Ad-Supported Streaming Space Getting More Challenging, Panelists Say at XFronts Event

Acquiring an audience, finding carriage on connected TVs and devices and curating in-demand content are all getting more challenging in the ad-supported streaming space, panelists said May 25 at the XFronts event in Los Angeles hosted by OTT.X.

Getting carriage for FAST channels has become highly competitive, like finding a spot on a cable service, said Erick Opeka, chief strategy officer for Cinedigm, during the panel “How Does Anyone Make Money in this Business?”

“If you can’t get carriage, you won’t make any money,” he said. He also noted that the FAST channel business has become “more of a gladiator pit than cable ever was” in part because it doesn’t include the cushion of carriage fees.

Attracting eyeballs is more difficult as streaming services have proliferated, Opeka said. “To get [consumers] to download [your app] to the TV, you’re competing with all the big services that have driven up the marketing costs,” he said, noting it used to be “relatively cost effective to do a campaign with Roku or others.”

“If you’re competing with Netflix, Paramount, HBO Max, the cost per acquisition has skyrocketed,” he said.

Jonathan Skogmo, chief innovation officer at Trusted Media Brands, agreed that Roku has jacked up its pricing. “They want you to spend a quarter million dollars a quarter to get customers,” he said.

Panelists said original, exclusive, and in-demand, quality content is key as the competition increases.

“The table stakes are much higher now,” Opeka said. “We’re regularly involved in bidding wars for shows that can be an anchor of a FAST channel. … We’ve got a great one in Bob Ross.”

Skogmo added ad-supported streamers need “really unique programming, something that’s not already out.”

Finding content with ready appeal is also a key strategy.

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“We don’t have the major, major new releases to draw audience attention,” said Jesse Baritz, VP of content acquisition and development at Multicom Entertainment Group, so he said his company focuses on quality, star power and timely content.

“It’s making sure that it is 4K restored, star driven, hitting at the right time with the right audiences,” he said, adding that “when Natasha Lyonne was on ‘SNL’ this week, we made sure we had a movie that stars her.”

Ben Lister, senior director of content at Sinclair Broadcast Group, pointed out that the big subscription streaming guns such as Netflix are moving into the space, creating another challenge.

“As the SVODs start turning on advertising, I’m not sure how the consumer is going to respond,” he said, advising those that want to compete to “be prepared to make new content.”

Something as elemental as metadata can also help audiences find your content. Have “as much of that as you can” to help with discovery, Lister said.

“If you ask Siri or Alexa to show you the content, it comes up,” he said.

Another way to stand out from the crowd is to have a clear brand.

“You need a brand,” Opeka said. “If you don’t have a brand, align with somebody who does.”

OTT.X Hosts Streamers, Advertisers at XFronts

OTT.X held its inaugural “XFronts” event May 24-25 at the Skirball Cultural Center in Los Angeles. The XFronts event, which drew nearly 400 guests, was an exchange consisting of pitches and presentations by prominent and up-and-coming AVOD and FAST platforms, networks, and channels to an audience of brands, advertisers and ad agencies, according to OTT.X. Presentations included details about lineups, content promotion and other plans for the coming year. The opening reception was held Tuesday evening, May 24. (Media Play News staff photos.)

OTT.X XFronts Event Spotlights FAST, AVOD Services

Ad-supported streaming services took center stage on the first day of the inaugural OTT.X XFronts event, taking place May 24-25 in Los Angeles.

The event is an exchange consisting of pitches and presentations by prominent and up-and-coming AVOD and FAST (free ad-supported streaming) platforms, networks and channels to an audience of brands, advertisers and ad agencies.

OTT.X president and CEO Mark Fisher said XFronts tallied nearly 400 registrants.

In welcoming the crowd, Erick Opeka, Cinedigm chief strategy offer and one of the creators of the event, said XFronts was designed to help “build the next generation of great streaming companies.”

“For years, the [ad-supported streaming] business was tiny, incremental and frankly a rounding error,” he said. But now with Netflix and other major streamers looking at ad-supported tiers, he noted, “The rest of the industry is catching up.”

Prior to a panel titled “Is FAST Programming Moving in the Direction of Cable TV?” TelevisaUnivision’s Richard Hull said that linear streaming was indeed encroaching on traditional TV turf.

“You’re finally seeing a transition of all the linear dollars on broadcast and cable TV starting to move over to these free ad-supported platforms,” he said.

Panelists agreed that FAST services were the new frontier in the linear TV business that cable and broadcast built.

“We actually consider ourselves as being in the cable TV business,” said Stuart McLean, CEO of FAST Studios, which features numerous channels and is soon launching the Women’s Sports Network. “All of our teams come out of the cable business.”

“But there’s the data to back it up on who’s watching when,” he added.

“That’s something that cable’s never been able to do, [serve up ads] customized for the user,” added panelist Anthony Layser, VP, partnerships and programming, at Xumo, the OTT service provider owned by Comcast Corp.

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Adam Bergman, VP of national ad sales for Vizio, which offers FAST services on its connected TV screens including its own WatchFree+, noted Vizio is a service just like cable “without the strings” and also pointed out streamers’ added power of data in serving advertisers.

“That’s my screen and my remote in your hand,” he said of the Vizio service. “I know more than anyone about what happens on my screen.”

Xumo’s Layser said the ad-supported business started to really take off in 2019. “The content doors started opening,” he said, noting that services such as Tubi, Pluto TV and Roku paved the way. “Since that time it’s very different in terms of the premium nature of the content,” he said, adding “more and more studio catalog is available.” Original programming in the space has also started to pop up, he said. Tubi has started to add originals, he noted with a nod to fellow panelist Sam Harowitz, VP of content acquisition and partnerships at Tubi.

“Our overarching strategy is to superserve passionate communities,” Harowitz said, noting that Tubi has a library of 40,000 titles. In measuring Tubi’s success, he looks at “the total view time that a customer is spending on our service.” Tubi is also built around machine learning, which helps to serve up better content to consumers the more they watch, he said, driving engagement.

While distribution is cheap in the marketplace, FAST Studios’ McLean said, “At the end of the day, you still have to have scale.”

As streamers jockey for distribution partners, carriage conflicts like those frequently experienced in the cable marketplace could become more common, said Vizio’s Bergman, pointing to the dustup between Roku and HBO Max.

“One will look to have the upper hand when maybe they shouldn’t,” he said, pointing out that carriers might say, “I am fine without your content if those are the terms.”

The first day of the conference also included company presentations with details about lineups, content promotion and other plans for the coming year. Presenting companies included FAST Studios, which highlighted the launch of the Women’s Sports Network with an ESPN and surf star; Cinedigm, which outlined its genre-based channels and a partnership with Roundtable Entertainment; Future Today, which highlighted its kids and family content; Plex, which spotlighted its new content discovery product; and AfroLandTV, which highlighted its African content and a move into original programming starting with an African food show.

OTT.X to Host Diversity Summit in Los Angeles June 9

OTT.X has announced the OTT.X Diversity Summit scheduled for June 9 at the Skirball Cultural Center in Los Angeles.

The summit is designed to bolster diverse OTT streaming organizations with access to information, connections and opportunities.

The full day conference will feature presentations, panels and breakout sessions to support content creation, increased distribution, awareness and viewership for OTT businesses that are owned and run by minorities and those in underrepresented groups.  

Topics include:

  • AVOD, FAST and subscription matching the right model with the right content and audiences;
  • gaining meaningful distribution for indie content creators;
  • making money with ad-supported video;
  • producing content for underrepresented audiences; and
  • reaching a diverse audience.

 
“The OTT.X Diversity Summit brings the OTT ecosystem together across the breadth of human experience to advance their businesses and amplify their voices,” OTT.X CEO and president Mark Fisher said in a statement.  

The summit is free for OTT.X members and $150 for non-members. 

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OTT.X Launching X-Fronts Confab May 24-25

OTT.X  has announced its inaugural X-Fronts event will be held May 24-25 at the Skirball Cultural Center in Los Angeles.  

The confab will provide “new opportunities for the next frontier of audience engagement,” according to the industry organization.

The X-Fronts will be an exchange consisting of pitches and presentations by prominent and up-and-coming AVOD and FAST platforms, networks, and channels to an audience of brands, advertisers and ad agencies, according to OTT.X. Presentations will include details about lineups, content promotion and other plans for the coming year. 

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The X-Fronts event “will serve as a launch pad for the rapidly growing AVOD and FAST markets by educating about and advocating for the growth and promotion of AVOD and FAST platforms,” according to the organization. Attendees will be directly exposed to a wide variety of options for their media budget spends from across the broad spectrum of established and rising stars in OTT streaming, according to organizers.

Each day will include a keynote speaker or panel, and meeting spaces, both private and semi-private, will be available for planned or ad-hoc meetings. 

“It is no secret that AVOD and FAST platforms are quickly becoming prominent players in the OTT and streaming landscape,” Mark Fisher, president and CEO of OTT.X, said in a statement. “By 2024, North American AVOD revenues are expected to reach $20.3 billion and close to 50% of the U.S population will be streaming AVOD content. The X-Fronts provides a first mover opportunity into the next generation of content viewing and audience engagement.”

OTT.X Speakers: Streaming Market Entering a New, More Competitive Phase

The streaming marketplace is entering a new phase as consumers balk at paying for more subscription services and turn to cheaper and free ad-supported options. But while those more economical options are experiencing growth, that marketplace, too, is getting more crowded and competitive. That’s according to speakers at the OTT.X Online event Feb. 23.

“The days of build it and they will come are over,” said Quincy Newell, CEO of TwentyOne14, which operates Fuse Beat, available on Roku and offering entertainment and lifestyle content targeting Black culture.

“Quality is important and key. Exclusivity is preferable,” he said.

“I think original content is becoming more important,” said Philippe Guelton, president of Crackle Plus. The AVOD service garners original content from parent company Chicken Soup for the Soul Entertainment.

Meanwhile, Gary Delfiner, CEO of Watchfreeflix, which offers various free streaming channels of licensed content via Roku and other platforms, noted originals aren’t as important as some think.

“I’m not that focused on original content,” he said. “I can’t afford it. I’m not Amazon and I’m not Netflix.”

Watchfreeflix plays to its strengths in horror and action thrillers, among other genres, he said.

“I believe that quantity and not sacrificing quality is the reason people are watching my channels,” he said.

He noted that SVOD services aren’t refreshing their new content that frequently, while he is constantly getting new content and creating new channels, all offered to audiences at no cost.

“I think free is a good price,” he said.

Guelton agreed that free ad-supported services have an advantage, but the competition is getting fiercer.

“When it comes to AVOD, the game is almost over,” he said. “On the FAST [free ad-supported TV], linear side, I think there’s a much longer runway.”

Newell said that his company is careful about what content it acquires and creates to stay on top of the market.

“I don’t want to have long-term licenses,” he said, adding he likes to refresh content based on audience feedback.

His team subscribes to other services to identify gaps in the marketplace and uses social media to communicate with audiences.

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“We have a very large social presence,” added Zack Coffman, founder and CEO of global OTT distributor One World Digital.

Jonathan Skogmo, founder and CEO of Jukin Media, said his team uses social media to incubate content ideas.

Platforms, such as Roku, can be an important and influential marketing partner, speakers said.

“It’s the platforms that hold the gate,” said Berkin Ecevit, sales and business development director at SPI International, a global media company that is moving into the FAST space.

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Getting to the top of the marketing list at such platforms is challenging, he said.

“Valentine’s day you’ve got to have love movies,” he noted. “What if we don’t have those?”

“The big question is what kind of leverage do we have,” Guelton added. “What can we trade? … and, yes, it can be money.”

The type of content distributors can offer is key, too.

“They’re willing to promote it for free if it’s exclusive,” Guelton said, adding the quality of the brand is important as well.

“The Crackle brand is well-respected,” he said, as is that of its parent Chicken Soup for the Soul.

Kathryn Przybyla, director of social media at America’s Test Kitchen, agreed that a good brand gives FAST players a leg up.

“People know who ATK is,” she said.

Coffman said communicating with the platforms is key.

“Start to pay attention to what the platforms are telling you,” he said, adding “if you become a great partner, the platform is more than happy to work with you.”

Skogmo noted that there’s a “sense of choice paralysis” among consumers that makes brand equity and good key art crucial.

“I think you have to have a really clear voice of what you’re curating and why you’re curating,” he said.

Stuart McLean, CEO of FAST Studios, told FAST players to “lean in on graphics packages and thumbnails.”

As a platform player among the panelists, Jennifer Vaux, head of content acquisition at the Roku Channel was coy about what prompts Roku to market a channel above others.

“You’re essentially telling the viewer what they’re going to spend their time with,” she said, adding with hundreds of channels to search through, content owners “really need to cut through the noise.”

As far as what Roku is looking for in acquiring and promoting a channel, she said a strong IP is attractive, as well as a deep library.

“We’re always looking to partner with people who have expertise in different genres,” she also said.

The data that a streaming channel collects is helpful in defining a strategy, speakers said.

“Sometimes content resonates completely differently depending on the platform,” Przybyla said.

In contrast with legacy channels, streamers get real-time data, McLean said.

“We don’t wait for Nielsen,” Coffman said.

“We’re lucky because we are a platform … we generally see what people are watching on our own channels and use that to inform our programming decisions,” Roku’s Vaux said.

While the U.S. market is crowded, speakers noted that going global might make sense.

“I think the world is wide open,” SPI’s Ecevit said.

“That’s a market that is wide open and somewhat untouched,” Watchfreeflix’s Delfiner agreed.

Clockwise from top left, moderator Anthony Layser of Xumo and panelists Jennifer Vaux of the Roku Channel, Jonathan Skogmo of TMB, Kathryn Przybyla of America’s Test Kitchen, and Zack Coffman of One World Digital.

Looking Ahead: Lessons From the Pandemic to Guide 2022 Home Entertainment Strategies

The uncertainty over the COVID-19 surge triggered by the emergence of the Omicron variant has made any and all predictions for the coming year suspect. Life could go back to normal fairly quickly or we will continue to battle surges and adjust our lives accordingly. Most observers don’t see us going back to the draconian shutdowns and lockdowns of the early days of the virus, but studio executives and exhibitors are understandably nervous about the current and any future surges since theatrical attendance could suffer — which ultimately affects everyone down the food chain.

The home entertainment business weathered the initial COVID crisis quite well, with streaming growing stronger and transactional video-on-demand (TVOD) winning a premium first-run window. That said, there are several “givens” as 2022 gets underway.

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Netflix, Disney+, HBO Max and the other high-profile streamers will continue to battle for dominance, with Netflix doing everything in its power to reduce churn and not lose market share. The second tier of SVOD players, including Paramount+ and Peacock, will make as much noise as possible to win a seat at the table — as evidenced by Peacock’s recent announcement that it will be streaming the winter Olympics in their entirety.

On the transactional side, a lot depends on the fate of movie theaters as this pandemic lumbers on. The early pandemic led to an overall shortening of windows and new-release strategies that ultimately benefited both home entertainment divisions and digital retailers such as Vudu by Fandango, Redbox On Demand, Microsoft and Google Play.

Jim Wuthrich

But while TVOD, and physical media, benefit from shorter windows, it is also impacted by studios accelerating, or re-ordering, SVOD windows. A film available as part of an all-you-can-watch subscription streaming service simply isn’t going to sell or rent nearly as well as it would if there was no “free” competition. And that plays into the bigger picture that the more consumers tune in to SVOD services, the less likely they are to purchase or rent something a la carte.

Jim Wuthrich, president of content distribution for WarnerMedia, says he’s “optimistic that we’ll continue to adapt to the changing nature of COVID and learn to live with it.”

“Although there are many challenges, we’ve learned how to be productive with a distributed workforce, productions are largely back and there’s more consumer choice than ever before — both in amount of content and ways to view,” he says. “It’s a great time to be a fan of linear storytelling. We will continue to improve and expand HBO Max to more markets, while providing a la carte options for fans and collectors. SVOD services will continue to dominate viewing time, with transactional supporting a vital role in discovery, sampling and fandom. Physical media (4K/Blu-ray/DVD) continues to be a meaningful market, with approximately $2 billion in U.S. consumer sales, and largely immune to evolving distribution patterns.”

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On the WarnerMedia side, Wuthrich says, “We have a great movie slate, with four DC films coming to theaters and another installment of ‘Fantastic Beasts.’ We also have a number of series releasing, including the new ‘House of the Dragon,’ a ‘Game of Thrones’ prequel. History has shown these franchises to be powerhouses in driving catalog sales so we are looking forward to a great year.”

Michael Bonner

“Similarly to 2021, we expect a very healthy home entertainment market in 2022, with strong consumer engagement across multiple business models,” says Michael Bonner, president of Universal Pictures Home Entertainment. “Release patterns will likely continue to fluctuate and vary across studios on a title-by-title basis.   

“With the theatrical marketplace continuing to strengthen, the growth of PVOD and the expansion of various SVOD services, the distribution landscape is stronger than ever. As we look ahead, studios have more options and outlets to create value and reach consumers which strengthens our ability to continue investing in great content.”

Bonner maintains that Universal, with its slate of anticipated new releases including Jurassic World: Dominion, Minions: The Rise of Gru and Downton Abbey: A New Era, “is perfectly positioned to draw audiences back into theaters and fuel further transactional growth across the varying windows and platforms.”

Paramount Home Entertainment president Bob Buchi says that “as the global hub for transactional home entertainment across ViacomCBS, our division is exceedingly fortunate and singularly focused on delivering an extraordinary 2022 line-up of the company’s theatrical and television content, as well as third-party acquisitions through our extensive partnerships.”

Bob Buchi

“Our theatrical slate includes new entries in wildly popular franchises, including ‘Scream,’ ‘Top Gun,’ ‘Mission: Impossible,’ ‘Sonic the Hedgehog’ and ‘Jackass,’ which are not only highly anticipated, but also provide excellent opportunities to stoke fan interest in the earlier films and television shows available through home entertainment,” he says.

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On the catalog front, Buchi adds, the division’s most ambitious initiatives are the year-long 50th anniversary salute to The Godfather, “for which we anticipate massive consumer excitement for the film’s return to theaters, new 4K home entertainment releases, and licensed merchandise,” and the first-time-on-4K director’s edition of Star Trek: The Motion Picture, “with fantastic new VFX, which will be released first on Paramount+ and then on home entertainment platforms.”

Cameron Douglas, VP of home entertainment for Fandango, which oversees the Vudu digital retailer, also has high hopes for the new year.

“We expect the TVOD sector to deliver even more value to consumers, as fans sort through a fragmented streaming world, looking for a one-stop-shop entertainment service for movies and TV,” he says. “Because subscription services, by their nature, cater to specific audiences and content offerings, we continue to see consumers utilizing the flexibility, depth and breadth of Vudu’s new release and catalog offering of over 200,000 titles to complement their monthly entertainment needs.”

Cameron Douglas

Douglas says Vudu “is working hard to expand our catalog every day. It’s both a challenge and an opportunity, as we continue to secure new and previously unavailable titles. There’s a variety of titles where digital rights were originally unsecured, but with the demand increasing, there’s more pressure than ever to make these films available for fans to stream at home. We pride ourselves on providing the best quality of experience and we are always working to create a bigger, better home entertainment experience for our customers. We want to be that place where fans can find every beloved movie and show they desire.”

At the top of Vudu’s agenda for the coming year, Douglas says, are plans “to innovate new services for our customers and add new platforms and devices to meet the fan demand in an ever-changing marketplace. We also plan to offer deeper integration with our sister sites, Rotten Tomatoes, for entertainment discovery, recommendation and curated content, and Fandango for crossover promotional opportunities to help enhance the theatrical experience. With our entertainment lifecycle marketing strategy, we look forward to helping new and returning partners more effectively and efficiently reach high-value entertainment audiences at scale.”

The big challenge for home entertainment executives in the coming year is to apply lessons they learned during the pandemic and react quickly to market conditions.

Paramount’s Bob Buchi says that “with two years of experimentation and the expedited evolution of our business, we know we need to remain agile in our windowing and co-promotional strategies as we continue to support the return to theaters and the rapid growth of our streaming service, Paramount+.”

Adam Frank

Adam Frank, SVP of global digital sales and distribution at Lionsgate, says what happens at the box office will trickle down into all aspects of home entertainment.

“Our expectation, given the quality and quantity of the theatrical release slate, is that box office sees significant increase and momentum in 2022 vs. 2021,” Frank said. “The old adage of content is king still rings true, and with more product in the marketplace, consumers will ultimately have more choices and more opportunities in the home entertainment space.”

Jed Grossman, EVP and GM of worldwide sales and distribution at Lionsgate, adds, “We expect all business segments — transactional digital, packaged media, SVOD and AVOD/FAST — to grow year-over-year driven by five key factors:

    • A more robust theatrical release schedule, inclusive of major tentpoles and franchises like ‘Jurassic World,’ ‘Top Gun’ and ‘Black Panther’ that were delayed during the pandemic. Lionsgate has a strong slate that includes Unbearable Weight of Massive Talent, starring Nicolas Cage; Are You There God? It’s Me Margaret; and White Bird, among others; 
    • A more viable theatrical marketplace, with theater-going comfort increasing as vaccine/booster shot rates increase and tentpoles drive attendance;
    • The continued unprecedented demand for new release and library product from SVOD and AVOD/FAST platforms. Lionsgate has achieved record library revenue over the past year;
    • The ability to capitalize on home entertainment consumer behavior, consumer content thirst and technology enhancements — across all offer types — as accelerated by the pandemic lockdowns of 2020 and early 2021; and 
    • Continued collaboration with our theatrical exhibition partners to release films with dynamic windows to meet demand across all platforms.”
Jed Grossman

For independent film distributors, don’t expect much variance in 2022 from established policies of continuing to take aim at the collector and niche markets, particularly on the physical media side.

“For disc sales, MVD and our label partners are focusing on collectible content in deluxe packaging,” says Ed Seaman, COO of MVD Entertainment Group. “We anticipate a similar trajectory for disc sales, which have steadily grown over the last several years. The pandemic certainly gave them a boost, but the resilience and resurgence of disc sales may have more to do with the frustrating customer experience our industry has created in the OTT space. Finding what you want is now very challenging. How many streaming services do you need to subscribe to only to not find the film you want to watch, when you want to watch it? You can more easily find what you want transactionally, but it is still a search. Why not just pay a bit more and own the deluxe-edition disc?”

On the digital front, Seaman says “AVOD/FAST will continue to grow dramatically as consumers clearly embrace and enjoy that model. TVOD is tricky; considering Amazon’s tight curation of non-fiction, we expect some other platforms to step up and become more dominant in that space. There is a real opportunity for platforms focusing on non-fiction to deliver to fans what they want when they want it.”

At MVD, Seaman notes, “we’ve just added Zach Fischel to our leadership team; Zach is a veteran in the entertainment industry and is leading our label management team and marketing department. We’ve additionally moved longtime MVD staffer Chris Callahan to lead our digital sales and operations team. Chris has been with MVD since 1999 and has served in sales management, label management and international licensing. Both of these leaders are committed to improving their areas of responsibility; they have great ideas particularly in digital marketing, an area of overlapped responsibility. We are really excited about 2022!”

So is Mark Fisher, president and CEO of OTT.X, a streaming industry trade group.

“2022 will be a year that portends the future of our industries — a future that, enabled by OTT distribution, is more egalitarian, more global and more diverse,” Fisher says. “While Hollywood continues to make great movies and TV shows, smaller distributors and independent producers from all over the world are making a lot of great content, too — enabling the consumer to be less reliant and dependent on content from the big studios and on domestic-produced content. And, while the big ‘Pluses’ and ‘Maxes’ continue to grow, consumers are finding plenty of additional content on indie and niche channels, both FAST and on demand.”

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

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

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

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

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

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

Jim Wuthrich

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

Mixed Results

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

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

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

Amy Jo Smith

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

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

TVOD Recovers

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

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

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

Jason Spivak

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

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

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

Bob Buchi

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

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

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

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

Michael Bonner

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

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

Distribution Deals

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

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

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

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

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

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

Streaming Fatigue and the Rise of AVOD

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

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

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

Mark Fisher

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

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

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

Converging Businesses

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

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

Galen Smith

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

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

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

On the Indie Front

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

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

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

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

John Rotella

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

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

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

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

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

New Ways of Doing Things

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

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

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

OTT.X Cancels Breakfast Event at CES 2022

The trade group OTT.X has canceled its breakfast at the upcoming CES 2022.

“Due to the rise in COVID cases and out of an abundance of caution, OTT.X CES Breakfast has been canceled,” read an email announcement from the trade group.

The event was to take place Jan. 5 at the Stirling Club near the Las Vegas Convention Center.

“Thank you for your continued support and being a valued member of our OTT community. We hope to see you at our next event in the future,” the email read.

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Personal Stories: Mark Fisher of OTT.X — From Stop & Shop to Streaming

Editor’s note: This is the first in an occasional series of personal stories by executives in home entertainment, detailing how they got into the business and comparing what they’re doing now to what they did back then. For submissions, please contact Thomas K. Arnold at tkarnold@mediaplaynews.com. 

Mark Fisher

Facebook memories occasionally stimulate reminiscing about days gone by.

The other week, an old post and picture popped up on Facebook that reminded me that my first contribution to the home entertainment industry was opening my first video rental store — the first store-within-a-grocery store — 36 years ago.  That triggered a rush of memories of those earlier years, and the travels to get to where I am today: still in home entertainment, focused on streaming, now the industry’s dominant incarnation.

But let’s step back. In 1985, I was just starting my career.  I had a job at Stop & Shop Supermarkets, the largest grocery chain in New England, managing the non-foods departments in the company’s Connecticut stores — a great gig to have in my 20s.  The company was, compared to other grocers in the 1980s, very professional and progressive, and had lots of really good people in its management ranks. When independent video rental stores were popping up around New England, the company thought, what better place for a rental store than in the neighborhood grocery store. It is, by nature, a convenient location, and customers visit on average of two and one-half times each week.

Personally, I was a movie lover and a video enthusiast. I had a front-projection TV, a piano key VCR (like the one you see at the start of each episode of ABC’s “The Goldbergs”), and I was a regular renter of VHS tapes at the Fotomat drive-through, where you could find all the latest releases.

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A Stop & Shop standalone video store in 1993.

I was recruited to move up to corporate headquarters in Boston and lead a team to develop our own chain of rental stores to operate within our grocery stores. Like every other video rental store, we charged a membership fee and rented movies by the night. Unlike the others, partly because we didn’t have a lot of space, we didn’t put empty boxes out on the shelves — we put the actual tapes out for the customer to bring up to the counter to rent. (That way there was no chance they’d be disappointed if it was out of stock.) We were a well-funded company, and we had an aggressive rollout plan — so, also unlike so many of our competitors, we brought in lots of copies of new releases (think 75 copies of Jurassic Park). Our customers were more likely to go home with the movie they came in for, and hopefully one or two more.

We located the Stop & Shop Video Centers up in the very front of the store layout, so the customer could get in and out easily. Executive management took this new venture seriously. We were formed as a separate division of the company — I reported to the SVP of operations, and my direct reports were the buying team and district managers, while the store teams reported directly to my DMs (unlike everybody else in the store, who reported to the grocery store manager). We were truly a novel “store-within-a-store” concept.

We built our chain up to 63 stores within our grocery stores, and five freestanding 6,000-square-foot video rental stores positioned adjacent to our grocery stores. We had endcaps with video rentals that were serviced out of the courtesy desks in our smaller grocery stores, and a team of merchandisers who revamped the product mix in each weekly.

The most enjoyable part of my job was the promotions that we ran, with the support of our studio partners. We had a tie-in promotion with the actual Mystic Pizza in Connecticut when that Julie Roberts movie released; another with the submarine base in Groton, Conn., when The Hunt for Red October was released. We worked with a local radio station and hosted a day at the Rhode Island Zoo when Disney released Jungle Book. And we raised a lot of contributions and spent Thanksgiving Day helping out at a homeless shelter in Springfield, Mass., to promote Robin Hood: Prince of Thieves. There were countless others — pretty much a new promotion somewhere within our chain every month.

A Mickey Mantle in-store appearance at a Stop & Shop Video Center.

We also had lots of in-store appearances. Customers lined up to meet Mickey Mantle, Phil Rizutto, Gordie Howe and plenty of others over the years.

Our biggest events were our annual Oscar parties. We invited our best customers from each store to join our store managers and management team each year to watch the Oscars on big screens with music, food and drinks. We always had special guests and local entertainment. We really scored the year that David Letterman hosted the Oscars and we had secured Larry “Bud” Melman, Letterman’s “man on the street,” to participate in our party.

How did I learn the business? Here’s where everything comes full circle.  Before we opened our first store, I started going to meetings of the local chapter of the Video Software Dealers Association (VSDA — which eventually became EMA and now OTT.X). The VSDA in those days was primarily an organization of small independent video rental stores around the country. I learned from other retailers and from local distributor reps and studio reps. Stop & Shop joined the VSDA. I attended local meetings, and went to my first national convention in 1986. I eventually joined the board of directors for the local VSDA chapter, and helped out creating educational events for video rental store employees in New England. I served as treasurer for a few years, and during that time I was appointed to the VSDA’s national board of directors, where I served with industry superstars such as Mitch Lowe (later the co-founder of Netflix and Redbox), David Ingram (president of Ingram Entertainment), Ron Berger (founder of Rentrak) and others. Before I left that board, I had moved up to treasurer, while still treasurer of the local board.

All of my team at Stop & Shop was involved in the VSDA — my buyers, my DMs and my store managers. They attended meetings and events and got involved in producing local VSDA events. These sessions supplemented the industry knowledge that we could share with them, and inviting them to local movie openings and VSDA parties served as a reward, too. My team worked really hard — but I always liked to give them the opportunity to play hard, too.

In 1997, I was recruited to head up corporate store operations for West Coast Entertainment — a chain of 450 rental stores plus even more franchisees on the East Coast. Not able to grow our Stop & Shop video store footprint any larger, I left and moved to Philadelphia for my new position with West Coast. It was challenging, managing a chain that had a dozen different retail store brands and nearly two dozen different POS systems, but it was also an opportunity to grow a new team and meet a lot of new friends — many of whom I’m still close with and work with today, including Mike Haney at Allied Vaughn and Steve Apple on our OTT.X team.

Just a few years later, I joined the staff of the VSDA, then headed by Bo Andersen, to manage membership and sales. Twenty-two years later, I’m still here, now in the president/CEO role, and I’ve been at the helm from our transition from physical discs to digital and from EMA to OTT.X.

The old saying, “everything old is new again,” certainly has rung true for me. The big sellthrough retailers such as Best Buy, Walmart and Target, as well as many of the big studios, haven’t been the most entrepreneurial and have been less in need of what we do as a trade association. Today we are back to an organization of mostly indie or entrepreneurial companies — along with many established companies. We’re back to having lots of engagement and a strong vibrant community. 

Looking back, it’s been lots of fun, and most of all, I’ve made lots of friends — and if I didn’t move out to Los Angeles for this gig at what was then the VSDA, I’d never have met my wife. Julie. And, I think I’ve made an impact on the industry that I love over the years. (Actually, Redbox co-founder Mitch Lowe wrote that my original Stop & Shop store-in-a-store concept was the inspiration for Redbox.)

The best thing about all of this is that it isn’t over. Today’s industry isn’t what we knew as “home entertainment” — it’s blended with the extension of the broadband and cable industries and linear programming into OTT, and it is still in its formative stage with a hunger for education, collaboration and networking. And as long as I’m still challenged and having fun, I’ll be in it — transitioning and pivoting, just as I’ve always done.