDOW, DISNEY/MARVEL
1 2
2
MONSTER HUNTER, SONY PICTURES
2 3
3 NEW
THE THING, UNIVERSAL
3 1
4
HITMAN’S WIFE’S BODYGUARD, LIONSGATE
1 3
5
NOBODY, UNIVERSAL
2 4
6
THE CONJURING: THE DEVIL MADE ME DO IT, WARNER
2 5
7
A QUIET PLACE PART II, PARAMOUNT
1 6
8 8
PETER RABBIT 2, SONY PICTURES
1 10
9 9
ZACK SNYDER’S JUSTICE LEAGUE, WARNER
1 23
10 21 
GODZILLA VS. KONG, WARNER
1 18

 

‘Hitman’s Wife’s Bodyguard’ Enters U.K. Home Entertainment Chart No. 1

The Lionsgate U.K. action-comedy Hitman’s Wife’s Bodyguard made its U.K. retail debut atop the weekly home entertainment sales chart for the period ended Sept. 15. The sequel to the 2017 buddy actioner The Hitman’s Bodyguard, co-starring Ryan Reynolds and Samuel L. Jackson, led all titles in packaged-media and digital unit sales. A combo of the two movies ranked No. 9 in sales.

Warner’s horror sequel The Conjuring: The Devil Made Me Do It remained at No. 2 for a second week, while fantasy adventure newcomer Monster Hunter, starring Milla Jovivich, Tony Jaa and Ron Perlman, debuted at No. 3, driven by digital sales.

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The former headliner, Paramount Home Entertainment sequel A Quiet Place Part II, dropped to No. 4. Universal Pictures Home Entertainment’s Nobody was No. 5, and Sony Pictures Home Entertainment’s Peter Rabbit 2 finished No. 6 — both falling one place on the chart since last week.

Disney’s Cruella remained at No. 7, while Oscar winner The Father (Lionsgate) dropped five spots to No. 8. Finally, Zack Snyder’s Justice League (Warner) climbed three spots to return to No. 10.

The Official Film Chart Top 10 – Sept. 15, 2021

Rank Previous Week Movie Distributor
1 NEW HITMAN’S WIFE’S BODYGUARD LIONSGATE
2 2 THE CONJURING: THE DEVIL MADE ME DO IT WARNER
3 NEW MONSTER HUNTER SONY PICTURES
4 1 A QUIET PLACE PART II PARAMOUNT
5 4 NOBODY UNIVERSAL
6 5 PETER RABBIT 2 SONY PICTURES
7 7 CRUELLA DISNEY
8 3 THE FATHER LIONSGATE
9 NEW THE HITMAN’S BODYGUARD/HITMAN’S WIFE’S LIONSGATE
10 13 ZACK SNYDER’S JUSTICE LEAGUE WARNER