‘Sonic the Hedgehog’ Speeds to No.1 on U.K. Official Film Chart

Packaged media proved to be the perfect spark to push Paramount Home Entertainment’s Sonic the Hedgehog to the top of the U.K. Official Film Chart through June 17.

The video game adaptation entered the chart in April at No. 3 when it was released on digital download early due to the COVID-19 crisis. Sony Pictures Home Entertainment’s Bloodshot returned to the chart in the fifth spot following its release on DVD, Blu-ray Disc and 4K UHD.

Bloodshot, which stars Vin Diesel, was first released digitally in March, two weeks after its theatrical bow. Entertainment One’s Oscar-winning war drama 1917 jumped to No. 2, while the previous week’s No. 1, Dolittle (Universal Pictures Home Entertainment) fell to No. 3, and Disney’s Onward dropped to No. 4.

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Sony Pictures’ Bad Boys For Life finished No. 6, while the studio’s Jumanji: The Next Level remained strong at No. 7. Sony Pictures’ Little Women came in at No. 8, while Disney’s Frozen II followed at No. 9, and Universal’s Cats fell four spots to No. 10.

Target Q1 E-Commerce Sales Up 141%, Profit Plummets

Big-box retailer and home entertainment distributor Target May 20 reported a 141% increase in e-commerce revenue for the first quarter (ended March 31), as consumers stocked up on lower-margin products online due to the coronavirus. As the same time, higher-margin apparel and merchandise sales declined, which contributed to a 0.9% increase in same-store sales.

CEO Brian Cornell said Target.com saw an increase of 5 million customers in the quarter, while more than 2 million used the drive-up service. The chain said more than 70 million people have downloaded the Target Circle app to access e-commerce.

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Overall retail sales increased 11.3% to more than $19.3 billion, from $17.4 billion during the previous-year period. Yet, net income plunged more than 64% to $284 million, from $795 million a year ago. The culprit: increased product, employee and shipping costs for online sales.

Target said cost-of-sales increased more than 18% to $14.5 billion, from $12.2 billion in the previous-year period. Administrative costs increased 10.9% to $4 billion, from $3.6 billion a year ago.

The decreases reflected actions taken by Target’s merchandising teams, including costs and inventory impairments related to the rapid slowdown in apparel & accessories sales, unfavorable category mix as consumers stocked up on lower-margin categories like essentials and food and beverage resulting in higher digital and supply chain costs, driven by unusually strong digital volume as well as investments in team member wages and benefits.

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Indeed, Target is paying store employees and extra $2 per hour through July 4.

“We’ll continue to be focused on [consumer/employee] safety, not just for the next few quarters, but for years and years to come,” Cornell said on the fiscal call. “We’ve been talking for years about being America’s easiest place to shop. We’re going to need to make sure we combine being an easy place to shop with America’s safest place to shop and make sure that that commitment to safety is ongoing.”

Jeff Bezos: ‘Hardest Time We’ve Ever Faced’

Not even Amazon is immune from the impact of the coronavirus.

Founder/CEO Jeff Bezos devoted much of the e-commerce behemoth’s first-quarter (ended March 31) press release to highlight efforts the company has taken on the warfront against COVID-19 — including safeguarding its warehouse employees, hiring 175,000 more of them, increasing hourly wages by $2, working on virus detection test production, deploying AWS to school districts for at-home learning, and reserving special shopping times for seniors at Whole Foods, among other initiatives.

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“The current crisis is demonstrating the adaptability and durability of Amazon’s business as never before, but it’s also the hardest time we’ve ever faced,” Bezos said in a statement.

Indeed, while net sales increased 26% to $75.5 billion in the quarter, from $59.7 billion in previous-year period, profit declined 31% to $2.5 billion, from $3.6 billion.

The culprit: a shutdown of all non-essential shipments, including many third-party sellers (more than 50% of Amazon sales), and increased delivery-related costs. In addition, there was a $387 million unfavorable impact from year-over-year changes in foreign exchange rates, which impacted net sales by 1%.

Amazon said it spent $600 million on COVID-19-related costs, which is expected to increase to $4 billion in the current second quarter.

On the entertainment front, Prime Video launched Prime Video Cinema in the U.S., the U.K., and Germany — a premium VOD movie rental service that enabled members to stream in-theater movies at home, including titles such as Birds of Prey, Emma, The Invisible Man, Onward and Trolls World Tour.

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Prime Video premiered several new Amazon Original series, including the reality competition, “Making the Cut,” hosted and executive produced by Heidi Klum and Tim Gunn; “The Forgotten Army” in India; “Love Island” in France; “Celebrity Hunted” in Italy; and the docuseries “The Test: A New Era for Australia’s Team” in Australia.

As previously reported, Prime Video and the NFL announced a multiyear agreement to live-stream 11 Thursday Night Football games as well as one additional regular season game.

Online store sales increased 24% to $36.6 billion, from $29.4 billion a year ago. Store sales include packaged media such as DVD, Blu-ray Disc and music CDs. Subscription serviced revenue, which includes Prime memberships, audiobooks, transactional VOD, digital music, e-books and other non-AWS subscription services, increased 28% to $5.5 billion, from $4.3 billion a year ago.

Best Buy CFO: Coronavirus ‘Very Fluid Situation’ Impacting First Half-Year Results

Best Buy Feb. 27 said it expects interruptions from the global coronavirus outbreak to impact first half-year store results.

Like many retailers, Best Buy generates much of its product inventory from China, which, as the epicenter of the COVID-19 virus, has seen many manufacturing facilities shuttered over worker safety concerns.

“This is a very fluid situation, which makes it difficult to determine exact financial impacts from disruptions in supply chain,” CFO Matt Bilunas said in a statement.

The CFO said the retailer views the situation as a relatively short-term disruption that would not impact Best Buy’s long-term strategy and initiatives.

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“Our guidance ranges for both Q1 and the full-year 2021 [upwards of 2%] reflect our best estimates of the impacts at this time,” Bilunas said.

Separately, the nation’s largest CE retailer disclosed that fourth-quarter (ended Feb. 1) same-store entertainment sales in the United States fell nearly 22% to $1.1 billion compared to a 2.7% increase to $1.3 billion in the previous-year period.

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The entertainment segment includes DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software.

The nation’s largest consumer electronics retailer said entertainment represented 8% of $13.8 billion domestic revenue, down from 10% of $13.5 billion in Q4 of 2019.

Internationally, same-store entertainment sales dropped nearly 17% to $94 million from a 2.7% drop to $117 million during the previous-year period. Entertainment represented 7% of international revenue compared to 9% in 2019.

Overall, domestic revenue increased 2.6% versus last year. The increase was driven by comparable sales growth of 3.4%, partially offset by the loss of revenue from store closures in the past year.

The largest comparable sales growth drivers were headphones, computing, appliances, mobile phones and tablets. These drivers were partially offset by declines in the gaming category.

Domestic online revenue of $3.52 billion increased 18.7% on a comparable basis due to higher average order values, increased traffic and higher conversion rates. As a percentage of total domestic revenue, online revenue increased to 25.4% versus 21.9% last year.

COVID-19: A Boon to Home Entertainment?

The sudden spread of the Coronavirus disease (COVID-2019), an incurable infectious disease that has killed more than 2,200 people, into Italy, Iran, Austria, Spain, Croatia and South Korea, has sent global markets on a downward spin.

The Dow Feb. 25 reported its worst two-day slide in history in part on the impact of the disease as the Centers for Disease Control and Prevention in Atlanta issued a report saying it was “inevitable” the disease would infiltrate the United States.

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The news had one Wall Street analyst proclaim a potential upside for Roku, which pioneered the subscription streaming media market with Netflix, and now controls the streaming device market as well.

Needham & Co. analyst Laura Martin, in a note, believes Roku could be a stock that benefits should COVID-19 expand into the United States.

Specifically, Martin contends that should the virus spread domestically, consumers would more likely opt to stay home to be entertained rather than going out to the movies, concerts and other public live-event venues.

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In other words, consumers would increasingly opt for home entertainment choices such as subscription VOD, ad-supported VOD, DVD/Blu-ray Disc rentals and/or purchases.

Indeed, Redbox affords users the ability to rent discs online for quick pick-up at the nearest kiosk. The vendor also enables consumers to rent/buy digital titles online.

Walmart-owned Vudu.com and Amazon Instant Movies do the same, while Movies Anywhere platform directs consumers interested in purchasing or renting titles from one of eight digital partners, including Vudu and Amazon.

Movies Anywhere is available free on Roku players and Roku branded televisions, with the digital hub eliminating the need to surf Roku channels and Apple products looking for new-release movies.

Roku-enabled streaming devices top the market, including Apple TV, Google Chromecast and Amazon Fire TV, with 25% of all connected televisions sold in the U.S. being a branded Roku TV.

“That would boost hours viewed and available ad units above projections,” Martin wrote, promoting investment in Roku as a defensive strategy. She lists Roku with a “Buy” rating and a $200-per-share price target, which is 71% above what the stock closed at on Feb. 25 — and up 3% from the previous day.

Iger: Disney Sticking to 90-Day Theatrical Window

Late last year, Disney CEO Bob Iger said the company was considering steps to expedite access to select studio box office titles into retail channels — a move that could shorten the venerable 90-day theatrical window for new-release movies.

No sooner had he said that, Iger reiterated his ongoing support affording exhibitors such as AMC Theatres and Regal exclusive access to movies upon release.

“We have a studio that is doing extremely well and a [release window] formula that is serving us really well in terms of its bottom line,” he said last November.

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Indeed, any mention of shortening Disney’s massive theatrical gravy train for the sake of earlier access on DVD/Blu-ray Disc and digital, seemed shortsighted.

Disney ended 2019 with seven movies each generating more than $1 billion at the global box office. The studio ended the previous fiscal year with nearly $10 billion in ticket sales.

Regardless, the seeds of doubt had been sowed, prompting one analyst on the Feb. 4 Q1 fiscal call to ask Iger if he would “recommit to the theatrical window.”

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“The theatrical window is working for this company, and we have no plans to adjust it for our business,” Iger responded.

With upstart Disney+ streaming service getting every original studio release, domestic exhibitors saw a near 7% decline in tickets sold in 2019 compared to 2018.

Iger suggested the analyst’s question was a reflection how other studios are positioning their films and distribution business.

“We’re not the only movie company,” he said. “I suspect that [questions about the window are] not due to us or either a lack of conviction on our part or any suspicion that we might not be telling the truth. It’s working for us, and we have no plans in the foreseeable future to change it.”

 

Trans World Entertainment Selling f.y.e. Retail Chain

Trans World Entertainment Jan. 23  announced it is selling its flagship f.y.e. (For Your Entertainment) home entertainment retail chain to Sunrise Records and Entertainment Ltd. for $10 million.

The deal, pending shareholder approval, would transfer the retail brand (operating in U.S. malls and Puerto Rico) and web properties (www.fye.com and www.secondspin.com) to the parent of Sunrise Records in Canada and HMV Records in the United Kingdom.

The move comes as TWEC struggles to sustain operations in a rapidly changing retail landscape, in addition to misfires at its eTailz.com e-commerce business.

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The transaction, which was unanimously approved by the board,  follows a process in which the board said it explored all strategic alternatives. The deal is expected to close in the first quarter of 2020.

Until the deal is finalized, Trans World Entertainment will continue to operate its business in the ordinary course, and thereafter Sunrise anticipates keeping substantially all of the current FYE employees.

Following the closing, TWEC plans to focus on the operation of etailz, a Spokane, Wash.-based middleman for third-party sellers on the Internet.

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The f.y.e. chain, which operates more than 200 locations across the country, and has hailed itself as the last standalone packaged-media retailer, reported an operating loss of $21.5 million, with revenue down 14.7% to $40.8 million in the most-recent fiscal period. Comparable store sales declined 5.2% — the drop largely buttressed by gains in collectables revenue. And eTailz.com, the e-commerce middleman acquired in 2016 for $75 million, lost $1.4 million.

 

Record Online Sales Drive 2019 Winter Holiday Retail Results Up 3.4%

With a six-days-shorter winter holiday period this year compared to 2018, retailers pushed earlier discount pricing in stores and online, which resulted in record e-commerce sales and a 3.4% increase in overall consumer spending (excluding autos), according to new data from Mastercard.

Online transactions increased nearly 19% from a year ago and accounted for nearly 15% of overall sales for the period from Nov. 1 through Dec. 24.

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“E-commerce sales hit a record high this year with more people doing their holiday shopping online,” Steve Sadove, senior advisor for Mastercard and former CEO of Saks, said in a statement. “Due to a later-than-usual Thanksgiving holiday, we saw retailers offering omnichannel sales earlier in the season, meeting consumers’ demand for the best deals across all channels and devices.”

Department stores saw overall sales decline 1.8% and online sales growth of 6.9%, emphasizing the importance of omnichannel offerings. Electronics and appliances were up 4.6%, while the home furniture and furnishings category grew 1.3%.

E-commerce continues to drive retail, accounting for 15.4% of Black Friday (Nov. 28) and 24.5% of Cyber Monday (Dec. 1) consumer spending, respectively.

Top online retailers included Walmart, Amazon and Target — all drivers of packaged-media (including DVD/Blu-ray Disc) sales.

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Best Buy Q3 Entertainment Revenue Plummets

Best Buy can’t wait for the winter holiday retail season.

The nation’s largest consumer electronics retailer Nov. 26 said third-quarter (ended Nov. 2) domestic entertainment revenue dropped nearly 21% in same-store sales compared to a gain of 12.4% during the previous-year period. International entertainment sales fell 31% compared to a gain of 10.8% last year.

The entertainment segment includes DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software.

Entertainment represented 5%, or $448 million of domestic revenue, compared to 6%, or $525 million during the previous-year period.

International revenue represented 5%, or $40 million of same-store sales, compared to 7%, or $58.3 million last year.

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Domestic revenue increased to $8.96 billion, up 2.4%versus last year. The increase was driven by comparable sales growth of 2% and revenue from GreatCall, which was acquired in Q3 last year, partially offset by the loss of revenue from store closures in the past year.

The largest comparable sales growth drivers were appliances, headphones, tablets, services and computing. These drivers were partially offset by declines in the gaming and home theater categories.

“We are excited about our holiday plans,” CEO Corie Barry said in a statement. “Customers ordering online will get free next-day delivery on thousands of items all season long with no membership or minimum purchase required. They can also choose to pick up their products in a store within an hour of placing their order.”

Indeed, domestic online revenue increased 15% to $1.4 billion due to higher average order values. As a percentage of total domestic revenue, online revenue increased 15.6% versus 13.8% last year.

As the holidays loom, Best Buy is offering free next-day delivery on myriad items, excluding bigger and heavier items such as big-screen TVs and refrigerators.

With the service “Store Pickup,” customers can get their order ready within an hour at their local Best Buy. Best Buy reports 40% of online sales are picked up in stores.

‘Frozen II’ Theatrical Success Bodes Well for Home Entertainment

Walt Disney Animation Studios set a global opening weekend box office record with Frozen II, the sequel to the equally successful original Frozen from 2013.

That release went on to generate nearly $1.3 billion at the box office for Disney — the 15th largest worldwide theatrical tally in history — and help launch a global brand across theme parks, merchandise, cruise ships and ice shows.

Frozen II generated $350 million through Sunday, Nov. 24 and is on course to become Disney’s sixth billion-dollar movie in 2019 following a string of Marvel hits and live-action remakes.

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For home entertainment, the initial box office success of Frozen II could portend greener days for transactional retail, including packaged media and electronic sellthrough.

That’s because the 2014 home entertainment release of Frozen generated combined DVD/Blu-ray Disc sales of $335 million from more than 18 million discs, according to The-Numbers.com.

That’s more discs sold than the combined total for the next three years’ top-selling packaged-media releases: Universal Pictures Home Entertainment’s Jurassic World (2015), Disney’s Star Wars: The Force Awakens (2016) and Moana (2017).

The electronic sellthrough release of Frozen also established a record for fastest-selling digital release of all time.

“If Frozen was happily ever after, then Frozen II is the day after happily ever after,” Jennifer Lee, who wrote and co-directed both films, said in a statement.