OTT.X held its inaugural “XFronts” event May 24-25 at the Skirball Cultural Center in Los Angeles. The XFronts event, which drew nearly 400 guests, was an exchange consisting of pitches and presentations by prominent and up-and-coming AVOD and FAST platforms, networks, and channels to an audience of brands, advertisers and ad agencies, according to OTT.X. Presentations included details about lineups, content promotion and other plans for the coming year. The opening reception was held Tuesday evening, May 24. (Media Play News staff photos.)
Bob Tollini, a veteran of the home video industry who held senior management positions at two big distributors and was one of the leaders in the charge to establish a common street date for new releases, died Feb. 4 of cancer.
He was 74. Tollini is survived by his wife, Patricia; son, Mike; and two granddaughters, Eva and Sophie.
Tollini, a native of Buffalo, New York, earned a Bachelor of Science degree in Economics from Cornell University and an MBA from Columbia University’s Graduate School of Business.
He began working in the video industry in the early 1980s, at CBS/Fox, where he rose to controller. In March 1984 he joined Video Trend as VP and GM of the Detroit branch. At the time, the video rental industry was flourishing as thousands of independent retailers bought movies on videocassette at prices starting at about $60 and rented them to the public. Studios sold their VHS cassettes through a network of distributors.
Tollini was subsequently promoted to VP of marketing and purchasing for all seven Video Trend branches.
In 1991, Chicago-based Video Trend was purchased by Major Video Concepts of Indianapolis and Tollini joined the acquiring company, where he ultimately rose to SVP. He helped launch the company’s Internet presence and at one point oversaw marketing for 1,500 video rental stores inside supermarkets.
Tollini was also active in the Video Software Dealers Association (VSDA) and a frequent speaker and panelist at the trade group’s annual convention in Las Vegas. In July 1998, he spoke out against revenue-sharing, in which studios let retailers buy more copies of the big hits at a reduced price in return for sharing a percentage of the revenues. He argued that Blockbuster had an advantage because of its direct sales relationship with the major studios, while independent retailers couldn’t enjoy the same discount because they could only purchase product through distributors.
“He loved movies, he loved the business, he was just a really great guy,” said Mark Fisher, president of streaming trade association OTT.X, who in the 1990s was EVP of the VSDA.
“He was a great guy — in business, personally, and professionally,” said Kirk Kirkpatrick, former president of the video division of WaxWorks, an Owensboro, Ky.-based distributor. “I got to know him best because I played tennis with him often at some of these conferences. He beat the hell out of me every time.”
Kirkpatrick said Tollini also played a key role in establishing a uniform weekly release date for new home video releases, Tuesday, a practice that continues to this day. “I remember I called him and said, ‘This is crazy — we have all these different shipping days — why don’t we do what the record business does and have one standard release date,” Kirkpatrick said. “He backed that in an instant and made such a compelling case, because of his stature in the industry, that the studios agreed.”
Distribution was hit hard in the 1990s when independent stores were swallowed up, or put out of business, by rapidly growing national chains like Erol’s, National, West Coast and, later, Blockbuster, Hollywood Entertainment and Movie Gallery. The emergence of DVD in 1997 further impacted the videocassette rental business, as discs were priced low for direct sale to consumers.
Major Video Concepts was sold to Ingram Entertainment in 2000, and a year later Tollini left the company. He later worked as sales director for Video Access Computers, which manufactured DVD rental kiosks, before embarking on a career as a consultant. He also continued to produce a weekly buying guide aimed at the remaining independent retailers.
Tollini also was known for his charitable work. In the 1980s, he became a volunteer for Big Brothers, and over the years mentored dozens of young men. He also tutored children at a homeless shelter and drove a delivery truck for Second Helpings, an Indianapolis nonprofit that uses donated perishable and overstocked food to prepare nutritious meals for thousands of hungry children and adults.
“He was an altruistic person who was extremely generous with his time and really wanted to help people,” recalls son Mike. “He regarded himself as being raised by immigrant families who had nothing, and then at 17 he gets to go to two Ivy League schools in a row and gets to move into a management career. He was very troubled by inequality and the lack of opportunity, especially in the urban areas. He was really focused on helping kids, in particular from backgrounds of more challenging circumstances. He felt really fortunate to have had a lot of opportunity.”
Tollini also remained involved in film through Heartland Films, a nonprofit arts organization based in Indianapolis, with a mission to inspire filmmakers and audiences through the transformative power of film. He volunteered as a judge, and oversaw the organization’s video distribution initiative, alongside Bob Prudhomme and Tim Swain.
Tollini and his wife remained in Indianapolis until 2018, when they moved to the Washington, D.C. area to be closer to his son and grandchildren. He had been diagnosed with cancer in late 2017.
The uncertainty over the COVID-19 surge triggered by the emergence of the Omicron variant has made any and all predictions for the coming year suspect. Life could go back to normal fairly quickly or we will continue to battle surges and adjust our lives accordingly. Most observers don’t see us going back to the draconian shutdowns and lockdowns of the early days of the virus, but studio executives and exhibitors are understandably nervous about the current and any future surges since theatrical attendance could suffer — which ultimately affects everyone down the food chain.
The home entertainment business weathered the initial COVID crisis quite well, with streaming growing stronger and transactional video-on-demand (TVOD) winning a premium first-run window. That said, there are several “givens” as 2022 gets underway.
Netflix, Disney+, HBO Max and the other high-profile streamers will continue to battle for dominance, with Netflix doing everything in its power to reduce churn and not lose market share. The second tier of SVOD players, including Paramount+ and Peacock, will make as much noise as possible to win a seat at the table — as evidenced by Peacock’s recent announcement that it will be streaming the winter Olympics in their entirety.
On the transactional side, a lot depends on the fate of movie theaters as this pandemic lumbers on. The early pandemic led to an overall shortening of windows and new-release strategies that ultimately benefited both home entertainment divisions and digital retailers such as Vudu by Fandango, Redbox On Demand, Microsoft and Google Play.
But while TVOD, and physical media, benefit from shorter windows, it is also impacted by studios accelerating, or re-ordering, SVOD windows. A film available as part of an all-you-can-watch subscription streaming service simply isn’t going to sell or rent nearly as well as it would if there was no “free” competition. And that plays into the bigger picture that the more consumers tune in to SVOD services, the less likely they are to purchase or rent something a la carte.
Jim Wuthrich, president of content distribution for WarnerMedia, says he’s “optimistic that we’ll continue to adapt to the changing nature of COVID and learn to live with it.”
“Although there are many challenges, we’ve learned how to be productive with a distributed workforce, productions are largely back and there’s more consumer choice than ever before — both in amount of content and ways to view,” he says. “It’s a great time to be a fan of linear storytelling. We will continue to improve and expand HBO Max to more markets, while providing a la carte options for fans and collectors. SVOD services will continue to dominate viewing time, with transactional supporting a vital role in discovery, sampling and fandom. Physical media (4K/Blu-ray/DVD) continues to be a meaningful market, with approximately $2 billion in U.S. consumer sales, and largely immune to evolving distribution patterns.”
On the WarnerMedia side, Wuthrich says, “We have a great movie slate, with four DC films coming to theaters and another installment of ‘Fantastic Beasts.’ We also have a number of series releasing, including the new ‘House of the Dragon,’ a ‘Game of Thrones’ prequel. History has shown these franchises to be powerhouses in driving catalog sales so we are looking forward to a great year.”
“Similarly to 2021, we expect a very healthy home entertainment market in 2022, with strong consumer engagement across multiple business models,” says Michael Bonner, president of Universal Pictures Home Entertainment. “Release patterns will likely continue to fluctuate and vary across studios on a title-by-title basis.
“With the theatrical marketplace continuing to strengthen, the growth of PVOD and the expansion of various SVOD services, the distribution landscape is stronger than ever. As we look ahead, studios have more options and outlets to create value and reach consumers which strengthens our ability to continue investing in great content.”
Bonner maintains that Universal, with its slate of anticipated new releases including Jurassic World: Dominion, Minions: The Rise of Gru and Downton Abbey: A New Era, “is perfectly positioned to draw audiences back into theaters and fuel further transactional growth across the varying windows and platforms.”
Paramount Home Entertainment president Bob Buchi says that “as the global hub for transactional home entertainment across ViacomCBS, our division is exceedingly fortunate and singularly focused on delivering an extraordinary 2022 line-up of the company’s theatrical and television content, as well as third-party acquisitions through our extensive partnerships.”
“Our theatrical slate includes new entries in wildly popular franchises, including ‘Scream,’ ‘Top Gun,’ ‘Mission: Impossible,’ ‘Sonic the Hedgehog’ and ‘Jackass,’ which are not only highly anticipated, but also provide excellent opportunities to stoke fan interest in the earlier films and television shows available through home entertainment,” he says.
On the catalog front, Buchi adds, the division’s most ambitious initiatives are the year-long 50th anniversary salute to The Godfather, “for which we anticipate massive consumer excitement for the film’s return to theaters, new 4K home entertainment releases, and licensed merchandise,” and the first-time-on-4K director’s edition of Star Trek: The Motion Picture, “with fantastic new VFX, which will be released first on Paramount+ and then on home entertainment platforms.”
Cameron Douglas, VP of home entertainment for Fandango, which oversees the Vudu digital retailer, also has high hopes for the new year.
“We expect the TVOD sector to deliver even more value to consumers, as fans sort through a fragmented streaming world, looking for a one-stop-shop entertainment service for movies and TV,” he says. “Because subscription services, by their nature, cater to specific audiences and content offerings, we continue to see consumers utilizing the flexibility, depth and breadth of Vudu’s new release and catalog offering of over 200,000 titles to complement their monthly entertainment needs.”
Douglas says Vudu “is working hard to expand our catalog every day. It’s both a challenge and an opportunity, as we continue to secure new and previously unavailable titles. There’s a variety of titles where digital rights were originally unsecured, but with the demand increasing, there’s more pressure than ever to make these films available for fans to stream at home. We pride ourselves on providing the best quality of experience and we are always working to create a bigger, better home entertainment experience for our customers. We want to be that place where fans can find every beloved movie and show they desire.”
At the top of Vudu’s agenda for the coming year, Douglas says, are plans “to innovate new services for our customers and add new platforms and devices to meet the fan demand in an ever-changing marketplace. We also plan to offer deeper integration with our sister sites, Rotten Tomatoes, for entertainment discovery, recommendation and curated content, and Fandango for crossover promotional opportunities to help enhance the theatrical experience. With our entertainment lifecycle marketing strategy, we look forward to helping new and returning partners more effectively and efficiently reach high-value entertainment audiences at scale.”
The big challenge for home entertainment executives in the coming year is to apply lessons they learned during the pandemic and react quickly to market conditions.
Paramount’s Bob Buchi says that “with two years of experimentation and the expedited evolution of our business, we know we need to remain agile in our windowing and co-promotional strategies as we continue to support the return to theaters and the rapid growth of our streaming service, Paramount+.”
Adam Frank, SVP of global digital sales and distribution at Lionsgate, says what happens at the box office will trickle down into all aspects of home entertainment.
“Our expectation, given the quality and quantity of the theatrical release slate, is that box office sees significant increase and momentum in 2022 vs. 2021,” Frank said. “The old adage of content is king still rings true, and with more product in the marketplace, consumers will ultimately have more choices and more opportunities in the home entertainment space.”
Jed Grossman, EVP and GM of worldwide sales and distribution at Lionsgate, adds, “We expect all business segments — transactional digital, packaged media, SVOD and AVOD/FAST — to grow year-over-year driven by five key factors:
- A more robust theatrical release schedule, inclusive of major tentpoles and franchises like ‘Jurassic World,’ ‘Top Gun’ and ‘Black Panther’ that were delayed during the pandemic. Lionsgate has a strong slate that includes Unbearable Weight of Massive Talent, starring Nicolas Cage; Are You There God? It’s Me Margaret; and White Bird, among others;
- A more viable theatrical marketplace, with theater-going comfort increasing as vaccine/booster shot rates increase and tentpoles drive attendance;
- The continued unprecedented demand for new release and library product from SVOD and AVOD/FAST platforms. Lionsgate has achieved record library revenue over the past year;
- The ability to capitalize on home entertainment consumer behavior, consumer content thirst and technology enhancements — across all offer types — as accelerated by the pandemic lockdowns of 2020 and early 2021; and
- Continued collaboration with our theatrical exhibition partners to release films with dynamic windows to meet demand across all platforms.”
For independent film distributors, don’t expect much variance in 2022 from established policies of continuing to take aim at the collector and niche markets, particularly on the physical media side.
“For disc sales, MVD and our label partners are focusing on collectible content in deluxe packaging,” says Ed Seaman, COO of MVD Entertainment Group. “We anticipate a similar trajectory for disc sales, which have steadily grown over the last several years. The pandemic certainly gave them a boost, but the resilience and resurgence of disc sales may have more to do with the frustrating customer experience our industry has created in the OTT space. Finding what you want is now very challenging. How many streaming services do you need to subscribe to only to not find the film you want to watch, when you want to watch it? You can more easily find what you want transactionally, but it is still a search. Why not just pay a bit more and own the deluxe-edition disc?”
On the digital front, Seaman says “AVOD/FAST will continue to grow dramatically as consumers clearly embrace and enjoy that model. TVOD is tricky; considering Amazon’s tight curation of non-fiction, we expect some other platforms to step up and become more dominant in that space. There is a real opportunity for platforms focusing on non-fiction to deliver to fans what they want when they want it.”
At MVD, Seaman notes, “we’ve just added Zach Fischel to our leadership team; Zach is a veteran in the entertainment industry and is leading our label management team and marketing department. We’ve additionally moved longtime MVD staffer Chris Callahan to lead our digital sales and operations team. Chris has been with MVD since 1999 and has served in sales management, label management and international licensing. Both of these leaders are committed to improving their areas of responsibility; they have great ideas particularly in digital marketing, an area of overlapped responsibility. We are really excited about 2022!”
So is Mark Fisher, president and CEO of OTT.X, a streaming industry trade group.
“2022 will be a year that portends the future of our industries — a future that, enabled by OTT distribution, is more egalitarian, more global and more diverse,” Fisher says. “While Hollywood continues to make great movies and TV shows, smaller distributors and independent producers from all over the world are making a lot of great content, too — enabling the consumer to be less reliant and dependent on content from the big studios and on domestic-produced content. And, while the big ‘Pluses’ and ‘Maxes’ continue to grow, consumers are finding plenty of additional content on indie and niche channels, both FAST and on demand.”
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.
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.
“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.”
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.
“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.
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.
“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 Carnage, Ghostbusters: 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, 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.”
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.”
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, 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.
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.
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, 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.”
Editor’s note: This is the first in an occasional series of personal stories by executives in home entertainment, detailing how they got into the business and comparing what they’re doing now to what they did back then. For submissions, please contact Thomas K. Arnold at firstname.lastname@example.org.
Facebook memories occasionally stimulate reminiscing about days gone by.
The other week, an old post and picture popped up on Facebook that reminded me that my first contribution to the home entertainment industry was opening my first video rental store — the first store-within-a-grocery store — 36 years ago. That triggered a rush of memories of those earlier years, and the travels to get to where I am today: still in home entertainment, focused on streaming, now the industry’s dominant incarnation.
But let’s step back. In 1985, I was just starting my career. I had a job at Stop & Shop Supermarkets, the largest grocery chain in New England, managing the non-foods departments in the company’s Connecticut stores — a great gig to have in my 20s. The company was, compared to other grocers in the 1980s, very professional and progressive, and had lots of really good people in its management ranks. When independent video rental stores were popping up around New England, the company thought, what better place for a rental store than in the neighborhood grocery store. It is, by nature, a convenient location, and customers visit on average of two and one-half times each week.
Personally, I was a movie lover and a video enthusiast. I had a front-projection TV, a piano key VCR (like the one you see at the start of each episode of ABC’s “The Goldbergs”), and I was a regular renter of VHS tapes at the Fotomat drive-through, where you could find all the latest releases.
I was recruited to move up to corporate headquarters in Boston and lead a team to develop our own chain of rental stores to operate within our grocery stores. Like every other video rental store, we charged a membership fee and rented movies by the night. Unlike the others, partly because we didn’t have a lot of space, we didn’t put empty boxes out on the shelves — we put the actual tapes out for the customer to bring up to the counter to rent. (That way there was no chance they’d be disappointed if it was out of stock.) We were a well-funded company, and we had an aggressive rollout plan — so, also unlike so many of our competitors, we brought in lots of copies of new releases (think 75 copies of Jurassic Park). Our customers were more likely to go home with the movie they came in for, and hopefully one or two more.
We located the Stop & Shop Video Centers up in the very front of the store layout, so the customer could get in and out easily. Executive management took this new venture seriously. We were formed as a separate division of the company — I reported to the SVP of operations, and my direct reports were the buying team and district managers, while the store teams reported directly to my DMs (unlike everybody else in the store, who reported to the grocery store manager). We were truly a novel “store-within-a-store” concept.
We built our chain up to 63 stores within our grocery stores, and five freestanding 6,000-square-foot video rental stores positioned adjacent to our grocery stores. We had endcaps with video rentals that were serviced out of the courtesy desks in our smaller grocery stores, and a team of merchandisers who revamped the product mix in each weekly.
The most enjoyable part of my job was the promotions that we ran, with the support of our studio partners. We had a tie-in promotion with the actual Mystic Pizza in Connecticut when that Julie Roberts movie released; another with the submarine base in Groton, Conn., when The Hunt for Red October was released. We worked with a local radio station and hosted a day at the Rhode Island Zoo when Disney released Jungle Book. And we raised a lot of contributions and spent Thanksgiving Day helping out at a homeless shelter in Springfield, Mass., to promote Robin Hood: Prince of Thieves. There were countless others — pretty much a new promotion somewhere within our chain every month.
We also had lots of in-store appearances. Customers lined up to meet Mickey Mantle, Phil Rizutto, Gordie Howe and plenty of others over the years.
Our biggest events were our annual Oscar parties. We invited our best customers from each store to join our store managers and management team each year to watch the Oscars on big screens with music, food and drinks. We always had special guests and local entertainment. We really scored the year that David Letterman hosted the Oscars and we had secured Larry “Bud” Melman, Letterman’s “man on the street,” to participate in our party.
How did I learn the business? Here’s where everything comes full circle. Before we opened our first store, I started going to meetings of the local chapter of the Video Software Dealers Association (VSDA — which eventually became EMA and now OTT.X). The VSDA in those days was primarily an organization of small independent video rental stores around the country. I learned from other retailers and from local distributor reps and studio reps. Stop & Shop joined the VSDA. I attended local meetings, and went to my first national convention in 1986. I eventually joined the board of directors for the local VSDA chapter, and helped out creating educational events for video rental store employees in New England. I served as treasurer for a few years, and during that time I was appointed to the VSDA’s national board of directors, where I served with industry superstars such as Mitch Lowe (later the co-founder of Netflix and Redbox), David Ingram (president of Ingram Entertainment), Ron Berger (founder of Rentrak) and others. Before I left that board, I had moved up to treasurer, while still treasurer of the local board.
All of my team at Stop & Shop was involved in the VSDA — my buyers, my DMs and my store managers. They attended meetings and events and got involved in producing local VSDA events. These sessions supplemented the industry knowledge that we could share with them, and inviting them to local movie openings and VSDA parties served as a reward, too. My team worked really hard — but I always liked to give them the opportunity to play hard, too.
In 1997, I was recruited to head up corporate store operations for West Coast Entertainment — a chain of 450 rental stores plus even more franchisees on the East Coast. Not able to grow our Stop & Shop video store footprint any larger, I left and moved to Philadelphia for my new position with West Coast. It was challenging, managing a chain that had a dozen different retail store brands and nearly two dozen different POS systems, but it was also an opportunity to grow a new team and meet a lot of new friends — many of whom I’m still close with and work with today, including Mike Haney at Allied Vaughn and Steve Apple on our OTT.X team.
Just a few years later, I joined the staff of the VSDA, then headed by Bo Andersen, to manage membership and sales. Twenty-two years later, I’m still here, now in the president/CEO role, and I’ve been at the helm from our transition from physical discs to digital and from EMA to OTT.X.
The old saying, “everything old is new again,” certainly has rung true for me. The big sellthrough retailers such as Best Buy, Walmart and Target, as well as many of the big studios, haven’t been the most entrepreneurial and have been less in need of what we do as a trade association. Today we are back to an organization of mostly indie or entrepreneurial companies — along with many established companies. We’re back to having lots of engagement and a strong vibrant community.
Looking back, it’s been lots of fun, and most of all, I’ve made lots of friends — and if I didn’t move out to Los Angeles for this gig at what was then the VSDA, I’d never have met my wife. Julie. And, I think I’ve made an impact on the industry that I love over the years. (Actually, Redbox co-founder Mitch Lowe wrote that my original Stop & Shop store-in-a-store concept was the inspiration for Redbox.)
The best thing about all of this is that it isn’t over. Today’s industry isn’t what we knew as “home entertainment” — it’s blended with the extension of the broadband and cable industries and linear programming into OTT, and it is still in its formative stage with a hunger for education, collaboration and networking. And as long as I’m still challenged and having fun, I’ll be in it — transitioning and pivoting, just as I’ve always done.
OTT.X on Oct. 28 announced two new board seats on the trade group’s board of directors, going to Amagi co-founder Srinivasan KA and Crackle president Philippe Guelton.
“These additions display our continued growth alongside the entire OTT industry,” said Mark Fisher, OTT.X president and CEO. “And I am sure that each director will bring an important perspective, wealth of experience, and desire for growth benefiting our continued mission of connecting and nurturing the OTT ecosystem enabling innovation, collaboration, and competition.”
KA and Guelton will broaden the 17-member OTT.X board’s representation across all segments of its community, OTT.X says.
The appointments are effective immediately. Directors will serve until the annual OTT.X organizational board meeting in 2023.
OTT.X, the industry trade association for OTT streamers, has opened submissions for the second annual OTT.X Impact Awards.
The OTT.X Impact Awards is a program created by and for the over-the-top streaming industry to recognize creators, producers, platforms and channels who are using the power of streaming video to make a positive impact. Submissions are being accepted through Sept. 30 for audio/visual works that premiered, and are distributed, through OTT channels and platforms. Nominations will be announced Nov. 9 and winners will be named at the Impact Awards Ceremony to be held on Dec. 9, 2021.
“Our industry has the attention of millions of people globally,” said Mark Fisher, OTT.X president and CEO. “The stories we tell, messages we send and truths we reveal have the power to change the world. Using this power to promote understanding, acceptance, equality and to inspire positive action is a responsibility that OTT.X and our membership are committed to.”
Paul Colichman, CEO of Here Media and OTT.X Impact Awards Steering Committee chair, added, “As streaming transforms the entertainment landscape, it also democratizes video content distribution. This allows for more programs that focus on social justice, equality, kindness and compassion.”
The inaugural OTT.X Impact Awards was held virtually on Dec. 10, 2020, and recognized three winners, including Here Media’s “Girls Voices Now — ‘Not Quite Here, Not Quite There’” for Impactful Short Title; Chicken Soup for the Soul Entertainment’s “Going From Broke” for Impactful Series; and Passion River’s Intelligent Lives for Impactful Full-Length Feature.
Content must premiere on an OTT channel or platform, maintain exclusive
availability via OTT distribution and be available in the United States for three weeks. The qualifying period for the 2021 awards is the 12-month period ending Sept. 30, 2021.
For more information as well as content submissions, visit the OTT.X Impact Awards site here.
The OTT.X trade group Oct. 30 announced the appointment of two additional board directors.
They are TwentyOne14 Media, represented by Quincy Newell, founder and CEO, and VIX Inc., represented by Richard Hull, head of streaming platforms and chief strategy officer. The board of directors of OTT.X, which represents the streaming sector of the home entertainment industry, now has 16 members, including board chair Cameron Douglas of Fandango, vice chair Suyin Lim of Sony Interactive Entertainment, and Pedro Gutierrez Jr. of Microsoft.
These appointments are effective immediately. Directors will serve until the annual OTT.X organizational board meeting in mid-2024.
“These new companies on the OTT.X board of directors will add to its effectiveness,” said Mark Fisher, OTT.X president and CEO. “Each director brings an important perspective, and their wealth of experience will benefit the membership as OTT.X continues to be the forum for the OTT industry.”
TwentyOne14 Media is a content distribution, production and strategic advisory company for the media and entertainment industries.
VIX Inc. is a Miami-based streaming service that considers itself a hub for Spanish-language movies, TV shows and other filmed content aimed at Latinos.
The OTT.X Impact Awards is a program created by and for the over-the-top streaming industry to recognize creators, producers, platforms and channels who are using the power of streaming video to make a positive impact, the trade association says.
Submissions are being accepted at ottximpactawards.org through Nov. 9, 2020, for audio-visual works that premiere and are distributed through OTT channels and platforms. Nominations will be announced Nov. 16 and awards will be made at the annual OTT.X @Digital Media Pipeline on Dec. 10, 2020.
OTT.X on July 28 announced plans to host its first-ever Career and Leadership Development Summit on Aug. 12, using an online format similar to its popular “OTT.X Online Live” sessions.
The summit will feature three components, including a conference session with career and leadership development presentations delivered by successful executives; a series of informal discussion sessions between industry executives and conference attendees; and a “happy-hour” networking session.
Featured speakers include industry veterans Steve Nickerson, formerly of Warner Bros. Home Entertainment and Toshiba Corp.; Jason Peterson, chairman of the GoDigital Media Group; and Michele Edelman, head of growth with Premiere Video.
Other speakers include Teresa Philips, CEO of Spherex; Narendra Reddy, EVP and GM of The Africa Channel; and Paulette Pantoja, CEO of Blu; Jill Allen, SVP of digital distribution for Sony Pictures; Beth Anderson, AVP of digital strategy and business development for BBC Studios; Allison Martin, senior manager of content planning for BBC Studios; Kristen Bedno, director of domestic distribution and marketing for Vision Films; Lise Romanoff, managing director and CEO of worldwide distribution for Vision Films; and Lonni Silverman, director of client services, for Sony Pictures.
“The goal of the summit is to help prepare an inclusive population of professionals interested in advancing in business and technical roles in the entertainment industry and to provide opportunities to develop their leadership skills, contacts and confidence,” said Mark Fisher, OTT.X president and CEO. “Supporting the growth and professional development of future leaders and the diversity of those holding leadership positions is vital to our industry’s continued success. Our first Leadership Development Summit will provide a platform for leaders to share valuable insights and for a diverse community of professionals of all levels to connect and learn from each other.”
Fisher also will speak, as will Eric Hanson, OTT.X’s VP of industry leadership.
To create an inclusive and diverse community of participants, women and minorities are especially encouraged to register and attend, Fisher said. The morning conference portion of the event is free for all OTT industry professionals. Afternoon discussion and networking sessions are free to any employee of an OTT.X member organization.
The conference is being hosted by OTT.X’s Leadership Development Foundation (LDF), an organization dedicated to the vision of a diverse and inclusive business and technical workforce in the OTT video entertainment industry, supported by a broad range of career and leadership development opportunities. The LDF is overseen by a steering committee with representatives from content providers, channels, retailers and service providers in the OTT video industry.
For more information and to register visit the OTT.X website.