25 Years of Digital Entertainment — Part One: The Disc That Changed the World

Twenty-five years ago this month, the spark was lit for what has grown into a $32 billion-per-year business. The March 1997 U.S. debut of DVD was not only the most successful consumer electronics product launch in history. It was also the start of the digital revolution in home entertainment.

Without DVD, there would be no Blu-ray Disc or 4K Ultra HD Blu-ray, still the format of choice of movie purists and collectors. Without DVD, there would be no digital distribution or streaming. That’s right — there would be no Netflix, no Disney+, no HBO Max, no Hulu, no Peacock, and no Paramount+.

DVD’s compact size and high capacity also made it feasible to put entire TV series in one neat little package, which led to “binge-watching,” rooted in the TV-on-DVD explosion of the early 2000s and now part of popular jargon, and a regular habit, thanks to Netflix.

As a Microsoft tribute ad to Warren Lieberfarb, the Warner Home Video president hailed as the father of DVD, noted, the shiny little digital disc “helped usher in a new era of technology that changed the world.”

Media Play News is celebrating 25 years of digital entertainment with a two-part special report. This month, we will chronicle the development, launch and rise of DVD and its two successor disc formats, Blu-ray Disc and 4K Ultra HD Blu-ray. Next month, we will trace the history of digital distribution, including electronic sellthrough, digital rental and streaming.

Beginnings

The origin of the DVD can be traced back to 1986 when Warner Home Video, under the direction of president Warren Lieberfarb, first advocated for the development of a format to put movies on a five-inch optical disc, similar to the CD that had taken the music industry by storm just a few years earlier.

As the years progressed, Lieberfarb’s drive to develop a video disc for the distribution of movies intensified. After more than a decade of steady and significant growth, the home video industry — centered on the rental VHS videocassette — had begun to flatten. The novelty of renting movies was fast wearing off, and the cable business was aggressively courting consumers with more and more appealing pay-per-view options.

The path to DVD, however, was far from a straight one. It had many twists and turns.

Read our EXCLUSIVE Q&A with Warren Lieberfarb

“CD was launched in 1982, and when this became a mass-market success, it really drove the home video industry through a number of trials and errors,” said veteran industry consultant Marc Finer. “This included everything from evaluating the somewhat outdated Video CD format — which was limited to 80 minutes of video and/or still images — to rebranding the analog Laserdisc as CD Video, which was scrapped because it was felt this would simply cause consumer confusion. The ultimate solution was to develop an entirely new format that combined the portability and convenience of the audio CD with the latest state-of-the art video technology.”

Lieberfarb envisioned this new type of video disc riding the coattails of the CD explosion and turning consumers from renters into buyers — and generating significantly higher profits for the studios. He charged his organization with achieving this vision in an attractive, convenient, collectible form that — unlike the high-cost, cumbersome existing Laserdisc system — could be easily and inexpensively replicated.

“The goal was to have a form of packaged media that would be economically superior to the margins and royalties of pay-per-view, and to offer the consumers higher quality and convenience than the VHS rental market,” Lieberfarb said.

Warren Lieberfarb (right) and Ben Feingold, at the time presidents of Warner Home Video and Columbia TriStar Home Video, at the opening business session at the 1997 Video Software Dealers Association (VSDA) convention in Las Vegas, where the discussion was focused on DVD. (Media Play News archive photo)

The DVD project — code-named TAZ after Warner’s whirling Tasmanian Devil cartoon character — plunged Warner Home Video into a new world of advanced technology. Lieberfarb and his team, working closely with Toshiba Corp., soon became familiar with such new concepts as a bonded disc, digital assets management, authoring and other related production issues.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Beyond developing these new technological skills, the Warner team had to negotiate the specifications of the DVD system with the very different corporate cultures of the CE and IT industries, as well as the unique business cultures of its Asian and European partners. Within the Warner Home Video organization, a “Manhattan Project” spirit developed, as more members of management were brought in to apply their special expertise to TAZ — encouraged by the new format’s potential.

Then, in 1992, Sony and Philips announced their own intent to develop a high-capacity video disc utilizing CD replication technology.

Take a photographic journey back to 1997, when DVD launched in the U.S.

Development work at Warner accelerated. The Warner-Toshiba consortium in June 1994 officially announced the development of a five-inch Super Density (SD) disc, which could hold an entire movie. Three months later, in September, Sony and Philips announced their own specifications for a high-capacity video disc, called the Multimedia Compact Disc (MMCD).

Fears of a format war rippled through the industry as 1994 turned into 1995. But with the disruptive battle between VHS and Betamax still fresh on everyone’s minds the rival disc consortiums — Warner and Toshiba on one side, Sony and Philips on the other — began working on a compromise.

Follow us on Instagram

The final agreement was announced in December 1995, with both sides agreeing to support something called the DVD, which initially stood for “Digital Versatile Disc,” a moniker that over time evolved to Digital Video Disc.

“We all knew that we needed to work out a solution to bring a unified and fully supported new technology to market,” said Mike Fidler, who just before the March 1997 launch of DVD moved from Pioneer Electronics to Sony Electronics, where he was SVP of marketing. “We understood that consumers, as well as retailers and stakeholders, needed a single solution that could deliver all the incredible benefits of a CD-like optical disc, including high performance, high convenience and low cost, to drive a new sellthrough video business. All companies worked together to deliver this vision.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

‘A True Pop Culture Phenomenon’

After that, things happened fast. In November 1996, the first DVD players went on sale in Japan with a small assortment of titles, mostly music videos. The first feature films on DVD appeared in Japan on December 20 — The Assassin, Blade Runner, Eraser and The Fugitive from Warner.

Consumer electronics companies showecased their new DVD players at the January 1997 CES in Las Vegas. There was no content yet available to play on the new machines, but they attracted quite a bit of attention–and commanded a fair amount of floor space.

DVD was quite prominent on the show floor of the January 1997 CES. (Consumer Technology Association photo)

For the U.S. software launch, a handful of Imax documentaries arrived on March 19, 1997, with the initial batch of DVDs from Warner and MGM arriving in a seven-city test March 24. Titles in that first box of about 20 movies included Twister, Bonnie & Clyde and The Mask, all packaged in the cardboard “snapcase” that Lieberfarb is said to have preferred.

In May 1997 the first music video titles were released on DVD, including Eric Clapton: Unplugged.

In June 1997, the DVD Video Group was established, with the goal of being the “singular source” of information about the format, Billboard observed at the time. Organized by the late Philips executive Emiel Petrone, the group helped facilitate a unified marketing message across all of the industry’s leading companies.  

Read WarnerMedia executive Jim Wuthrich’s guest column, ‘Lifting and Shifting from the Disc Into the Digital Stream’

In July 1997 what was then MCA/Universal Home Video said it would support the nascent format. That month, the Video Software Dealers Association (VSDA) held its annual convention in Las Vegas, and devoted the opening business session to a panel of studio home video presidents discussing DVD and its potential.

In August 1997 Warner went national with DVD, putting discs in nearly every major home entertainment retail chain, including Best Buy, Musicland and Tower Records. And in September Walt Disney Studios announced its support for DVD as well.

Bob Chapek, CEO of The Walt Disney Co., remembers those days well. “At that point I was SVP of marketing for home video, running marketing, essentially,” he said. “What I was actually doing was making sure those discs would actually play, because if you remember there were some playability issues, as there are with all new formats, compatibility issues between players and discs, and making sure that anything we put in the marketplace was going to actually deliver on what the consumer expected. And then, shortly thereafter, we started innovating, trying to take full advantage of all the capabilities that the new digital format had. More than just no need to rewind, right? Or you can start a movie anywhere you wanted to — there wasn’t that linearity, and we tried to take advantage of that in so many ways.”

Twentieth Century Fox, led by feisty ex-Disney home video chief Bill Mechanic, was a conspicuous holdout — in part, observers said, because of Lieberfarb’s command of the spotlight. Citing piracy concerns, Mechanic pushed for digital VHS, the videocassette’s last gasp, which never really got off the ground. When a reporter subsequently asked when Fox would join the other studios in supporting DVD, Mechanic’s flippant response was, “Ask Warren Lieberfarb.”

Then, just as DVD was beginning to gain some momentum, along came Divx, a pay-­per-play variant championed by the CEO of Circuit City, one of the country’s major consumer electronics retailers. Fox, not surprisingly, embraced Divx, as did Paramount, Universal, Disney and DreamWorks.

But Divx died a surprisingly swift death, done in by a failure of consumer electronics manufacturers — who were focusing on making more, better and cheaper DVD players — to support it. The playing field was obstacle-free, and DVD’s popularity began to accelerate.

In February 1998 Air Force One became the first DVD to ship more than 100,000 units. In April, Paramount announced its intent to release movies on DVD, followed in August by a reluctant 20th Century Fox and, in September, by DreamWorks.

An early Warner Home Video ad for DVD. (Media Play News archive photo)

The percentage of people who switched from renting to buying movies kept rising, surpassing even Lieberfarb’s initial projections. In November 1998 the 1 millionth DVD player was shipped to retail; in December it was reported that DVD players were in 1.4 million U.S. homes, and that these households had snapped up a whopping 23 million discs that year alone. Computer makers announced shipments of 6 million PCs with DVD drives.

In August 1999 Titanic became the first DVD to ship 1 million units. In October, Disney announced that the first of its vaunted animated classics to be released on disc would be Pinocchio. And by December 1999 4 million U.S. households had at least one DVD player; software shipments, meanwhile, had quadrupled to 98 million discs.

“It was a heady and exciting time,” said Fritz Friedman, who at the time headed worldwide publicity for Columbia TriStar Home Video (now Sony Pictures Home Entertainment).

Subscribe HERE to the FREE Media Play News Daily Newsletter!

“DVD brought home entertainment into the digital age. Digitized content provided such superior image and sound quality that once the consumer experienced DVD, it was hard to go back to tape. Commercially, thanks to the bigger margins on DVD and robust sales, the home entertainment industry entered what I would say was the beginning of a ‘golden age’ in our business. And this success subsequently gave our home entertainment execs seats at the studios’ theatrical production meetings because the huge revenues generated by DVD contributed greatly to a film’s bottom line. Thus, home entertainment revenue potential became a vital consideration in determining theatrical release slates.”

To enhance the value proposition of buying movies rather than renting them, studios began adding bonus content, from deleted scenes and bloopers to detailed documentaries about the making of the film, and director and cast commentaries.

“For New Line, introducing the new DVD format was pure nirvana, energizing and challenging us to think completely out of the box,” said Stephen Einhorn, at the time president of New Line Home Video.

Chapek adds, “I work with Pete Docter still to this day, and I remember innovating on Monsters Inc., with the two paths on the menus, one for kids, one for adults, and it was a completely different experience.”

The swift rise of DVD also allowed two young tech entrepreneurs, Reed Hastings and Marc Randolph, to revive the floundering rental market by doing away with the most hated aspect of the video rental experience: returning copies to the video store, often with hefty late fees.

After first making sure a DVD was below the 13-ounce limit for first-class mail, they launched a company called Netflix that allowed customers to rent movies by mail and then return them in a postage-paid envelope. Hastings, who provided $2.5 million in seed money, had reportedly come up with the idea after he was forced to shell out $40 in late fees for an overdue copy of Apollo 13. By 1999 the company had settled on a subscription model; Hastings enlisted two veteran video “rentailers,” Ted Sarandos and Mitch Lowe, as his wingmen and sent them on the road to talk up the Netflix concept, armed with a white plastic mailbox as a prop.

Reed Hastings and a stack of DVDs Netflix would rent by mail. (Netflix photo)

The business grew rapidly; within a year there were 100,000 subscribers, including Colin Powell. In early 2000 Hastings and Randolph offered to sell Netflix to Blockbuster for $50 million. Blockbuster turned them down.

By 2003 Netflix had 1 million subscribers, and two years later the service was reportedly renting 1 million movies a day. Blockbuster, meanwhile, was on a losing streak, culminating in the chain’s 2010 bankruptcy.

In the meantime, DVD’s fortunes kept rising. In October 2000 Sony’s highly anticipated new PlayStation 2 video game console came to market with DVD playback. By December of that year DVD players were in 13 million homes, and it was reported that consumers during the year had bought 182 million discs.

In June 2001 holdout George Lucas announced that Star Wars: Episode I — The Phantom Menace would appear on DVD in October, the first “Star Wars” film to be available on the format.

In October 2001 MCA/Universal announced first-week sales of 25 million units of The Mummy Returns. A few days later, Disney said the DVD debut of Snow White and the Seven Dwarfs was the first DVD title to sell a million copies in a single day. That kicked off a running sales-record battle, with the trade press inundated with press release after press release touting a new victory of one sort or another.

By December 2001 the industry was preparing for a very giddy, gleeful Christmas. The latest stats showed DVD players were now in 25 million U.S. households, with total discs sales for the year at 364 million.

In April 2002 DVD player shipments hit 30 million. Two months later, Netflix — the upstart rental organization that offered DVD rentals by mail — opened 10 distribution centers, paving the way for next-day delivery. Also in June, the Motion Picture Association of America reported that DVD accounted for 40% of the studios’ total worldwide revenue.

In August 2002 The New York Times dubbed DVD “the most successful home entertainment device in history … a true pop-culture phenomenon.” A month later, Disney’s Monsters, Inc. became the first major animated film to sell more copies on DVD (7 million) than VHS (4 million) its first week in stores.

In October 2002 DEG: The Digital Entertainment Group (originally, the DVD Video Group) reported that 153 million DVDs had been shipped to retailers in the third quarter, twice as many as in the third quarter of the previous year. Since launch, the DEG reported, more than 1.1 billion DVDs had been shipped to retailers — 425 million, or nearly 40%, in the first nine months of 2002.

As holiday sales began to heat up, DVD was again front and center — both at the sales counter and as a press-release topic from the studios. In November, what was then Columbia TriStar Home Entertainment (now Sony Pictures Home Entertainment) said Spider-Man set a new sales record, shipping 26 million units in North America, 20 million of them DVD.

In September 2003 the studios began to assemble a variety of multi-disc boxed sets aimed at the gift market and diehard DVD fans looking to enhance their collections. In October, analyst Tom Adams of Adams Media Research revised buy rates upward to 15.5 DVD units per household per year, citing “phenomenal” sellthrough growth in the first half of the year. By December 2003 50 million U.S. households had at least one DVD player. The following month the DEG reported that consumers had spent $11.6 billion that year on buying DVDs and another $4.5 billion on renting discs.

Follow us on Instagram

Decline

This success could not have been achieved without retail support. As soon as DVD began to take off, the big mass merchants rallied behind it, using DVD to drive store traffic even if it meant selling discs at loss-leader prices.

Rental dealers, even the mighty Blockbuster chain, were slow to migrate to DVD, and by the time they did the business was firmly in the hands of the big chains. There was no way they could compete on price.

Netflix wasn’t the only company to delve into DVD rental. McDonald’s began renting DVDs in vending machines and in 2005 sold half the company, known as Redbox for its bright-red kiosks, to Coinstar, whose primary business was coin and bill-changing machines. Kiosks were placed outside high-traffic discount stores, supermarkets and drug stores. Redbox flourished — despite litigation from studios that felt the cheap dollar rentals cannibalized DVD sales. In 2016 Redbox was sold to Apollo Global Management and became a standalone company.

Consumer spending on DVD purchases hit $15.5 billion in 2004, up 33% from the prior year. But in the fourth quarter of that year softer-than-expected sales on certain new mega-hit theatricals suggested to some that the gravy train might be running out of steam.

Bob Chapek, then president of the Walt Disney Co.’s home video distribution arm, Buena Vista Home Entertainment, told Home Media Magazine at the time, “It’s an indicator that things might be slowing down.
I expect that next year we’re going to see a significant fall in the buy rate per household. Maybe the 30th percentile will buy as much as the 20th, but with the 70th percentile you start to hit the laggards.”

Even so, in February 2005 DreamWorks’ Shark Tale sets a new record for a February sellthrough release, selling 6 million units its first week in stores. In April the DEG announced DVD shipments of more than 400 million units in the first quarter of the year, up 21% from the first quarter of 2004.

VideoScan data showed sales to consumers rose 20.5% in the same period.

Then came a dismal 2005 holiday season, with title after title missing its sales target. The press releases touting new sales records abruptly stopped. And when the year-end numbers were tallied, they showed DVD sales with a mere 5% gain over 2004 — a far cry from the double-digit increases to which the industry had grown accustomed.

Observers attributed the slowdown in DVD sales to a maturing market, as well as the emergence of high-definition TVs. But worry not, studio executives told fretful retailers: A next-generation, high-definition disc format is just months away from launch.

The only problem was, there were two of them.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Next-Generation Blues

Work on a high-definition disc format began even as DVD was in the early stages of its meteoric rise in popularity. The best minds of the consumer electronics industry knew that as clear and crisp as DVDs looked on regular TVs, they were not meant for the new breed of high-definition TVs poised to take over the market, and it was imperative to develop a next-generation optical disc that could present viewers with true 1080p HD.

Rival high-definition, next-generation formats at the January 2008 CES. (Media Play News archive photo)

After years of lab development, Sony Corp. in 2000 unveiled a pair of projects — one in partnership with Pioneer — that employed blue-laser technology, with the promise of far greater capacity than DVD. The first prototypes were displayed in 2000, and two years later the Blu-ray Disc rewritable format was officially unveiled. The nine founding members of the format — Hitachi, LG Electronics, Matsushita Electric Industrial (which later became Panasonic), Pioneer, Royal Philips Electronics, Samsung, Sharp, Sony and Thomson Multimedia (which later became Technicolor) — began releasing specifications, and the first consumer Blu-ray Disc home recording device, the Sony BDZ-S77, was released in Japan in April 2003 with a price tag of $3,800. It was touted as a means of recording high-definition broadcasts; no studio content had yet been released on the new disc.

But the DVD Forum, led by Toshiba, had other ideas. Also in 2003, the consortium behind the original DVD launch adopted specs for a high-definition successor that they called HD DVD. It employed red-laser technology, the same as DVD, but on a higher-density disc.

The battle lines were drawn around a fundamental philosophical difference. The HD DVD camp wanted to ramp things up as quickly as possible, with a format that was evolutionary in nature: It used the same red-laser technology as standard DVD, but on a dual-layer disc with three times the capacity of a standard DVD — ample room for a high-definition picture, better sound and more extras. It was also an open format that could be brought to market quickly to start meeting the needs of consumers looking for high-def content on disc.

Blu-ray Disc, on the other hand, was a revolutionary new product that employed blue-laser technology and offered even greater capacity — six times that of a standard DVD. It wasn’t seen as an interim step, but as a “format of the future” more than capable of accommodating expanded interactivity and associated broadband services — a promise that certainly has come to pass.

Warren Lieberfarb, the father of DVD, was among Blu-ray’s harshest critics, calling it “vaporware” and questioning whether it would ever be brought to market.

On the content side, Ben Feingold, who at the time was president of what is now Sony Pictures Home Entertainment, pushed for studios to rally behind Blu-ray Disc several years before they ultimately did. In a presentation to the Sony board, he recalls, “I said, ‘We need to accelerate the next-generation format,’ and their response was, ‘We’re doing so well with DVD, why would we go to a new format?’ I told them I was noticing a very sharp drop in early adopter purchases, and I was kind of alarmed at the decay.
I told the board we have to obsolesce to keep ourselves in the game, like the tech companies are always doing, with a better product. Sony agreed, but everyone else said we don’t want to do that.”

Blu-ray Disc ultimately was launched in the United States in June 2006, at the same time that HD DVD appeared on the scene. What followed was a format war every bit as bruising and destructive as critics had feared. Studios lined up on either side of the aisle, with Universal, Paramount and Warner Bros. supporting HD DVD, and Sony, Disney and Fox rallying behind Blu-ray Disc.

Consumers, caught in the middle, were understandably confused — and reacted by not buying either format. Fueling their hesitancy was the emergence of digital distribution options. Consumers had become accustomed to buying their music over the internet — so why not movies?
Netflix thought the same; in 2007, just one year after the launch of Blu-ray and HD DVD, the company augmented its disc-by-mail rental business by offering its subscribers the chance to “stream” movies and TV shows over the internet.

The format war, Feingold said, “was very damaging — it delayed everything by about 18 months.”

Why wasn’t there a compromise, as there had been with DVD?

“There were two issues,” Feingold said. “There were competing hardware companies that didn’t want to agree on a standard — led by Toshiba on one side and Sony on the other — because they were fighting over patents, royalties and pride. And the second issue was that studios were being induced through compensation to align with one side or the other. I made a bunch of deals with a number of companies to support the Blu-ray format.”

Ironically, 2006 turned out to be a banner year for physical media. Consumers spent more on disc sales and rentals than they ever had before — or since. Total disc sales generated $16.6 billion in consumer spending, while disc rentals brought in another $7.5 billion.

Shortly after the two rival high-def formats came on the market, Warner Bros. and Paramount said they would support both formats. At the January 2007 CES in Las Vegas, the Warner Home Video team, in a nod toward appeasement, debuted a two-sided disc with HD DVD on one side and Blu-ray on the other. Even the packaging was half blue, half red, the colors adopted by the competing formats.

Warner Home Video at the January 2007 CES debuted a two-sided disc with HD DVD on one side and Blu-ray Disc on the other, held up here by Warner executives Ron Sanders (left), Steve Nickerson and Kevin Tsujihara. (Media Play News archive photo)

A big boost to Blu-ray came in late 2006 when Sony put a Blu-ray Disc drive in its new PlayStation 3.

In March 2007 Sony Pictures Home Entertainment’s Casino Royale was the first Blu-ray Disc to ship more than 100,000 units. That was also the same month that Blu-ray sales topped 1 million.

By this time, Blu-ray was already outselling HD DVD, and in June 2007 Blockbuster announced it would carry only Blu-ray. Disney gave Blu-ray Disc a significant push with extravagant media events for new Blu-ray releases such as the first two “Pirates of the Caribbean” movies in May 2007 and, that summer, an educational mall tour.

Follow us on Instagram

The War Is Over

In January 2008 Warner announced it would support only Blu-ray after May of that year. Walmart and Netflix soon announced the companies would carry only Blu-ray. And on February 19, 2008, the high-definition format war officially ended, with Toshiba announcing it would no longer market HD DVD. Both Universal and Paramount, which several months before had gone all in on HD DVD, quickly announced their support for Blu-ray Disc.

By the end of 2008 there were more than 10.7 million Blu-ray players in the market, outpacing the adoption of DVD (5.4 million players by the end of its third year), according to the Blu-ray Disc Association. In October 2008 Walt Disney Studios Home Entertainment introduced the industry’s first Blu-ray combo pack, Sleeping Beauty, which sought to ease the transition from DVD to Blu-ray Disc by offering consumers the chance to get both formats in one package. Wall-E followed in November and High School Musical 3 came in February 2009. They were so well-received that the combo pack soon became an industry standard.

The January 2009 CES saw huge electronics industry support for the format, with Panasonic announcing the world’s first portable Blu-ray player, and Sharp unveiling HDTVs with built-in Blu-ray drives. By mid-2009 there were more than 2,500 Blu-ray releases in the market, and by the end of the year home entertainment leaders noted that despite the global economic meltdown Blu-ray Disc sales were up a whopping 70% from the prior year. Also in late 2009, former Blu-ray rival Toshiba announced it would begin selling Blu-ray players and laptops with Blu-ray drives.

The creative community also rallied behind Blu-ray. Director James Cameron said, “I wish all my movies could be seen by everyone at home in Blu-ray. It’s the image quality, it’s the color, it’s the quality control — it’s everything.”

James Cameron (third from left) and Jon Landau (far right) with DEG officers David Bishop, Craig Kornblau, Mike Dunn and Ron Sanders at Blu-Con 2010. (Media Play News archive photo)

A novel tangent briefly captivated the consumer electronics press, if not the consumer: 3D Blu-ray. CES 2010 was something of a coming out party for the throwback to the 1950s theatrical craze, with a flurry of 3D Blu-ray hardware announcements and commitments by DreamWorks Animation, Walt Disney Studios Home Entertainment, and Sony Pictures Home Entertainment to release 1080p 3D discs to owners of 3DTVs utilizing active-shutter glasses.

The glasses, however, hastened the format’s downfall. They were expensive, easily broken or misplaced, had to be recharged, and proprietary to each manufacturer. HDTVs with passive 3D, using glasses with polarized lenses of the same type employed by theatrical 3D, didn’t catch on either. And with limited content suitable for 3D presentation, the format experienced a rather quick decline.

Regular Blu-ray Disc, meanwhile, continued to gain ground, although not at the level of DVD. Consumers were reluctant to ditch their DVD collections and repurchase their libraries. Even if the DVD picture quality wasn’t quite as good, many considered it good enough. There was also a new kid on the block — disc-based video games — that siphoned away the young male consumers who had played a key role in DVD’s initial success.

“When we launched DVD there was no game platform other than cartridge,” Feingold said. “VHS sellthrough was pretty much limited to family-oriented product, with practically no ‘R’-rated product. DVD changed that, and guys started buying movies. Then the game platforms came, and guys started playing video games instead of buying movies.”

In March 2010 Redbox announced it would begin offering Blu-ray rentals at its kiosks in the summer. A month later, Avatar became the best-selling Blu-ray Disc ever, with initial sales of more than 1.5 million copies.

Blu-ray Disc sales up shot up another 68% in 2010, contributing $1.8 billion in revenue, with 11.25 million Blu-ray devices sold for the year, bringing the total U.S. installed base to more than 27 million households.

The Blu-ray Disc tide continued to swell, even as Netflix was growing its streaming service and studios began offering movies for sale over the internet, as downloads, through iTunes and other services.

But then history repeated itself: A new, even better TV came on the market, and, again, physical media didn’t have a seat at the table.

The first 4K TVs, billed as “ultra high-definition,” or UHD, were previewed at the January 2012 CES. They boasted more than 8 million pixels, compared to about 2 million pixels in a 1080p HDTV.

But as the Los Angeles Times opined at the time, “with so many consumers more than happy with 1080p (and 720p, a less-intensive level of high-definition), why bother?”

What’s more, the paper noted, “there’s nothing to watch in that format.”

It wasn’t until CES 2016 that a premium version of the disc format — 4K Ultra HD, with HDR, offering greater contrast and deeper, more life-like colors — was introduced, this time with full support from both consumer electronics manufacturers and the studios.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

A Third Generation of Disc

The first 4K Ultra HD Blu-rays went on sale in March 2016 and broke all sales expectations, even though there were just two players on the market, from Panasonic and Samsung. By then, more than 84 million U.S. households had at least one regular Blu-ray Disc player, and consumers had bought some 750 million Blu-ray Discs.

4K Ultra HD Blu-ray backers at CES 2016: 20th Century Fox’s Mike Dunn, Sony Pictures’ Man Jit Singh, Warner’s Ron Sanders, and Universal Pictures’ Michael Bonner. (Media Play News archive photo)

In October 2016 Eddie Cunningham, then-president of Universal Pictures Home Entertainment, said 4K Ultra HD Blu-ray “represents a transformative time in home entertainment,” delivering “an unprecedented viewing experience which we expect in turn will cement the format as the best way to watch movies at home.”

In January 2022 the Consumer Technology Association (CTA) reported that 4K Ultra HD TV penetration grew from 36% of U.S. households in 2020 to 52% in 2021, while DEG: The Digital Entertainment Group in February 2022 reported that sales of 4K Ultra HD Blu-ray Discs rose 6% in the fourth quarter of 2021 — the latest in a series of steady sales gains.

Follow us on Instagram

A Proud Legacy

With 4K movies and TV shows readily available from Netflix and other streaming services, 4K Ultra HD Blu-ray has yet to expand beyond a niche market. And with streaming now accounting for nearly 80% of all consumer home entertainment spending, it is doubtful that it ever will.

Physical media remains a viable business, but its popularity has been on a downward slide for the past decade and a half. Consumer spending is a fraction of what it was in those heady days of 2006 when consumers spent more than $24 billion on buying and renting discs — at the time, mostly DVDs.

The following year, disc sales and rentals posted their first-ever decline, and as digital distribution and, in particular, streaming, took hold, the annual drop in consumer spending on physical media hit double digits.

Most recently, according to DEG estimates, total disc sales generated just $1.97 billion, while rentals brought in $822.7 million.

The total, $2.8 billion, is less than 12% of the 2006 tally.

And yet the disc’s legacy remains. As head of Studio Distribution Services (SDS), a joint venture between Universal Pictures Home Entertainment and Warner Bros. Home Entertainment to distribute DVDs, Blu-ray Discs and 4K Ultra HDs in North America, Cunningham is one of the few Hollywood executives who are still focused on the disc.

He’s quick to underscore DVD’s importance in the digital entertainment food chain — and maintains the disc business, small as it has become, still has years of life ahead.

“In many ways, the DVD was the beginning of the digital revolution for our industry,” he said. “While packaged media no longer occupies a lofty position near the pinnacle of the media business, it is still a significant category. Many consumers and collectors are still remarkably committed to physical purchasing, and the retail industry remains steadfast in their support for it.

“The Blu-ray Disc and 4K Ultra HD formats are still the best way to enjoy the highest-quality, uninterrupted, picture and sound in the home. And as long as retail stays engaged, we will have a good business for many years to come.”

DEG: The Digital Entertainment Group CES 2020 Event

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

Streaming, Consolidation Dominate Top 10 Home Entertainment Stories of 2019

Streaming and consolidation dominated the home entertainment headlines in 2019, with the Walt Disney Co. leading the way. Netflix got some subscription streaming competition, and free streaming through advertising, or AVOD, emerged as a new star. It was also a year that saw the home entertainment industry lose a venerable studio player that had helped birth the business more than 40 years prior — 20th Century Fox Home Entertainment. Meanwhile, physical disc sales and rentals continued a structural decline, while electronic sellthrough, the digital sale of content, was a solid performer in the transactional business.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Here are the top 10 home entertainment stories of 2019, as chosen by Media Play News staff:

  1. Disney Acquires Fox: Disney closed its $71.3 billion purchase of 20th Century Fox Film Corp. The deal included myriad Fox properties, including Fox’s interest in Hulu and 20th Century Fox Home Entertainment, which helped birth the home video industry in 1979. The merger also saw the departure of several executives, including Mike Dunn and James Finn at Fox and Janice Marinelli, president of global content sales & distribution for Disney’s direct-to-consumer & international unit.
  2. Disney + Bows: Calling it the company’s most-important consumer product ever, Disney CEO Bob Iger announced the launch of Disney+, a standalone SVOD service aimed at taking on segment pioneer Netflix and Amazon Prime Video. The service launched Nov. 12 at $6.99 a month offering a trove of catalog movies, including its venerable animated classics and Marvel hits, and catalog TV shows, in addition to original “Star Wars” series “The Mandalorian,” an instant fan hit from director Jon Favreau. Disney also unveiled the bundle offer of ESPN+, Hulu (now controlled by Disney) and Disney+ at $12.99 a month.
  3. AVOD in the Spotlight: Advertising-supported video-on-demand, or AVOD, emerged from the SVOD shadows, gaining traction among subscription-weary consumers looking for free content. Mega-media companies Comcast, Viacom (through the acquisition of Pluto TV) and Amazon (through IMDb) acknowledged the growing market. Reports surfaced that Comcast is eyeing acquiring AVOD player Xumo TV to go along with 2020’s Peacock streaming service debut.
  4. Apple TV+ Launches: Apple Nov. 1 launched a standalone branded subscription streaming service at $4.99 a month, Apple TV+, in more than 100 countries and regions through the Apple TV app. Original content included Golden Globe-nominated “The Morning Show,” “See,” “For All Mankind” and “Dickinson.”
  5. Electronic Sellthrough Continues to Grow: Outside of subscription streaming video, the only home entertainment category to post an increase in consumer spending during much of 2019 was electronic sellthrough, the digital purchase of movies and other content. The segment generated an estimated $1.9 billion in consumer spending through the third quarter of 2019, up 6.7% from the previous-year period, according to DEG: The Digital Entertainment Group.
  6. Redbox Gets Into Content, Out of Disney Movie Code Sales: Redbox launched Redbox Entertainment, a new label to acquire and produce content exclusive for Redbox’s 50 million kiosk consumers. The company tapped Broad Green Pictures and Lionsgate veteran Marc Danon to head content acquisition. The kiosk vendor also settled 2-year-old litigation with Disney, agreeing not to sell the studio’s digital movie codes.
  7. Filmmakers Tweak UHD: The UHD Alliance, along with leaders in consumer electronics, Hollywood studios and members of the filmmaking community, announced collaboration on a new viewing mode for watching movies and episodic TV called “Filmmaker Mode,” designed to reproduce the content in the way the creator intended.
  8. Netflix Takes a U.S. Sub Hit: Disaster struck Wall Street favorite Netflix after the streaming behemoth posted a 126,000 domestic subscriber loss in Q2 after projecting growth of 300,000 subs. It was Netflix’s first domestic sub loss since 2011 when co-founder/CEO Reed Hastings announced the short-lived separation of the company’s DVD rental business from its subscription streaming business. Regardless, stock plummet nearly 20% (or $26 billion) in value after the disappointing numbers.
  9. Changes Afoot at Vudu: Vudu — rumored to be up for sale by owner Walmart, which executives told The Information considers it a non-core business — quietly downsized support for its Vudu To Go/In-Home Disc to Digital app, effective Jan. 1, 2020. The digital movie transactional service will still allow users to convert DVD and Blu-ray movies for digital access by scanning UPC codes on the Vudu app via select portable devices such as a mobile phone and tablet.
  10. Netflix Hails Discs: Taking its eye off its dominant streaming business for a moment, Netflix acknowledged a milestone: Delivery of 5 billion discs since the launch of its legacy disc-by-mail rental service more than two decades ago. The disc rental: Paramount’s Rocketman.

Oh, What a Year — With Transformational Changes, Home Entertainment in 2019 Got Smaller — and Bigger

The phrase “transformational change” has been used so much it’s become a cliché — and yet there really is no better way to describe what happened in not just home entertainment, but also the entertainment industry overall, in 2019.

The completion in March of the Walt Disney Co.’s purchase of 20th Century Fox saw the number of major studios drop to five from six. Some of the home entertainment sector’s most familiar faces were suddenly gone, including Mike Dunn, the longtime leader of Fox’s home entertainment unit, and Danny Kaye, the visionary behind Fox Innovation Labs. Later, in the summer, Janice Marinelli, Disney’s home entertainment chief, also exited in a surprise move, given that she had opened an office on the Fox studio lot and was reportedly screening staffers.

In November, two new streaming giants emerged to take on longtime leader Netflix, Apple TV+ and, most significantly, Disney+.

Meanwhile, a new flavor of streaming gathered momentum: free to consumers, paid for by advertisers. Among the heavyweights jumping into what’s known as “AVOD” are ViacomCBS, with its Pluto TV acquisition, and Comcast Corp., which in December was reported to be in advanced talks to acquire Xumo TV, which boasts more than 140 digital channels of programming across 12 genres, including sports, news, kids and family entertainment.

The overall impact of all these developments on home entertainment: It got smaller — and bigger.

Smaller, because the traditional transactional business model that has defined home entertainment since its birth more than 40 years ago has increasingly come under fire, with subscription streaming, in particular, gobbling up more and more consumer attention — and dollars — that previously would have gone toward buying or renting movies, either on disc or through digital retailers.

But also bigger, because streaming, in its various incarnations, is now widely accepted as being part of home entertainment — which is now broadly defined as people watching what they want, on demand. There’s even a new name for all of this — direct-to-consumer — which was first adopted by Disney and is now used interchangeably with “home entertainment.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Bob Buchi, president of Paramount Home Entertainment, says 2019 “was the year of transition.”

“From media mergers and changing consumer viewing habits to the explosion of streaming services, the landscape has shifted dramatically,” he says.

The Nov. 1 launch of Apple TV+ marked the tech giant’s entry into the content business, with nine original series. One of them, “The Morning Show,” picked up several Golden Globe nominations from the Hollywood Foreign Press Association (HFPA), a first for a new streaming service.

Less than two weeks later, Disney launched its much-ballyhooed Disney+, with a full menu of in-demand movies and series — including the “Star Wars” spinoff “The Mandalorian.” Disney said more than 10 million people signed up for the service in the first 24 hours. By the end of November, the service had 24 million subscribers, according to estimates from Wall Street firm Cowen & Co. (Netflix as of October had more than 60 million domestic subs.)

“It’s an exciting time and we believe we have a unique and significant role to play,” Ricky Strauss, president of content and marketing for Disney+, told Media Play News on the eve of the service’s launch. “Disney+ will compete based on the unparalleled strength of our brands, the quality of our intellectual property, and expertise in high-quality video streaming.”

And yet industry insiders insist that despite streaming’s growth, there’s room for transactional — largely because new theatrical films, particularly the blockbusters, aren’t available on SVOD services. This distinction has prompted FandangoNow, one of the big digital retailers, to boldly proclaim on its home page, “New releases not on Netflix, Amazon Prime or Hulu subscriptions.”

“Because we’re the first point of entry for fans to see movies in theaters, and first at home, we’ve seen a significant growth among consumers who are excited to own movies as soon as they’re available digitally,” says Cameron Douglas, head of FandangoNow. “Fans looking for high-quality content right out of theaters, including 4K HDR movies, don’t have to wait until they arrive later on subscription services, and innovative deals like rental binge bundles and the availability on new platforms keep them coming back to transactional digital services like our own.”

“New movie releases continue to be sought out by consumers during the first window in the home amidst the frenzied buzz around new streaming services,” adds Michael Bonner, EVP of digital distribution for Universal Pictures Home Entertainment. “While there’s no denying the landscape is becoming more competitive, this business has successfully co-existed with abundant availability of non-transactional content for a long time and we expect it to continue to do so.”

“There is space — and demand — for both transactional content as well as streaming — just as there is consumer interest in both digital and physical,” says Amy Jo Smith, president and CEO of trade association DEG: The Digital Entertainment Group.

Beyond new releases, streamers have a limited selection of older films and TV shows, particularly with their increased focus on original content.

“For many consumers, their streaming options are good enough,” says Mark Fisher, president and CEO of home entertainment trade association the Entertainment Merchants Association (EMA). “But just like the days when the first video rental stores opened and made it easy for the consumer to watch anything they wanted to watch when they wanted to watch it, online VOD retailers offer that same opportunity to the consumer. I know that every time I see a montage of old movie clips, I’m driven to watch titles that aren’t new releases — and these are titles not readily (or easily) found on the streaming services.”

Sales of digital movies, in particular, were a bright spot, with consumer spending up nearly 7% in the first nine months of 2019, according to trade association DEG: The Digital Entertainment Group.

“We’ve continued to see growth in EST (electronic sellthrough) — both in our new releases and in our catalog,” says Jason Spivak, EVP of distribution, for Sony Pictures Home Entertainment. “Certainly the enhanced consumer experience enabled by Movies Anywhere is part of that, as is increasing consumer connectivity in their homes. EST continues to gain prominence in our marketing planning, release data scheduling, and retailer partnerships.”

Ron Schwartz, president of Lionsgate Home Entertainment, says Lionsgate EST revenue grew 30% this year, “four to five times faster than the overall industry. With increased collaboration between studios and retailers, and more offerings such as dynamic bundling, customers are starting to build their lockers up to 10-plus titles. Recent data shows that once a customer gets to between 10 and 12 titles in their locker, their EST purchasing behavior doubles.”

In addition to selling movies, digital retailers also offer them for a la carte streaming, the digital equivalent of a physical movie rental. Redbox remains the only retailer to offer both digital and physical rentals, the former through an e-commerce site and the latter, through a network of more than 40,000 kiosks situated outside (or inside) large retailers like Walmart, convenience and drug stores, and other retailers.

“Redbox owns the transactional space with more transactions across physical and digital formats — for rental and purchase — than any other transactional provider,” says Redbox CEO Galen Smith.

In 2019, he said, Redbox expanded its offering of 4K Ultra HD discs into new markets, and stepped up promotions as well, with its Back to the Movies campaign and a joint Dinner & A Movie offering with meal delivery service DoorDash.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

In addition, Redbox Entertainment, a new content acquisition and production division, has further transformed Redbox into a multi-channel content provider and programmer. Launched in October, the new division is headed by Marc Danon, who spent eights at Lionsgate, most recently as SVP of acquisitions and business development.

Disc sales in 2019 continued to decline in the low double digits, with DEG reporting that in the first nine months of the year, combined 4K Ultra HD, Blu-ray Disc, and DVD revenues were down 18.5% to an estimated $2.3 billion — exactly half what they amounted to five years ago, in 2014.

But studios continued to support the disc. And while a trend among smaller titles is to release them only on DVD and digital, bypassing Blu-ray Disc, major new releases are still getting significant marketing campaigns behind them, particularly for the 4K Ultra HD editions. The UHD disc also made headlines last August when the UHD Alliance, along with leaders in consumer electronics, the Hollywood studios and members of the filmmaking community, announced collaboration on a new viewing mode for watching movies called “Filmmaker Mode,” designed to reproduce the content in the way the creator intended. Filmmaker Mode, bowing next year, will allow viewers to enjoy a more cinematic experience on their UHD TVs when watching movies by disabling all post-processing (e.g. motion smoothing, etc.) so the movie or television show is displayed as it was intended by the filmmaker, preserving the correct aspect ratios, colors and frame rates.

“For the time being, 4K UHD is still the gold standard for at-home content,” says Jim Wuthrich, president of Warner Bros. Home Entertainment & Games. “With hardware costs dropping and television functionality such as Filmmaker Mode being made available next year, there is still a great value proposition in owning content in 4K UHD, both physically and digitally, as is still represents the best home-viewing experience.”

Follow us on Instagram

“As evidenced by the exceptional growth of 4K UHD to date, it is clear that there is a sizable appetite for premium high-definition products, and that format plays a meaningful role in boosting retail traffic,” says Eddie Cunningham, president of Universal Pictures Home Entertainment.

Retail partnerships are key, Cunningham adds. “Given that physical and digital transactional consumption rates are remaining steady year over year and that disc purchases are making up more than half of that consumption, there’s no question that movie buyers continue to be vitally important to retail,” he says. “At no other time in our industry has it been more critical to ensure that we work together to retain the loyalty of movie consumers, creating urgency for our products and delivering the utmost value, quality, accessibility and convenience possible.”

 

Uncertainty, and Another Key Departure, at Fox Home Entertainment

Five months after the Walt Disney Co. closed its acquisition of 20th Century Fox, the fabled film studio’s home entertainment division lumbers on in a protracted state of uncertainty.

New releases are marketed and promoted, often with publicity events to stir up consumer interest. Just last week, the DVD release of FX’s Mayans M.C.: The Complete First Season was celebrated with a party at Heroes Motors in Los Angeles.

And yet it’s hardly business as usual. No one seems to have any idea of how long their jobs will last — or whether they will be offered employment at Disney. Questions, too, remain about the fate of the division. Will it continue to operate as a standalone entity within the Walt Disney Co., or will it be integrated into Disney’s own home entertainment unit, which recently changed its name to Disney Direct-to-Consumer & International.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

“No one knows anything,” said one staffer who asked not to be identified. “There have been no discussions, no contracts – we’re all just doing our jobs without knowing for how long we’re going to have jobs.”

Mike Dunn

Mike Dunn, for years the top home entertainment executive at 20th Century Fox, was among a handful of high-ranking studio executives to leave the studio on March 21, a day after the acquisition closed.

A short time later, Janice Marinelli, head of home entertainment at Disney, set up an office at Fox, reportedly to acquaint herself with the studio’s home entertainment team and see how they operate.

In July, veteran division publicist James Finn, who recently had become co-head of marketing, quietly announced his departure in an email to friends and colleagues. “For nearly 20 years I’ve called Fox my home,” he wrote. “Thank you to my colleagues, my mentors, my family, my friends and my team for making it so much fun.”

Emails sent to his Fox account receive this reply: “James Finn is no longer with Twentieth Century Fox. For immediate assistance please contact Keith Feldman (keith.feldman@fox.com). Thank you.”

Feldman had been Dunn’s top lieutenant, appointed as president of worldwide home entertainment in February 2017 in the wake of his boss’s promotion to president of product strategy and consumer business development.

Feldman did not respond to emails.

James Finn

Finn’s departure was followed on  July 16 by the sudden, and unexpected, departure of Marinelli, a 34-year Disney veteran.

Marinelli had been vetting 20th Century Fox Home Entertainment team members, insiders told Media Play News, and her exit only intensified their confusion over their fate.

A Disney publicist subsequently told Media Play News that Julia Howe, who had been co-head of marketing, with Finn, for 20th Century Fox Home Entertainment, was now sole head of marketing.

Two weeks later, it was revealed that Howe, too, would be leaving, with a departure date set for some time in November.

Howe had been considered one of Fox’s rising stars and one of the home entertainment sector’s top marketers.

Howe did not return calls or emails.

Julia Howe

Word of Howe’s departure came just one day after Disney CEO Bob Iger on a quarterly earnings call expressed surprise, and dismay, at a fiscal downturn at Fox — specifically, a third-quarter operating loss of $170 million, the opposite of a projected $180 million operating profit.

“One of the biggest issues we faced in the quarter was the performance of the Fox film business,” Iger said on the call. “It was well below what it had been and well below what we thought it would be when we did the acquisition.”

This week, Media Play News received a press release from 20th Century Fox Home Entertainment for the Oct. 8 release, on DVD and Blu-ray Disc, of Vikings: Season 5 Vol. 2.

The boilerplate description of the studio has no mention of the Walt Disney Co. It reads exactly as it did before the acquisition: “Twentieth Century Fox Home Entertainment, LLC (TCFHE) is a recognized global industry leader and a subsidiary of Twentieth Century Fox Film.”

DEG Announces Board for 2019-20

DEG: The Digital Entertainment Group on Aug. 9 announced its incoming board of directors at the start of its 23rd year as one of the home entertainment industry’s leading trade associations.

DEG’s voting member companies elected the new board to serve for the 2019-20 fiscal year (Aug. 1 – July 31). New board members include Pedro Gutierrez of Microsoft Corp., Cheryl Goodman of Sony Electronics and Erol Kalafat of Amazon Studios.

Amazon Studios is a new member company represented on the
DEG board for the first time.

The DEG also has added two additional companies to its membership: Row8, a transactional digital movie service that allows viewers to stop a movie they don’t like and choose a new one at no additional charge, and Snap Inc., parent company of social networking app Snapchat.

The Officers of the DEG board were elected to a two-year term in 2018 and will continue to serve through July 2020. Officers include Chair Matt Strauss of Comcast Cable; Vice Chair Sofia Chang of WarnerMedia Distribution (HBO); CFO Bob Buchi of Paramount Home Entertainment; Secretary Jim Wuthrich of Warner Bros. Worldwide Home Entertainment & Games, and Chair Emeritus Mike Dunn, formerly of 20th Century Fox Home Entertainment.

“At a time when our industry is rapidly changing, the board of directors strives to produce deliverables that meet the needs of the industry at this dynamic time, such as DEG’s D2C Alliance, formed at the start of the year,” said Amy Jo Smith, president and CEO of the DEG.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

High-Definition Redefined

A little more than a year after the grand opening of its new flagship store in the Westfield Century City mall, Video and Audio Center on April 17 held another showcase event. More than 200 invited guests at “High Definition Redefined” got the chance to preview Samsung’s latest 8K TVs, ranging in size from 65 inches to 98 inches. The new TV sets have built-in Artificial Intelligence (AI) processing to upconvert content to 8K. And that’s a critical factor, says Tom Campbell, Video and Audio Center corporate director and chief technologist. “Content is king,” he says. “Content drives our business.” Video and Audio Center carries a limited selection of 4K Ultra HD Blu-ray discs, currently the optimum way to view content in the home.

20th Century Fox Home Entertainment: A History of Distinction

With the March 20 closure of Walt Disney Co.’s acquisition of 20th Century Fox, much has been written about the storied history of the celebrated film studio, responsible for nearly a century’s worth of big-screen favorites, from Shirley Temple musicals to Star Wars, from The Sound of Music to Avatar.

And yet hardly anything has been said about the legacy of the studio’s home video division, which in many respects is the birthplace of home entertainment.

“It was the first,” recalls Bill Mechanic, the veteran film producer — and chairman and CEO of Pandemonium Films — who later ran 20th Century Fox studios.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

More than 40 years ago, in 1978, entrepreneur Andre Blay licensed 50 films from 20th Century Fox, including The Sound of Music and Patton, and released them on his own Magnetic Video banner. The occasion marked the first time movies were available for home viewing on demand, a key tenet of home entertainment. The films were sold through an ad in the back of TV Guide.

A year later, Blay — who died last August at the age of 81 — sold Magnetic Video to 20th Century Fox and became the first president and CEO of the industry’s very first studio home video division.

“Fox was the first studio that instead of fighting the videocassette, recognized that it was another market for its product,” says former Warner Home Video president Warren Lieberfarb, the celebrated “father of DVD” who at the time was a marketing executive at Lorimar Productions, the largest independent television production company. “Fox was a pathfinder that saw the videocassette as a new way for people to watch movies at home.”

Beginnings

In those early days of home video, the business was split apart by a format war between Sony’s Betamax and JVC’s Video Home System, or VHS, cassettes. Meanwhile, studios like Fox that were putting movies out on cassette were looking for consumer sales but weren’t counting on enterprising retailers to buy them and then rent them out repeatedly to the public, pocketing the proceeds.

In early 1980, 20th Century Fox launched a pilot program with the Plitt Theater chain directly, and United Artists Theaters through a distributor, to sell videocassettes in select theater lobbies.

But Fox, like the other studios, soon found that consumers didn’t necessarily want to buy movies — particularly when they could rent them for a fraction of the cost. The concept of being able to bring movies home and watch them, at will, was a novelty; consumers wanted to watch as many movies as they could as cheaply as possible, and the burgeoning rental trade allowed them to do precisely that.

The format war was effectively resolved when VHS sales began to mushroom, primarily because VHS was an open format while Betamax was a proprietary one. The proliferation of video rental stores frustrated the studios and they went to court, seeking injunctions against retailers from renting their movies. But the First Sale Doctrine, which holds that a copyright owner’s exclusive right to distribute a particular copy ends with the “first sale” and the new owner can then distribute it as he or she pleases, was ultimately upheld — and the wave of video rental stores grew into a veritable tsunami.

In March 1982, Fox changed the name of its home video enterprise to 20th Century Fox Home Video. By then Blay had been ousted and veteran Fox executive Steve Roberts — who had struck the initial licensing deal with Magnetic — was placed in charge in his capacity as president and CEO of Twentieth Century Fox Telecommunications. Roberts, who died in May 2017 at the age of 78, was a native of Manhattan who began his career in 1958 at Columbia. He later moved to the international sales division of Fox and ultimately became president of two Fox units: president of the International Theaters Division and Licensing Corp., and then president of Fox’s Telecommunications Division and Chairman of Fox Video. In 1996, Roberts was inducted into the Video Hall of Fame.

Roberts in the early 1980s directed Fox’s rapid and early expansion into home video and pay-per-view television. In June 1982, just three months after the Magnetic Video name was dropped, Roberts oversaw the merger between Fox’s video operations and CBS Video Enterprises, resulting in the creation of CBS Fox Video. He served as president of the new venture until January 1983, when the unit got a new president, Larry Hilford, a former Columbia Pictures executive. Hilford was a vocal critic of the rental business, but when it became clear the studios had no say in the matter, he tried to make the best of the situation.

To maximize revenue, Hilford and his fellow studio home video chiefs instituted a steady progression of cassette price hikes, from $60 to $65 to as high as $100.

See a photographic retrospective of 20th Century Fox Home Entertainment

At the same time, they doubled down on their quest to get consumers to buy rather than rent their movies by wooing established retail chains with the promise of direct sales. In July 1985, CBS Fox Video signed the industry’s first direct deals with Toys R Us and Child World, prompting Walt Disney Home Video to immediately announce its own plans to go direct with Toys R Us.

Meanwhile, the video rental business soared throughout the 1980s and early 1990s. At one point there were more than 50,000 separate video rental stores, most of them independents, generating billions of dollars from consumer rentals. Many of them attended the annual Video Software Dealers Association (VSDA) conventions, mostly in Las Vegas each July, where studios spent hundreds of thousands of dollars wining and dining upwards of 15,000 retailers and treating them to elaborate booths on the show floor and even more extravagant parties each night.

Over time, the indies were gobbled up by fast-growing chains such as Erol’s and National, and ultimately an outfit out of Texas called Blockbuster Video would conquer much of the country with its ubiquitous blue-and-yellow motif and “Make It a Blockbuster Night” tagline.

As the 1980s came to an end, studios began to experiment with lower cassette prices on hit movies geared toward families and kids. Banking on the repeat viewing factor, they hoped enough consumers would buy these movies to compensate for the lower unit cost, which drove down revenue from sales to rental dealers.

In June 1991, Fox announced plans to release Home Alone at a suggested list price of $24.98, a new low. Then VP of marketing Bruce Pfander said the studio expected to sell more than 10 million copies.

By then, the CBS-Fox joint venture had taken a back seat and 20th Century Fox began distributing its movies on videocassette under the FoxVideo banner. The newly created division also had a new president, Bob DeLellis, who had joined CBS Fox in 1984 and risen to group VP and, ultimately, in 1991, president.

DeLellis got into the home video business when it was hot — red hot — after selling air-conditioners with another future home video executive, Len White. His bombastic personality and tendency to boast to the trade press whenever a rental title set a new advance-order, or “prebook,” record, seemed to fit in well with the Wild West atmosphere of the video industry in the early 1990s.

“He was doing great numbers,” recalls Peter Balner, who in the 1980s ran Palmer Video, a Union, N.J.-based video chain he sold to West Coast Entertainment Corp. in 1990.

“They were putting out a lot of great movies, and selling the larger ones in record numbers,” he recalls. “We had a great relationship with them.” Indeed, years later, after they had both exited the home video business, Balner and DeLellis would team up on Quintessentials, a retailer of home leisure equipment such as pool tables, shuffleboard courts and jukeboxes.

The Bill Mechanic Era

Three years after DeLellis was named head of FoxVideo, he found someone looking over his shoulder. In 1993 Bill Mechanic was named the first president and COO, and then chairman and CEO, of Fox Filmed Entertainment. Mechanic had spent the previous nine years running home video, among other divisions, for Walt Disney Studios. He aggressively drove Disney into sellthrough, and was the architect of the studio’s celebrated, and successful, moratorium strategy, in which animated classics were available on videocassette for only a short time before they were returned to “the vault.” This sense of urgency led to impressive sales. A high-water mark under Mechanic was set in October 1993 when Aladdin in its first week of availability sold more than 10.6 million videocassettes. By the end of the year, Disney had sold more than 21 million VHS cassettes.

“I came to fix all of Fox,” Mechanic recalls. “It was the weakest of the studios, and I began by setting up multiple creative divisions. I also set out to bring FoxVideo, which I thought was a solid company, but not extraordinary, into what I saw as the modern age — doing not just what everyone else was doing — rental — but taking them into sellthrough.”

Mechanic initially let DeLellis run the home video show. He even promoted him, elevating DeLellis in May 1995 to domestic president of 20th Century Fox Home Entertainment, a newly created distribution entity that would handle sales and inventory management for FoxVideo, three other labels and a pair of new media outfits. The new business unit “leaves us open to any kind of shrinkwrapped product,” DeLellis told Billboard at the time. “We felt the umbrella was necessary to take advantage of studio resources.”

Over time, however, Mechanic made his presence known. “He couldn’t help himself,” said one longtime industry observer. “He had built Disney into the most successful home video studio of all time, and he felt he knew all the tricks.”

Disney had a library of animated classics, which were relatively easy to sell because they were aimed at children, and kids tend to watch the same film or show over and over again. Fox didn’t have nearly as many cartoons as Disney, but Mechanic still saw a sellthrough business just waiting to happen, with the right films at the right price.

“It was the same as when I first came to Disney — nobody wanted to sell cassettes because there was no business,” he recalls. “Video stores didn’t want to sell, and to reach the big retailers like Walmart and Kmart you had to go through third-party wholesalers, known as ‘rackjobbers.’ So it was impossible to build a business until Disney went around the rackjobbers and set up direct distribution deals with retailers, from mass merchants to grocery stores and drug stores.”

Shortly after Mechanic’s arrival, Fox issued the Robin Williams comedy Mrs. Doubtfire at a low sellthrough price — and sales far exceeded expectations at about 10 million units, Mechanic recalls.

“From my perspective, I saw my role as letting other people do the work, but I would help guide them, and kind of get to a shared vision,” he recalls. “I would get them to see what’s possible and not be afraid to fail.”

In August 1995 FoxVideo released the three original “Star Wars” movies and, taking a page from the Disney playbook Mechanic had helped write, announced they would be placed on moratorium four months after their release. “This is not a joke,” DeLellis told Billboard at the time. “Star Wars is going off the market forever.” The other two movies in the trilogy, The Empire Strikes Back and Return of the Jedi, would be removed until the fall of 1997, he said. Sales ultimately topped 30 million copies, exceeding expectations.

“Again, people were saying, ‘You can’t sell a 20-year-old movie,’ and, again, people see only what they see — they don’t see what they can’t see,” Mechanic says. “Everybody’s a doubter, and you can’t let the doubters ruin it. You can’t be afraid of failing.”

In 1996 the FoxVideo release of Independence Day became the industry’s bestselling live-action home video release, with an 18 million-unit sales tally.

Also in 1996, Steve Feldstein took over as the division’s first communications chief. Hired by DeLellis, Feldstein had previously worked under Mechanic at Walt Disney Home Video, and in the words of one observer, “spoke Bill fluently.”

DeLellis left Fox Home Entertainment in May 1997 and Mechanic promoted international chief Jeffrey Yapp, a former Pizza Hut and Gallo Winery marketing executive, to lead the division. Yapp lasted only four months, leaving to head up Hollywood Entertainment Corp., at the time the nation’s No. 2 video rental chain behind Blockbuster.

Mechanic turned to Pat Wyatt, head of Twentieth Century Fox Licensing & Merchandising, and appointed her interim president of Fox Home Entertainment in September 1997.

In the meantime, Mechanic had become even more vocal when DVD was launched in March 1997 with an initial batch of movies from Warner Bros. — and a strategic vision to shift home entertainment from rental to purchase through convenience, affordability and higher quality than VHS. Warner Home Video had a vested interest in the format, and its president at the time, Warren Lieberfarb, is in the history books as “the father of DVD.”

But Mechanic was not so quick to chime in. Under his direction, Fox sat out the DVD launch and instead advocated first digital VHS and then Divx, a “watch it and toss it” DVD variant launched in June 1998, more than a year after DVD, by the Circuit City consumer electronics chain.

Asked by a reporter in 1998 when Fox would start issuing movies on DVD, Mechanic quipped, “Ask Warren Lieberfarb.”

Aimed at perpetuating the rental model, which Mechanic believed would generate more revenue for the studio than a single sale of a low-priced DVD, Divx cost consumers about $4.50 for unlimited viewing for a 48-hour period. After that, consumers could pay more to have the viewing time.

But with consumers enamored by DVD’s promise of being able to buy — and own — first-run movies for as little as $20, Divx died a quick death — and Fox and the handful of other studios that supported it ultimately did join the DVD juggernaut.

“Eventually, Bill got on board for the greater good of Fox and News Corp.,” Feldstein recalls. “[News Corp chief] Rupert [Murdoch] was launching Fox News and he wanted carriage in New York City on Time Warner’s cable system, and Fox entering the DVD business played right into it. Once we were in, Bill’s competitive nature took over and he wanted us to win … so we all went for it, big time.”

Lieberfarb says another factor was that Fox wanted a lower dial position on Time Warner cable systems for its family channel, and sought to curry favor with Warner by supporting DVD.

Big Business

In the meantime, Wyatt’s interim role as division president turned into a permanent one. She ended up running Fox Consumer Products, a combined video and licensing unit, although she eventually had to shed licensing as FoxVideo became all-consuming. In the five years that Wyatt ran the division, DVD sales soared and the industry routinely enjoyed double-digit revenue gains. Studios struck up direct sales deals with big national chains such as Best Buy, Target and Walmart, and consumers switched from renting movies for the night for $2 to buying them for $20 or more.

“There was so much DVD money flooding the town it was insane,” Feldstein says. “Potential DVD revenues were a big factor in the greenlight process, and as DVD became the industry cash cow, home entertainment all of a sudden went from the studios’ stepchild to the studios’ ATM.”

Wyatt also reorganized Fox Home Entertainment and reengineered the division into a mighty distribution enterprise, thanks to a unique partnership with replicator Cinram. She also pioneered the use of data mining to drive margins for the division’s retail business partners. Fox was well ahead of the other studios and began to distribute product from other labels, with the fees more than covering the division’s overhead. Fox handled all backroom functions for its distributed labels, and at the same time forged partnerships with the industry’s leading retailers to manage the entire home entertainment category for them and won multiple Vendor of the Year awards. The system Wyatt built gave Fox a significant edge for years to come.

“Coming from a consumer products background, she embraced not only what the business was, but also what it could be,” Mechanic says. “There’s that shared vision again — I have the push, but that’s about it. It wasn’t me doing it, it was Pat.”

While at Fox, Wyatt also pioneered the TV-on-DVD business by releasing whole seasons of “The X-Files,” “The Simpsons” and “24.” Feldstein noted, “These TV on DVD packs established the concept of binge-watching, which is now a given for anyone watching Netflix, Hulu, Prime or whatever.”

Meanwhile, the videocassette rental business was in a state of decline. Blockbuster and other retailers cut “revenue-sharing” deals with the studios so they could bring in more copies of the hits at a lower price and then share the spoils with the studios on the backend, satisfying more customers.

Mechanic left Fox in June 2000, replaced by Jim Gianopulos, who ran the studio until 2017 and now holds the same post at Paramount Pictures.

In December 2002, Wyatt resigned to start an indie film production and financing company specializing in Japanese-style animated programming produced specifically for home viewing. Wyatt’s departure came as Fox was enjoying one of its biggest holiday sales seasons ever, with huge tallies for marquee titles such as Ice Age and Star Wars: Episode II — Attack of the Clones.

Mike Dunn, who as EVP of domestic marketing and sales was one of Wyatt’s top lieutenants, was tapped as her successor. Dunn had joined FoxVideo in 1987 as manager of marketing and steadily progressed up the ranks. In 1995, he was promoted to SVP of international marketing and in 1998 was named SVP and GM for Fox home video operations in Europe. Two years later, he was promoted to EVP of domestic marketing and sales.

“I think Mike Dunn’s leadership set the company on a trajectory that put it in a leadership position, along with Disney and Warner Bros.,” Lieberfarb recalls.

The Glow of DVD

Dunn had it made those first few years running home video for Fox. DVD was the most successful consumer product launch in history, and consumer spending on home entertainment soared, with the industry posting double-digital sales gains, year after year. Aside from new theatricals, TV on DVD became a significant business, with consumers collecting complete seasons, and even series, of their favorite shows — something that due to space constraints simply hadn’t been feasible in the VHS era.

“DVD became a lifestyle,” Feldstein says. “Owning movies may have been a novelty, but DVD turned it into a way of life — it was an impulse purchase, an any-occasion gift, something you collected and treasured and showed off. Just like people used to collect books to tell guests what kind of person they were, now they were doing the same things with movies.”

Accordingly, studios revved up their marketing as well, and Feldstein and Fox were leading the charge. New DVD releases were heralded with creative stunts and elaborate parties. “There were so many new and catalog movies and we made events out of all of them,” Feldstein recalls. “We did The Simpsons on Ice in Bryant Park, turned the Empire State Building yellow and handed out yellow Santa hats that were all over town. For Cast Away, we did a promotion with the Coast Guard where we ‘rescued’ Tom Hanks’ co-star ‘Wilson,’ the volleyball, at sea via Coast Guard helicopter, as part of their water safety awareness campaign that was all over TV through local and national newscasts. And we held a 75th birthday party for Marilyn Monroe at the Playboy Mansion — her diamond birthday — and had De Beers, the ‘Diamond Is Forever’ people, as a sponsor. We teamed with AMC as a media partner and produced an amazing documentary about her last film. At the mansion, I had a flawless 75-carat rock on my hand and four security guys trailing me all night.”

“We had the good fortune of providing PR services to Fox Home Entertainment for over 17 years, and one thing truly stands out — their creative ability to support their titles,” says veteran Hollywood publicist Dean Bender, head of what is now Bender/Helper Impact. “Led by Bruce Pfander, the marketing group at that time was extremely bold in the creation of collateral materials, trailers and launch events. Because of the huge revenue created by the selling of DVDs in those years, marketing budgets were at their highest and Fox was not shy about supporting their titles.”

A Maturing Business — and the Shift Toward Digital

However, by 2005 sales growth had slowed, as the novelty of DVD began to wear off. With the advent of high-definition TVs studios realized they needed a high-definition disc to compete. Unfortunately, by the spring of 2006 it became apparent that two competing formats would come to market — and in the summer of that year they did, with half the major studios behind Blu-ray Disc, the other half behind HD DVD, and one or two choosing to release movies in both formats.

The crucial fourth quarter of 2006 got off to a good start when 20th Century Fox’s X-Men: The Last Stand and Buena Vista’s The Little Mermaid: Platinum Edition generated $80 million in consumer spending in a single day. And despite the format war, Dunn had high hopes for Blu-ray Disc, the format that Fox was betting on.

“We’re seeing tremendous growth in household penetration for high-definition displays and big-screen televisions,” he said at the time. “Given the popularity of purchasing and collecting movies, the next logical step is making those films available in a packaged-media format.”

As 2006 gave way to 2007, however, it became clear that the home entertainment business was not rebounding. As if the format war wasn’t bad enough, disc sales were further hit by the emergence of digital delivery options. Eager to capitalize on the steady increase in bandwidth capacities, Netflix in 2007 augmented its disc-by-mail rental business with the launch of a subscription streaming service, allowing consumers to watch an unlimited number of movies and TV shows over the Internet for less than $10 a month.

And yet 20th Century Fox Home Entertainment had one of its best years ever, buoyed by a new distribution pact with MGM — headed by former Paramount Home Video president Eric Doctorow. The studio rose to No. 2 in the annual market share sweepstakes, behind Warner Bros. — and, notably, ahead of Walt Disney Studios.

In October 2007, 20th Century Fox became the first studio to include a digital copy of a movie on a physical disc. As The Hollywood Reporter noted at the time, “the special-edition DVD of Live Free or Die Hard will come with an electronic copy of the complete movie that can be played on a computer and select portable video players.” Dunn commented at the time, “This may be the killer app, where you have physical media that allows you to have a big-screen experience and at the same time move the file around to other devices and have a great experience there as well.”

Things looked even better in 2008, when the format war finally ended and studio executives hoped the death of HD DVD would give Blu-ray Disc a chance to really catch on with consumers — particularly with the rapid rise of high-definition TVs.

“Consumers are telling us that Blu-ray is the future of home video entertainment,” Dunn told Home Media Magazine. “If you have an HDTV, you can’t maximize your entertainment experience without Blu-ray.”

Also in 2008, Mary Daily joined Dunn’s team as North America marketing chief. Earlier in her career she had worked in Fox’s London office and helped market the release of Titanic and Braveheart outside the United States.

As the year progressed, the expected resurgence in disc sales didn’t materialize. The triumph of Blu-ray Disc as the sole high-definition format didn’t get consumers buying their movie libraries all over again, as some observers had hoped. And then came the Great Recession. Consumer spending, which had continued to inch upward, all of a sudden reversed course and began to decline. And while studio executives and retailers put on a brave face and talked up home entertainment’s resiliency in hard times, it was becoming clear even tougher times lay ahead.

In early 2009 Feldstein left and later that year James Finn was hired as the division’s second PR chief. Finn had been VP of national publicity at Fox Searchlight Pictures for six years; he first joined the studio in October 2000, doing theatrical publicity.

In 2010, 20th Century Fox Home Entertainment scored the year’s top-selling title with Avatar. The film also became the top Blu-ray Disc seller since the format’s launch, with 5 million Blu-ray units sold.

The following year, Fox issued the entire “Star Wars” theatrical catalog — which at the time consisted of six films — on Blu-ray Disc. The nine-disc “Star Wars” saga sold 1 million units its first week in stores, an unprecedented number for a premium-priced box set. First-week sales generated an estimated $84 million in worldwide consumer spending.

In February 2012 Daily was promoted to president of worldwide marketing with the mandate to give a high priority to integrating the digital ownership of films. Accordingly, Fox that year pioneered the early window policy that is now commonplace among all studios, in which the digital version of a hit movie is made available through digital retailers two or three weeks before the physical disc.

Fox launched the concept in September 2012 with the sci-fi thriller Prometheus. The release kicked off the studio’s Digital HD initiative, which allowed consumers to download or stream more than 600 Fox films on connected devices. The titles, which cost less than $15, could be accessed through Amazon, CinemaNow, Google Play, iTunes, PlayStation, Vudu, Xbox Live and YouTube.

The Digital HD name would soon be dropped, however, as the industry was already preparing for the next-generation format with an even clearer, more lifelike picture than HD. Initially dubbed “4K” at the 2012 CES, the new format failed to make much of splash, so a year later it was introduced as Ultra HD, or UHD. This time, people noticed.

It was a busy, and confusing, time — for Fox, and for the home entertainment industry. On the one hand, studios were working to transition consumers from buying discs to buying digital copies of movies, with far better margins and no additional expenses for manufacturing, shipping or returns. Yet at the same time, with the lion’s share of home entertainment revenue still coming from physical discs, and UHD TVs coming onto the market, studios were working with CE companies on a next-generation Blu-ray Disc, initially called UHD Blu-ray, and more formally referred to as 4K Ultra HD Blu-ray.

And in the midst of all this, Netflix, with its inexpensive all-you-can-watch subscription streaming service, “was eating everyone’s lunch,” one observer quipped.

Studios plowed ahead on both fronts: promoting digital movie sales while at the same time laying the groundwork for UHD Blu-ray.

In December 2013, Dunn acknowledged the growing importance of building a digital business, which he said was fueled by the rapid rise in popularity of tablets, smart phones and other mobile devices. “We are in a renaissance of connectivity, fueled by technology, and this is driving consumer appetites for high-quality digital content,” he told Home Media Magazine.

The following year, 2014, saw the launch of the Fox Innovation Lab, a high-tech think tank. The lab was established under the auspices of Dunn, research and tech strategy EVP Danny Kaye, and chief technology officer Hanno Basse as a way to meld the often disparate worlds of technology and entertainment, of Silicon Valley and Hollywood.

In September 2015, Samsung unveiled the industry’s first Ultra HD Blu-ray player at IFA 2015, the big global trade show for consumer electronics in Berlin. And 20th Century Fox promptly announced its intent to release upcoming movies on Ultra HD Blu-ray on the same day as standard Blu-ray and digital copies. The studio also said it would go back and reissue recent hit films in Ultra HD.

“When my colleagues and I at Fox first saw the side-by-side comparison of Ultra HD with high dynamic range versus HD, it was reminiscent of the difference between standard-def and high-def,” Dunn said in Berlin. “This is a massive leap forward for the consumer experience.”

The first Ultra HD Blu-ray films hit the market in March 2016. Fox was one of four studios participating in the launch, with more titles than Sony, Warner or Lionsgate: The Martian, Kingsman: The Secret Service, Exodus: Gods and Kings, X-Men: Days of Future Past, The Maze Runner, Maze Runner: The Scorch Trials, Wild, Hitman: Agent 47, Fantastic Four and Life of Pi.

In December 2016 Dunn was given a new title: president of product strategy and consumer business development. “2016 was the year of connection,” Dunn told Home Media Magazine at the time. “The consumer journey is more diverse and more connected than ever before. They are inundated with choices that range from traditional cable to OTT services to user-generated content, and everything from their actual devices to their viewing habits are connected.”

The Fox and the Mouse

In March 2017, Dunn gave up his old title, president of worldwide home entertainment, to Keith Feldman, who previously had been president of worldwide home entertainment distribution, and, before that, president of international. Feldman began his career in 1987 as a sales rep for the E & J Gallo Winery and joined Fox in 1995 as international business development director in London.

While disc sales overall continued to slide, there was a new sense of optimism, not just at Fox, but throughout the entire home entertainment industry. Digital sales at last began to show signs of life, and Ultra HD Blu-ray sales, while a small part of the overall business, climbed faster than anyone had expected. At Fox, spirits were particularly high due to the culture of innovation fostered by Dunn and his team.

Then came D-Day: Disney’s announcement in December 2017 that it had agreed to buy 21st Century Fox’s filmed entertainment, cable entertainment and direct broadcast satellite divisions, including 20th Century Fox, FX Networks and National Geographic Partners, for $52.4 billion.

After a competing bid from Comcast, Disney upped its offer to $71.3 billion, a 10% premium over Comcast’s offer, and in July 2018 the U.S. Department of Justice gave the deal its antitrust approval.

The end came on March 20, 2019. Until then, it was business as usual at 20th Century Fox Home Entertainment. Indeed, the division in the summer of 2018 launched one of its biggest marketing campaigns ever for the August home release of the superhero comedy Deadpool 2, with a massive presence at San Diego Comic-Con International that included a panel discussion, “Super Duper Dance Party” on the show floor, and a partnership with Walmart and its Vudu digital storefront. Fox and Vudu decorated a suite at the San Diego Hard Rock Hotel to look like Deadpool’s apartment and held a sweepstakes for one Comic-Con attendee to stay in “Deadpool’s Dream Suite” on the Saturday evening of the convention.

Editor’s Note: 20th Century Fox’s home entertainment division remains operational, since there are still several releases in the pipeline. There has been no word yet on whether it will continue to operate concurrently with Walt Disney’s own home entertainment arm or whether it will be absorbed.

Longtime 20th Century Fox Home Entertainment Chief Mike Dunn Exits, Ventures Into Startup World

Mike Dunn, for years the top home entertainment executive at 20th Century Fox, is among a handful of high-ranking studio executives to exit March 21 in the wake of Walt Disney Co.’s acquisition of the celebrated film studio, which was completed March 20.

Insiders told Media Play News that Dunn’s departure was not unexpected and the executive already is eyeing several startup opportunities in the technology field — after a two-week vacation.

Other senior 20th Century Fox executives who lost their jobs at the company, as reported by Variety, include Fox Film head Stacey Snider, domestic distribution chief Chris Aronson, communications EVP Heather Phillips, chief data strategist Julie Rieger, worldwide theatrical marketing president Pam Levine, and chief content officer Tony Sella.

One insider told Media Play News that Disney appears to be sticking by reports that ultimately 4,000 people will lose their jobs. “This morning, it felt like 5,000,” the insider said, noting that the day brought a steady succession of HR meetings as Fox staffers learned their fate — although many already knew, but had been asked to remain silent until today.

Since December 2016, Dunn has been president of product strategy and consumer business development for the studio, with oversight of emerging media platforms, distribution models, partnerships with consumer electronics and technology companies, and overseas opportunities.

He remained the de facto worldwide head of 20th Century Fox Home Entertainment, a position he first landed in 2005 — making him the longest-serving head of a major studio home entertainment division.

Dunn was named worldwide president of the division after three years as president, domestic home entertainment, a position he assumed after the December 2002 departure of Pat Wyatt, who resigned to start up an independent film production and financing company specializing in Japanese-style animated programming for home audiences.

Subscribe HERE for FREE Daily Newsletter!

Dunn joined Fox in 1987 as manager of marketing and subsequently rose to director and then VP. In 1995, he promoted to SVP of international marketing; three years later, he was named SVP and GM for Fox home video operations in Europe.

He was promoted to EVP, domestic marketing and sales in 2000, three years after the launch of DVD but before the disc’s explosive growth. In that capacity Dunn was dealing primarily with video rental dealers, both big national chains like Blockbusters and a dwindling number of independents and regional chains serviced by a network of third-party distributors.

Veteran distributor Steve Scavelli, president of Flash Electronics, remembers Dunn from the annual National Association of Video Distributors (NAVD) conferences at the Hyatt Grand Champions in Palm Springs every spring.

“Mike is a tremendously talented and consummate professional who has always been a pleasure to work with and grow our mutual businesses,” Scavelli said. “He is a visionary who always treated his team with class and respect. We at Flash wish him all the best in his future endeavors. One of the good guys!”

Scavelli’s sentiments are shared by Dunn’s peers.

Eddie Cunningham, president of Universal Pictures Home Entertainment, said of Dunn, “I haven’t known Mike personally for as long as some, and more by his great reputation, before my move from London to Los Angeles some five years ago. I will always be grateful to Mike for how welcoming he was to me, both personally and professionally, as my family settled into life in a new country.

“He was a fierce competitor, a good partner where we worked together on distribution in some smaller territories, a strong leader and colleague on the DEG Board and someone who could light up any room with his ‘smarts’ and great sense of humor.

“I wish Mike well and can’t wait to hear about his next ‘chapter,’ which I’m sure will be as interesting as his previous ones.”

Ron Sanders,  president of worldwide distribution of the Warner Picture Group and president of Warner Bros. Home Entertainment, said, “Over the more than 10 years we’ve been colleagues in the industry, Mike and I have transitioned from wary competitors to good friends.  His casual, humble demeanor belies a sharp intellect with keen ideas on how to approach challenges. He has made Fox into a powerhouse with strong talent and enviable performance.”

Dunn also served as chairman of DEG: The Digital Entertainment Group for two years, from 2016 to 2018. Amy Jo Smith, the DEG’s CEO, said of Dunn, “Mike is the rare executive who exhibits a vision for our business, a keen understanding of what consumers want, and fair leadership in equal parts. It’s been a privilege to have him share his expertise with DEG and I look forward to seeing what he does next.”

During Dunn’s tenure as head of 20th Century Fox Home Entertainment, the industry shifted from a rental to a purchase model thanks to the rapid rise of DVD. Dunn also oversaw the studio’s home entertainment business during the bruising format war between the proposed high-definition successors to DVD, Blu-ray Disc and HD DVD. Blu-ray eventually won the battle.

But his legacy, observers say, is his early belief in digital distribution and embracing technology, which led to partnerships with tech giants such as Amazon and Google and the establishment of Fox Innovation Labs, a high-tech think tank launched in 2014 — under the auspices of Dunn; Danny Kaye, 20th Century Fox’s research and tech strategy EVP; and chief technology officer Hanno Basse — as a way to meld the often disparate worlds of technology and entertainment, of Silicon Valley and Hollywood.

The Fox Innovation Labs will not continue under Disney ownership, insiders told Media Play News. As part of the reorganization, Fox Innovation Lab executive Danny Kaye also is exiting.

As far back as 2007, Dunn was thinking digital. In October of that year, 20th Century Fox became the first studio to include a digital copy of a movie on a physical disc. As the Hollywood Reporter noted at the time, “the special-edition DVD of Live Free or Die Hard will come with an electronic copy of the complete movie that can be played on a computer and select portable video players.” Dunn commented at the time, “This may be the killer app, where you have physical media that allows you to have a big-screen experience and at the same time move the file around to other devices and have a great experience there as well.”

Tom Campbell, company spokesman and chief technologist at Video and Audio Center, a high-end consumer electronics chain in Southern California, said about Dunn, “He gets it – he understands the content to our category.” Just as former Warner Home Video president Warren Lieberfarb is hailed as the father of DVD, Campbell said, “I call Mike Dunn the father of Blu-ray Disc and 4K Ultra HD Blu-ray.”

When Video and Audio Center launched 4K Ultra HD with the Samsung player and 20th Century Fox’s The Martian, Campbell said, “it was Mike Dunn who was at our store. He truly is one of a kind, and I’m excited to see what he moves into next.”

Dunn at a gathering of studio executives celebrating the launch of Blu-ray Disc in January 2007. Dunn (left) is shown with David Bishop of Sony Pictures, Steve Beeks of Lionsgate and Bob Chapek of Walt Disney.
Dunn (second from right) at the December 2014 Video Hall of Fame ceremony in Beverly Hills, with (from left) Warner’s Jim Wuthrich and Jeff Brown and Media Play News publisher Thomas K. Arnold.
Mike Dunn and Danny Kaye (center) at the January 2017 CES, during a special Fox presentation on VR at the Oriental.

Video and Audio Center Flagship Store Opening, Jan. 25, 2018

Video and Audio Center held a gala opening party Jan. 25 for its new flagship showcase store in the Westfield Century City mall. Video and Audio Center has been introducing new technologies for more than 34 years, and its new store is a new retail concept focused on the customer experience, with towering wall displays and interactive product exhibits.

For more, click here: Video and Audio Center Opens New Flagship Store