DEG Gives Movies Anywhere First-Ever Innovation Award

Trade group DEG: The Digital Entertainment Group during its annual reception at CES on Jan. 9 will showcase its Achievement Awards, honoring the best 4K UHD hardware and software products released during 2017.

Movies Anywhere also will be honored by DEG leadership with the new DEG Emiel N. Petrone Innovation in Entertainment Technology Award.

The reception will promote 4K UHD products and content in various ways, with reception sponsor Redbox celebrating its plans to test 4K content at kiosks in 2018 by presenting one reception guest with the ultimate 4K home entertainment center, including a Sony BRAVIA OLED 4K HDR TV, winner of the DEG: Excellence in 4K UHD Product Award; a gaming system; and peripherals including a sound bar and gaming headset. All attendees prior to the drawing will receive a chance to win the grand prize, presented during the reception by Redbox CEO Galen Smith.

The DEG Emiel N. Petrone Innovation in Entertainment Technology Award honors the memory of the DEG’s founding chairman, the late Emiel N. Petrone. The new award recognizes a technology development release in 2017 that has created new opportunities for the home entertainment industry.

The first DEG Emiel N. Petrone Innovation in Entertainment Technology Award winner is Movies Anywhere, the Disney-owned industry initiative that at launch last October brought together films from five major studios (Sony Pictures Entertainment, The Walt Disney Studios – encompassing Disney, Pixar, Marvel Studios and Lucasfilm, Twentieth Century Fox, Universal Pictures and Warner Bros. Entertainment) with four key digital retailers (Amazon Video, Google Play, iTunes and Vudu) to provide movie owners with the ability to store their digital content in the cloud and access it across a wide range of devices and platforms.

Nominations by DEG leaders focused on those innovations that generated significant new trends in home and mobile entertainment. Voters recognized Movies Anywhere as “the best innovation we’ve had in years, with huge potential to come” and “this year’s innovation that has the best chance of transforming our industry.”

Winners of the Excellence in 4K UHD Awards were selected by a panel of product reviewers from the industry’s home theater enthusiast and business publications, including Media Play News. One hardware and one software product will be awarded with the top honors.

Blade Runner: The Final Cut 4K Ultra HD Blu-ray Disc, from Warner Bros. Home Entertainment, is recognized with the DEG: Excellence in 4K UHD Content Award. The criteria for the Content Award include demonstrated excellence in 4K image capturing/transferring; HDR encoding; wide color rendering; and immersive (object-based) audio.

The DEG: Excellence in 4K Product Award goes to Sony Electronics for its Sony BRAVIA OLED 4K HDR TV. For the Product Award, criteria include delivery, on a consistent basis, of outstanding audio/video performance, convenience and versatility. Sony’s OLED TV boasts more than 8 million self-illuminating pixels and sound that comes from the entire screen, with the industry’s first Acoustic Surface.

“As home entertainment consumers increasingly demand enriched visual and audio experiences, delivered in a more convenient and frictionless way than ever before, DEG member companies are moving quickly to not only meet their needs, but to introduce them to new possibilities,” said Amy Jo Smith, DEG president and CEO. “DEG is delighted to recognize Sony Electronics and Warner Bros. as purveyors of best-in-class 4K UHD for the home, and Movies Anywhere as a model of seamless content delivery perfectly positioned for the future.”

Hollywood Innovates – A Special Report

As technology advances, new platforms, formats and distribution channels continue to proliferate. Even the very definition of content has changed, with movies and TV shows forced to make room for webisodes, Snapchats and Facebook Live streams. YouTubers are mobbed like A-list movie stars; people are consuming, and sharing, content on their phones, on their iPads, and through their PlayStations.

The home entertainment industry, rocked by the Internet and disrupted by Netflix, hasn’t sat idly by as the world around it changes. Far from it — indeed, innovation and experimentation have become the order of the day. In addition to supporting the new, enhanced 4K Ultra HD format with high dynamic range, studios are delving into virtual reality — the use of computer technology to create a simulated environment — and augmented reality —  in which an enhanced version of reality is created by the use of technology to add digital information on an image of the physical world.

Here’s a look at some of the highlights of 2017 — and a glimpse of what is to come in 2018 and beyond.

Movies Anywhere — A Watershed Moment for Digital Movie Sales

In what observers are calling a major breakthrough in getting consumers to buy movies digitally, five of the six major studios — and four key retailers — joined forces in late 2017 for the launch of Movies Anywhere.

The cloud-based service, an outgrowth of Walt Disney’s Disney Movies Anywhere, lets people store and access their purchased movies across a wide variety of platforms, from TVs to iPhones, for immediate viewing wherever and whenever they want to — regardless of whether the movies are acquired digitally or on disc. Consumers can do so through Movies Anywhere apps or through the website.

“It’s a seamless experience, designed with the consumer in mind,” said one veteran industry observer. “Enter the code and the movie pops up on your phone, on your TV — everywhere your account is linked.”

“Movies Anywhere is just the latest example of studios and distributors working together to provide more value to the consumer and setting a new bar for digital movie ownership,” said Michael Bonner, EVP of digital distribution for Universal Pictures Home Entertainment.

“Movies Anywhere, [like] Premium VOD … will shake up the basic tenets of distribution and how and when consumers get content,” noted Mark Fisher, president and CEO of the Entertainment Merchants Association.

Movies Anywhere launched on Oct. 11, 2017, with support from Disney (including Pixar, Marvel Studios and Lucasfilm), Sony Pictures, 20th Century Fox, Universal Pictures and Warner Bros. Movies are redeemed through digital retailers Amazon Video, Google Play, iTunes and Vudu (owned by Walmart). Movies Anywhere is a Disney-owned entity that operates independently with input from an advisory committee with members from each of the participating studios

“Movies Anywhere enables movie fans to sync their collection from the five studios across retailers, devices, and platforms. It’s a game changer for consumers. It elevates the movie purchasing, collecting and viewing experience and is simple and easy to use,” said Movies Anywhere GM Karin Gilford.

It’s an interface that will ultimately make digital movie collection seamless, said the executive, who formerly worked at Comcast Interactive Media and Yahoo! The launch comes after several fits and starts, including the stalled UltraViolet digital locker service and Disney’s launch of its own proprietary service, Disney Movies Anywhere. Observers say the studios signed up for Disney’s model because the technology is superior.

Consumers can download a free Movies Anywhere app, create an account and link to any of the four digital retailers. The service will automatically populate consumers’ digital libraries from any of the participating retailers on Movies Anywhere. Consumers can immediately stream or download any film from their Movies Anywhere library

“The magic really happens when you link to retailer accounts because you get to see that whole collection come together,” Gilford said. “There’s that sort of aha moment that happens when all of the titles that you bought from one of our five studios on any of our four digital retailers all come together.”

Consumers can also buy new digital movies on the app through Movies Anywhere retailers and redeem codes from DVDs or Blu-ray Discs they have purchased to gain immediate access to more digital movies. Starting next year, physical discs will feature Movies Anywhere branding.

Movies Anywhere allows consumers to have up to five subaccounts, in addition to the master account. Subaccounts can have personalized recommendations and restrictions, allowing the master account holder to ban access to ‘R’-rated films for a child, for instance. Purchases may only be made from the master account. Viewers can start streaming a movie on one device and finish it on another. Two viewers can watch the same title on different devices at one time, and up to four viewers can stream different content on different devices at the same time. Consumers can access their library on Amazon Fire devices, Android mobile and tablet devices, Android TV, Apple TV, Chromecast, iPhone, iPad, iPod Touch, the Roku platform and popular Web browsers.

The service launched with a five-free-movies offer has a comprehensive marketing strategy.

“We have a robust and year-round paid media strategy that leans heavily into mobile user and Web acquisition tactics, and are engaging consumers with ongoing and targeted email, push, and in-app marketing tactics,” Gilford said. “And last but not least, we have the unprecedented support from our studio partners who are helping us build the Movies Anywhere brand through their title marketing efforts.”

There have been several improvements in the service since launch.

“Movies Anywhere was built with consumers in mind to add more value to their movie purchases,” Gilford said. “As such, our first priority is responding to customer feedback about the product. We have amazing movie fans in Movies Anywhere with large collections. We heard loud and clear that they want more control over their library. We answered with improved sort capabilities across platforms and we will continue to look for ways to help consumers manage their collections.”

Consumers have responded well to the interface, she said.

“We are seeing strong engagement with users spending time on the Explore page, interacting with the seasonal, franchise and many of collections we showcase in that area,” she said.

Overall, the service is a hit with consumers, she said.

“The consumer response to Movies Anywhere has been incredible, and the feedback and engagement with the app is strong as consumers experience the ease of bringing digital movie collections together,” she said. “The strength of the studios and digital retailers that have come together at launch is unprecedented, and consumers are recognizing this.”


Studio Standouts — A Look at What’s Up the Majors’ Sleeves

20th Century Fox

The Fox Innovation Lab, 21st Century Fox’s research and development center, was established to drive the advancement of groundbreaking technology and new consumer experiences across all platforms and distribution models.

The Lab works across all 21st Century Fox film and television divisions as well as key external partners on advancements in next-generation technologies, including high dynamic range technology; 5G and mobile content delivery; virtual, augmented, and mixed reality content; and hardware, machine learning, artificial intelligence and advanced data analytics.

Fox’s collaboration with leading technology partners to drive industry innovation is seen in its latest work with HDR10+ to improve the home entertainment viewing experience for audiences. HDR10+ is an open, royalty free technological step forward that optimizes picture quality for next-generation displays through the use of dynamic metadata, which more precisely adjusts content to the capabilities of different TVs.

Danny Kaye, EVP at 20th Century Fox and managing director of the Fox Innovation Lab, added that “working in partnership with Panasonic and Samsung through the Fox Innovation Lab, we are able to bring new platforms like HDR10+ to the market that more accurately realize the vision of our filmmakers beyond the theater.”

It’s a picture that more clearly adjusts to consumers’ TVs.

“Scene by scene and even frame by frame, that movie is being adjusted to be optimized to that particular TV,” Kaye said.

The Fox Innovation Lab serves as a research hub, demonstrating and testing technologies with consumers throughout the development process to obtain qualitative data and hands-on feedback in order to bring innovative and premium products to market.

In addition to premium viewing experiences for traditional entertainment, the division is also working on new forms of entertainment, such as virtual, augmented and mixed reality. Its work on virtual reality resulted in Fox’s groundbreaking first commercial VR product, The Martian, a roughly 20-minute interactive experience that put viewers in the world of the feature film. That virtual reality experimentation helped result in this year’s creation of an entire new business unit at the studio, FoxNext, which not only works on VR, but video games and theme parks.

Fox Innovation Lab now also has its eye on incorporating artificial intelligence, or machine learning, both in the entertainment production and distribution process and in the content itself.

“You could be watching a sporting event and you could have a conversation with your television about stats depending on a sport or a player,” Kaye noted. “You could ask questions, just like people talk to Alexa today or to Google Home.”


Warner Bros.

Warner Bros. Home Entertainment’s innovation efforts are focused on developing a better picture and sound to boost home entertainment sales.

Jim Wuthrich, president of the Americas and global strategy, notes that the physical disc still drives the business and is also the best, most reliable delivery system for 4K Ultra HD with high dynamic range, the new format that provides a picture with greater contrast and more vivid colors.

“4K UHD HDR is a superior consumer experience on physical,” he said. “All the bits are on the disc. Getting them from the player to the television is a guaranteed experience. When you talk about 4K UHD HDR in the digital space there’s a lot of dependencies that we just don’t have control over, so you may have the broadband speed to get it into your house, but once it gets into your house, and it’s got to go across your own network, those bits might get lost, so we can’t guarantee that same experience that you can on physical.

“The other thing you just can’t get away from is the size of these files. There’s so much information that’s packed in these 4K experiences that it takes a long time and a lot of bandwidth in order to deliver that content. Physical solves those problems, and it’s a very efficient way of delivering all of the information.”

The format is already gaining traction.

“Consumers are very excited about 4K UHD television sets and they’ve been buying them in record numbers,” Wuthrich said. “People want to watch this content and utilize those television sets.”

Other new technologies that the studio is keen on are virtual, augmented and mixed reality. The studio released a VR experience for the hit horror film It and plans a home VR experience for Justice League as well.

“We are really bullish and excited about the virtual, augmented, mixed reality marketplace,” he said. “It’s a nascent marketplace, but we think that this is going to be a very important part of the home entertainment/entertainment slate. And we think home entertainment is a natural home for virtual, augmented, mixed reality and the reason is most people are going to experience it in their homes.”

He notes the experiences with It and Justice League in virtual reality are very immersive.

“Basically, it allows the consumer to go into these worlds that they’ve seen on the screen and get closer and interact in that environment,” he said.

As far as pricing for these experiences, Wuthrich said the industry is in the experimental stage.

“We’re experimenting from 99 cents all the way up to the price of more of a traditional game,” he said. “Having said that, again, we think there’s a real opportunity here and we’re going to continue to figure out how you make that an experience consumers can’t live without.”


Lionsgate

Exiting leader Steve Beeks leaves behind a studio/distributor successfully tackling changing distribution business models (OTT video, 4K and virtual reality) while sustaining physical media.

A year after acquiring premium TV distributor Starz, Lionsgate has assimilated home entertainment unit Starz Distribution (and Anchor Bay Home Entertainment) to emerge as the No. 4 home entertainment distributor — led by Jim Packer and Ron Schwartz — with nearly 15% market share and about $1 billion in annual revenue driven by a 16,000-title film and television library.

Through the fiscal half-year (ended Sept. 30), home entertainment movie revenue reached $400 million, compared with $100 million a year earlier. TV content retail sales reached $6.5 million, compared with $10 million in the previous-year period.

Beeks has said home entertainment revenue helps underwrite a “substantial” portion of company overhead costs, which include upstart over-the-top video services such as Kevin Hart’s Laugh Out Loud, Spanish-language Pantaya, Tribeca Shortlist and Comic-Con HQ.

“Over the past several years, we’ve leaned heavily into the library business. Even before all these [distribution] platforms began to proliferate, we felt we could see it coming. All the other studios were slacking their interest [in library],” Beeks said.

Schwartz believes 4K and high dynamic range can resonate with consumers seeking superior visual and audio formats in the home. The distributor last year bowed initial 4K releases around Sicario, The Last Witch Hunter, Ender’s Game and The Expendables 3.

“4K UHD is reinvigorating interest in the high-definition platform and … strengthening HD packaged-media sales,” said Schwartz.

He said early results suggested about triple the sales of comparable Blu-ray Discs — the industry’s last platform launch.

“With our deep library and rich content crossing multiple genres, we feel we can reach consumers many different ways. And we see the momentum continuing as the installed base of 4K televisions continues to grow,” Schwartz said.

Lionsgate continues to scout opportunities to enhance content discovery, including virtual reality.

Over the summer it partnered with United Technologies to develop what it claimed was the first virtual reality movie ad for the October theatrical reboot of the lucrative “Jigsaw” horror franchise.

“As big believers in the power of immersive storytelling, we are incredibly excited to bring Jigsaw into the world of VR,” said David Edwards, SVP of digital marketing.


Universal Pictures

Despite a challenging 2017 theatrical market, Universal Pictures Home Entertainment quietly produced on the bottom line. The studio churned out resilient fiscal results while embracing a new digital distribution business model (Movies Anywhere) and upping its 4K UHD Blu-ray presence.

“Consumer spend has increased each quarter over prior year, with the growth driven by the overall digital business — on both transactional and subscription platforms,” said Eddie Cunningham, president of UPHE.

The executive contends discs still account for the lion’s share of home entertainment spending, as evidenced by the more than 465 million physical transactions recorded domestically in 2016.

“The format remains exceptionally vibrant and viable,” he said earlier this year.

The studio bowed its first 4K Ultra HD Blu-ray Disc release in April 2016 with Jason Bourne. Since then the number of 4K UHD titles in market has more than doubled, with as many as 300 titles available industry-wide by the end of 2017.

Cunningham said 4K UHD Blu-ray with high dynamic range raised the bar in home movie watching. As the 4K ecosystem continues to gain traction, Cunningham said Universal remains committed to delivering more compelling 4K Ultra HD offerings, including catalog gems E.T. — The Extra-Terrestrial and Apollo 13 in September and October, respectively.

“We can expect to see that number [of 4K BD titles] to expand considerably in 2018, as content companies continue to release new and catalog titles in the premium format,” Cunningham said. “As well, 4K movies, TVs and players are selling units in record numbers. There is a clear groundswell around demand and we are highly optimistic about the format’s future prospects. Plan to see Universal increase its overall investment in 4K UHD offerings in the coming year.”

Indeed, Universal in September joined iTunes in offering 4K UHD digital titles through the upgraded Apple TV. Apple TV ranks fourth among streaming media devices, with more than 21 million users, according to eMarketer.

In October, Universal joined Warner, Disney, Sony and Fox in launching the Movies Anywhere cloud-based locker service.

“We are very pleased thus far with the launch of Movies Anywhere, and even more excited about the roadmap ahead,” said Michael Bonner, EVP of digital distribution.

Bonner praised the Movie Anywhere app’s “rich features and the freedom, flexibility and utility.”

“Universal will absolutely be complementing Movie Anywhere marketing initiatives in 2018 as we work toward driving broad consumer awareness and adoption,” he said.


Paramount Pictures

In a year of change at corporate parent Viacom, subsidiary Paramount Home Media Distribution buttressed traditional physical media with expanded digital, 4K and virtual reality campaigns.

For the year, home entertainment revenue from disc and digital retail showed resilience, improving 8% from 2016, reflecting ongoing Teenage Mutant Ninja Turtles: Out of the Shadows carryover revenue, as well as strong catalog sales. Domestic and international home entertainment revenue increased 11% and 3%, respectively.

Paramount joined Lionsgate, Sony Pictures Home Entertainment and Warner Bros. Home Entertainment in incorporating Dolby Vision and Dolby Atmos in 4K UHD Blu-ray Disc and Digital HD releases featuring high dynamic range.

Dolby maintains its new HD audio and visual technology enhances video content with life-like qualities.

Bob Buchi, president of worldwide home media distribution, said he “diligently studied” next-generation home entertainment audio and visual technologies and considers Dolby to be the best.

“The combination of high-quality, immersive audio and dramatic visual imaging truly elevates the home viewing experience,” Buchi said.

Paramount also joined Warner, Sony, Fox, Universal and Lionsgate offering 4K UHD digital movies through iTunes exclusively on Apple TV. It also made the Transformers 5-Movie Collection in 4K UHD available on iTunes.

“We are continually exploring new and creative ways to engage consumers with our content,” said Howard Hsieh, VP of worldwide digital business development.

The company unveiled an augmented reality app for iOS users with the retail release of The Last Knight on 4K Ultra HD. Using Apple ARKit technology, Viacom’s team incorporated content from the movie into the app. The app overlays 3D graphics onto a user’s surrounding physical space, designed as the virtual junkyard of protagonist Cade Yeager as seen in the theatrical release. Players control the actions of movie character Bumblebee, directing his movements while hitting, blowing up and interacting with various objects, which can be added to expand the interactive environment.

“The timing of Apple’s introduction of ARKit along with the proliferation of smartphones with AR capabilities created an ideal confluence of events to promote the ‘Transformers’ franchise on 4K Ultra HD,” Hsieh said. “We will be looking at our slate over the coming year and creating the next wave of immersive storytelling leveraging new technology formats like AR, VR and Live Social to complement our releases, give consumers new ways to interact with our properties, and generate ongoing excitement for our franchises.”

Meanwhile, despite a growing bandwagon of media companies and content creators rushing to develop branded over-the-top video services, Paramount has no plans to join the fray, according to Viacom CEO Jim Gianopulos.

“For Paramount, at this point, a stand-alone OTT service is probably not something near-term for us,” Gianopulos told an investor group. “It may evolve over time in conjunction with Viacom and other content owners, but there is no immediate plan for that.”

Still, with Paramount’s hiring of tech executive Ted Schilowitz as its first-ever “futurist in residence,” change is inevitable. Reporting directly to Gianopulos, Schilowitz is tasked with exploring emerging distribution channels and related formats.

“[Schilowitz] has been a pioneer throughout the industry’s constant technological evolution and can identify what is and what will be relevant and important to moviegoers. He will be an incredible asset to the Paramount team,” said Gianopulos.


Sony Pictures

Sony Pictures Home Entertainment ended the fiscal year in March generating more than $1 billion in revenue, in large part by focusing on evolving distribution channels and consumer habits.

Following last year’s launch of proprietary 4K digital movie rental/retail service ULTRA, SPHE this year joined iTunes in offering 4K UHD titles through the upgraded Apple TV.

In October, Sony joined Fox, Universal, Disney and Warner on the Movies Anywhere  cloud-based digital locker platform.

The studio also unveiled the “Clean Version Initiative,” which gives consumers the choice of watching family friendly edited versions of select Sony movies purchased through iTunes, Vudu and FandangoNow. The program launched in June with 24 films, which feature the broadcast or airline edition as part of bonus material included with the theatrical cut.

“Our innovation focus is on creating value for the end consumer and engaging them more with our content,” said Man Jit Singh, president of SPHE.

The executive says helping consumers find Sony content more easily across the distribution divide remains a key strategy. This includes arranging in-store DVD/Blu-ray Disc assortments like online recommendation engines, offering superior retail propositions and giving consumers the largest selection of 4K-HDR product in the market.

“We are always looking to provide consumers with immersive and interactive opportunities to connect with our content and are doing so with virtual reality specifically on 4K-HDR,” Singh said.

Following the launch of a VR product for Ghostbusters: Answer the Call, Sony bowed its first standalone VR campaign with the retail release of space adventure Passengers. The 20-minute ($9.99) vignette, Passengers Awakening: VR Experience, launched day-and-date with the packaged-media release. Users are transported onto the spaceship and presented with myriad challenges to navigate and insure the safety of passengers.

“What we try to accomplish is comfort, so people want to stay in [the spaceship] longer. We want people to feel excited to be inside and give them something immersive and enjoyable,” Jake Zim, SVP of VR for Sony Pictures, said at a press event.

Additional VR vignettes accompanied the Spider-Man: Homecoming release and will come with the future Jumanji retail launch.

Separately, SPHE expanded its international prowess, inking an agreement to distribute in the United Kingdom and Ireland — beginning in January — the film slate of STXinternational, a division of STX Entertainment, across physical and digital formats.

Under the deal, Sony handles distribution and marketing for new releases, beginning with Wind River, starring Jeremy Renner and Elizabeth Olsen. Other titles include romantic comedy Home Again, starring Reese Witherspoon, and Andy Serkis’ feature directorial debut, Breathe, with Andrew Garfield and Claire Foy.


Walt Disney Studios

Disney has been exceptionally busy on the innovation front, with the October 2017 launch of Movies Anywhere just one of several groundbreaking moves.

The studio entered the 4K Ultra HD Blu-ray Disc market for the first time in August with the release of Guardians of the Galaxy Vol. 2.

Separately, Disney announced it will yank all original movies from Netflix in 2019 for its own branded over-the-top video services, including Marvel, Pixar, Lucasfilm (“Star Wars”) — launching as early as next year. Disney’s 2012 landmark SVOD deal with Netflix for original movies ends in 12 months. And the studio wants greater control on movies beyond the retail window in the digital era.

After launching OTT video service Disney Life in 2015 in the United Kingdom — enabling subscribers streaming access to movies, TV shows, music, audiobooks on mobile devices and connected TVs — Disney this year redoubled SVOD efforts domestically. The company’s initial foray early next year involves a streaming sports service around ESPN, followed by the branded OTT video venture priced “significantly less” than Netflix, according to CEO Bob Iger.

“We’re going to launch big and we’re going to launch hot,” Iger said on the September fiscal call.

To facilitate its OTT video aspirations, Disney acquired remaining interest in BamTech, valuing the former subsidiary of MLB Advanced Media at $3.75 billion.

“This represents a big strategic shift for the company,” Iger said. “We felt that having control of a platform we’ve been very impressed with after buying 33% of it a year ago would give us control of our [OTT] destiny.”

Indeed, BamTech provides backend support for HBO Now, MLB.tv, WWE.tv and NHL.

Separately, Disney again operated a program that focuses and funds innovation, called the Disney Accelerator program. This year it funded 11 third-party companies’ technology to better the Disney brand across virtual reality, robotics, real-time entertainment, video games and artificial intelligence, among other things.

Notable achievements included in the theatrical space Atom Tickets, a movie-ticketing app launched for Rogue One: A Star Wars Story; and Samba TV, an in-house data measurement company analyzing over-the-top video and digital media, as well as traditional broadcast and pay-TV.

“Disney Accelerator has provided The Walt Disney Co. incredible opportunities to connect with and be inspired by many talented entrepreneurs from all over the world,” said Michael Abrams, SVP of innovation at Disney. “This year, more than ever, we are working with companies with the potential to help define the future of media and entertainment together with Disney.”

Disney also hosted a tech confab (Grace Hopper Celebration of Women in Computing) in Orlando, Fla., to highlight contributions women are making in tech and entertainment.

“Technology is essential to the evolution of the media industry,” said Jamie Voris, SVP and CTO at Walt Disney Studios. “The way that we tell and consume stories in the future is going to be completely different than it is today, and I think we have this extraordinary opportunity to have a real participation in shaping what that looks like.”

(This article originally appeared in Home Media Magazine.)

Movies Anywhere Lives Up to Its Name

I have a new morning ritual. While sipping my first (of two) cup of coffee and catching up on my email and the latest news, all on my iPhone, I now also invariably finish the movie I fell asleep watching the night before.

Yes, I am at that age where I begin to nod off well before the closing credits. And until just recently I would finish watching a movie the next night, before starting a new one. But thanks to my new ritual, I now start a movie every night, which by my estimation has increased the number of movies I watch by at least 30%.

What changed? The mid-October launch of Movies Anywhere, a remarkably simple and easy to use digital storage locker that lets me watch any film in my library with a couple of clicks on my iPhone button. All the major studios, except for Paramount, are participating, and the beauty of Movies Anywhere is that even for people like me who still buy Blu-ray Discs, entering the redemption code so I gain access to a digital copy takes just seconds – and then the movie is available on my iPhone, my TV, and anywhere else I have the app. (In fact, while writing this paragraph I just entered the code for Annabelle: Creation and watched it instantly appear on my iPhone. I will start watching it tonight – probably on disc, just out of habit – and then whatever I missed will be viewed in the early morning, with a Keurig cup of bold Sumatra, after the obligatory cleansing of emails and quick look at the news headlines.)

I have a confession to make. While I consider myself an early adopter, both because of my role in the industry and my natural curiosity and yen to be on the cutting edge of new and cool stuff, my digital movie experience has been limited to Netflix, Amazon and Hulu. I have never bought a movie online; I set up an UltraViolet account years ago but never used it, not even once. I keep writing that consumers value convenience, simplicity and ease of use, above all else, and I might as well have been writing about myself. I rarely make myself a salad, preferring the salad-in-a-bag approach. I vastly prefer Uber to taxis, and order most of my stuff online – even my Keurig coffee cups – because I hate waiting in line.

The problem was, prior to Movies Anywhere, watching digital copies of movies I acquired was too much of a hassle. There were too many sites to visit, too many passwords to enter, too many steps to take.

Movies Anywhere is as easy as watching Netflix. And that’s why I believe our studio friends have gotten it right this time. Sure, there are still hurdles to overcome – chiefly the other main driver of consumer behavior, the desire to get things for free or, at the very least, for as little as possible. It’s still going to be a challenge to convince consumers who are used to spending around $10 a month for unlimited Netflix content to fork over more than that for a single movie, regardless of how new that movie is, or how much hype it has generated.

Still, everything else is in place. The stage has been set for digital ownership to really take off, once consumers realize the value proposition of instant access – and immediate (or, in my case, morning-after) satisfaction.

Home Entertainment’s Mantra in 2017 was ‘Just Keep Swimming’

At this year’s Video Hall of Fame ceremony in Beverly Hills in December, Janice Marinelli, president, Disney/ABC Home Entertainment & Television Distribution, for The Walt Disney Studios, drew solid applause when she advised her fellow home entertainment executives to “just keep swimming.”

The line, from the hit Disney film Finding Nemo, seemed to resonate with the several hundred execs in the room, many of whom have been contending with increasingly choppy seas for the better part of a decade.

In fact, 2017 marked the 10th anniversary of Netflix’s decision to transition its subscription approach from disc rentals by mail to digitally delivering content over the Internet – a truly disruptive moment that shattered the traditional home video model. Year after year, disc sales plummeted as consumers planted themselves on their sofas for a nightly steam of at first studio discards and then an increasingly compelling menu of original programming.

In the first nine months of this year, numbers provided by DEG: The Digital Entertainment Group show, more than 40% of the money consumers spent on home entertainment in the first nine months of 2017 was generated by Netflix and other subscription streaming services, up from 34% in 2016 and 29% in 2015.

Sales of Blu-ray Discs and DVDs, meanwhile, accounted for 24% of consumer home entertainment spending in the first nine months of 2017, down from 27% in the comparable period in 2016 and 31% in 2015.

In the first nine months of 2011, by contrast, streaming accounted for just 3.8% of the home entertainment business, with disc sales accounting for 46%, or $5.6 billion – compared to $3.26 billion in the first nine months of 2017.

“The [disc sales] business remains under pressure, due to the growing number of entertainment options,” says Eddie Cunningham, president of Universal Pictures Home Entertainment. “Nonetheless, studios and retailers continue to aggressively champion the category, looking to create the most compelling and meaningful opportunities to eventize our disc products and deliver the best, most exciting shopping experience possible.”

“Physical media continues to be an integral component of the product mix, but we need to find ways to remind consumers of the value of owning and renting discs,” adds Mark Fisher, president and CEO of the Entertainment Merchants Association (EMA).

Disney’s Marinelli says “physical consumption continues to be a vibrant, viable and top-performing line of business for us and it is also proving to be a very valuable resource in the transition to digital with e-copy redemption. This year the in-home division broke and set new records with four bestselling physical titles in the top 10 to date including tentpoles Star Wars: Rogue OneMoanaGuardians of the Galaxy Vol. 2 and Beauty and the Beast.  As viewing habits and consumer consumption rapidly evolve, we continue to evaluate our offerings on a regular basis and what will best meet the needs and demands of our customers.  This year we vigorously expanded into the 4K Ultra HD Blu-ray premium format beginning with inaugural title Guardians of the Galaxy Vol. 2, which quickly rose to the top of the industry’s 4K physical sales chart.”

Through it all, home entertainment executives have, well, just kept on swimming – and managed to keep their heads afloat through a steady string of technological advances and innovation. This year’s gold star goes to Movies Anywhere, the Walt Disney-owned digital movie service that allows consumers to buy newly released movies electronically (or redeem access codes packaged inside Blu-ray Discs) and watch them whenever they want to, on any screen, from the family room TV to their iPhone.

“Consumer centricity was without a doubt a defining characteristic of 2017, which was most notably addressed by the launch of the multi-studio digital locker Movies Anywhere,” said Disney’s Marinelli. “Movies Anywhere is a huge win for the consumer, providing them with more freedom, flexibility and utility and their digital library can now be viewed through a range of devices and digital retailers, anytime and anywhere. The strength of the studios and digital retailers that have come together at launch is unprecedented.”

Hollywood also claimed a seat at the burgeoning Ultra HD table with Ultra HD Blu-ray Disc, which experts agree is the optimum way to view 4K content , with even sharper pictures and more realistic colors than standard high-definition.

“We can expect to see the number of 4K UHD Blu-ray titles to expand considerably in 2018, as content companies  continue to release new and catalog titles in the premium format,” says Universal Pictures’ Eddie Cunningham. “As well, 4K movies, TVs and players are selling units in record numbers.  There is a clear groundswell around consumer demand and the industry is highly optimistic about the format’s future prospects.”

As Netflix and its OTT compadres continue to grab market share, studio executives – who still consider movie sales, either on disc or electronically, as their holy grail – also have had to contend with other challenges. Distribution channels have continued to proliferate, and the concept of content continues to evolve as millennials are as quick to spend an evening watching their favorite YouTuber or anime webisodes as they are the new Spider-Man movie.

“2017 really was the year of ‘more’ – more content, more provides, more devices, more technological enhancements, and more consumer choice,” said the EMA’s Mark Fisher. “Overall, this is a good thing, but it did lead to disruption of traditional business models. And we haven’t seen the end of it.”

Electronic sellthrough – also known as Digital HD – remains the most promising bulwark the studios have against continued double-digit OTT growth, but challenges remain. Consumers accustomed to spending around $10 a month for unlimited Netflix viewing might be reluctant to spend the same amount, or more, for a single piece of entertainment, even if they own it.

EST growth slowed from several years of double-digit gains to 7% in 2016, then rose slightly to 8% in the first nine months of this year. Executives hope Movies Anywhere will be the catalyst to reignite higher growth.

“On the EST front, we continue to see product, marketing and merchandising investments across the industry accelerate,” says Michael Bonner, EVP, Digital Distribution, for Universal Pictures Home Entertainment. “As a result, digital sell-through has been growing year over year and we continue to see increased consumer engagement in the category. Movies Anywhere is just the latest example of studios and distributors working together to provide more value to the consumer and setting a new bar for digital movie ownership.”

“Our focus is always on offering the best consumer experience possible, removing the barriers and offering a high-quality experience that adds value and utility to a digital movie collection,” adds Disney’s Marinelli. “Providing consumers with early digital access has been a successful way to drive consumers to the digital experience.  We continue to work closely with our digital retail partners to build a compelling in-home movie watching experience, including offering quality formats like 4K Ultra HD, as well as expanded and interactive extras – some of which are only offered digitally.”

Ultra HD Blu-ray Disc also is seen as a growth driver, particularly as the number of UHD TVs continues to mushroom.

“2017 was the year 4K UHD really took off,” said Jim Wuthrich, president, The Americas and Global Strategy, at Warner Bros. Home Entertainment. “With $200 million in global consumer sales, ample physical and digital distribution and accelerating penetration of capable TVs, content sales will continue to soar into 2018.”

“2017 was a year where we saw 4K HDR make huge strides towards becoming a mainstream part of the industry,” adds Jason Spivak, EVP, Worldwide Digital Distribution and North America Sales, for Sony Pictures Home Entertainment. “ 4K UHD physical discs are selling well, and we are seeing big advancements in 4K HDR digital services and devices.   The format is essential to our commitment to deliver the highest caliber consumer experience, and it is well on its way to mass acceptance.”

“ The number of 4K devices continues to grow, and is forecasted to triple in the next five years to nearly 350 million,” said Bob Buchi, president, Worldwide Home Media Distribution, for Paramount Pictures.  That clearly indicates that consumers have an appetite for the format, but we have to ensure that we don’t have a content gap.  At Paramount, we are committed to releasing the vast majority of new releases in 4K and have greenlit dozens of catalog titles for the format.

“We are seeing 4K UHD with HDR represent up to 10% of physical sales and a quickly growing percentage of digital sales as more platforms embrace the superior technology.  This technology is a huge boon to both consumers and filmmakers who are able to better realize their vision on home viewing platforms.  And the reality is that 4K UHD with HDR and object-based sound looks and sounds great.  It all contributes to the value proposition. “

Driving ownership of content, both physical and digital, is critical as the industry moves forward, executives agree.

“We continue to employ the most innovative and comprehensive tactics to drive ownership across both physical and digital platforms,” said Disney’s Marinelli. “We’ve had tremendous success implementing a number of strategic initiatives including pre-sale promotions, improving retail placement, expanding our social presence, producing live events and creating promotional partnerships. We are also committed to creating a superior in-home viewing experience that extends the consumer experience and deepens engagement.”

“We continually work with our retail partners to present consumers with compelling reasons to own, including superior audio and video presentations, early access, exclusive bonus features, special packaging, and more,” adds Paramount’s Bob Buchi. “Our job is to make our content readily available while maximizing revenue, which means carefully honing the distribution strategy of each title based on projected consumption. The great news is that the proliferation of platforms means consumers are enjoying our content in more ways than ever.”

Transactional video-on-demand (TVOD), which lets consumers “rent” a film or TV show for a limited streaming period, could use a shot in the arm.

“I am concerned that the consumer embrace of TVOD has not been as robust as we would have liked,” says the EMA’s Mark Fisher. “It remains a challenging business. Retailers and content providers are hesitant to invest in the category because it is not getting the desired growth, and we’re not seeing growth because investments are not being made. Delivery costs remain too high, and supply chain efficiencies need to be more widely embraced. EMA is actively working on both of those issues, and we will continue to do so because it is the right thing to do for the industry.”

Looking ahead to 2018, the prognosis among studios is essentially the same as it’s been at the end of the last few years – guarded optimism and a continued belief in the sales model.

Consumers’ appetite for home entertainment content remains remarkably robust,” says Universal Pictures’ Eddie Cunningham. “In fact, our research shows that a vast percentage of households continue to engage in the category whether via disc, digital or both.  Though there are many entertainment choices to distract consumers, offering tangible benefits unique to the format such as exceptional value, accessibility and utility of their favorite movies and TV shows reinforces the distinct advantages of ownership that you can’t get when renting or streaming.”

“I expect change to continue to be a factor in our industry in 2018 and beyond,” adds the EMA’s Mark Fisher.  “Movies Anywhere and Premium VOD, for example, will shake up the basic tenets of distribution and how and when consumers get content. Potential industry consolidations could significantly impact our industry as well. We shouldn’t fear any of this, but managing change will remain a challenge for all of us in the industry.

The home entertainment industry  “remains at the intersection of compelling content and technology, stemming from our consumers’ constant need for new and exciting experiences,” said Keith Feldman, President, Worldwide Home Entertainment, Twentieth Century Fox.

“Technology is moving at a rapid pace and we must evolve our content offerings to meet consumer expectations, which means delivering on next-generation technologies including 4K HDR, 5G and mobile content delivery, simple and functional solutions like Movies Anywhere and immersive experiences like virtual and augmented reality that accurately realize and extend the vision of our filmmakers.”

Disney’s Marinelli has high hopes for 2018. “Disney has the most impressive slate in the industry and we’re confident that 2018 will once again be a very successful year for us with the highly-anticipated in-home releases of Marvel Studios’ Thor: Ragnarok, Pixar’s Coco,Star Wars: The Last Jedi and The Walt Disney Signature Collection release of Lady and the Tramp.

“Movies Anywhere makes it easier than ever to build a digital movie collection. So far we’ve seen an incredible consumer response and believe that by offering a one-of-a kind experience, digital movie purchases will grow.  We will continue to work with the other studios and our digital retailer partners on programs to deliver exclusive content and offers that we believe will be important to driving engagement in the apps and website.”

“The choice between digital and physical is no longer an either/or proposition,” notes Paramount’s Bob Buchi. “We recognize that home entertainment has become a dynamic mix of consumption with opportunities across the spectrum.  Consumer behavior increasingly includes combinations of subscribing, transacting, renting, and buying, and greater comfort switching between digital and physical formats.  Our goal for 2018 is to make sure consumers have easy access to our content in the many ways they want to enjoy it.”

(This article previously appeared in Home Media Magazine.)