Supply Chain Crisis Impacts Home Entertainment Amid Lingering Replication Woes

The supply chain woes that are making headlines around the country are having an increasingly pronounced impact on the home entertainment business, sources say — compounding existing problems with limited replication.

Studios as well as independent content suppliers are reporting delays in bringing their product to market as the fourth-quarter holiday season nears. DVD and Blu-ray Disc sales may have been slipping year over year, but demand typically picks up as the holidays grow near. This year is no exception, particularly with catalog product, as studios continue to mine their vaults for anniversary or 4K Ultra HD reissues.

This uptick in catalog title sales is a good thing — and a bad thing. Most of the big Hollywood studios do the bulk of their physical disc replication through Technicolor, which now does most of its manufacturing work at a single facility in Mexico. (Paramount has its own manufacturing deal, with Sonopress.) And, sources say, when things get backlogged — as they invariably do during the fourth quarter — catalog titles are pushed back behind new releases. Now factor in supply-chain problems and it’s easy to see why that spectacular new anniversary release or 4K Ultra HD reissue may not be in stock.

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“It’s a huge problem,” said Bill Hunt, who as editor of The Digital Bits website closely monitors disc releases. “Almost every title is getting delayed, and those that aren’t are hard to find on street date.”

Hunt adds, “COVID is what started the supply chain issues, and they’ve basically cascaded across the economy. The Technicolor replication plant in Mexico City is at capacity, so a lot of studios are sending replication projects to Germany as well. But then shipping those discs back takes time, distributing all the discs to retail takes time, etc.

“It’s just a mess everywhere.”

“Our industry isn’t insulated from the global supply chain situation,” said Eddie Cunningham, president of Studio Distribution Services (SDS), the joint venture between NBCUniversal and WarnerMedia formed earlier this year to distribute DVDs, Blu-ray Discs and 4K Ultra HD Blu-rays from Universal Pictures Home Entertainment and Warner Bros. Home Entertainment. “At SDS, along with the rest of the industry, we have been wrestling with supply chain challenges for a number of months. 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.

“Our recent focus, aside of new releases and promotions, has been the fourth-quarter retail catalog resets and preparing for Black Friday, all of which looks good.”

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The trouble in getting consumer goods into stores — and consumer homes — is due to a variety of factors, including a labor shortage that is affecting all aspects of transport and shipping. This is compounded by pandemic-induced demand. In the first six months of this year, according to U.S. government estimates, retail sales rose more than 22% to $3.25 trillion.

As the World Shipping Council explains in a newly released video, “Global supply chains are a complex network connecting manufacturers, exporters, importers, rail, truck and ocean transport providers. Finely balanced, it can take a lot. But when COVID-19 closed down ports, put drivers in quarantine, the problems started. The U.S. demand spike has maxed out inland capacity, containers are tied up in storage, and vessels are stuck outside ports.”

“A lot of companies have really been struggling to get staff in these relatively low-paid jobs — pack and ship, that sort of thing,” said one high-ranking studio executive familiar with supply-side issues. “In a lot of cases, governments are paying more for them to stay at home.”

Labor shortages, he notes, have been impacting production of everything from the chips used in automobiles to the glue used to seal cereal boxes.

And even when the end product does get made, bringing it to market is a whole other challenge due to labor shortages in the transport sector. The trucking industry, for example, has long been having trouble attracting new recruits. Meanwhile, demand for trucking services has soared, thanks to the rapid gains of e-commerce — 32.4% growth in 2020, according to government statistics — and an overall rise in consumer retail spending.

More than 140 container ships are circling outside the ports of Long Beach and Los Angeles, waiting to be offloaded. “And if you figure each ship has about 1,800 of those great big containers, you can only imagine how much stuff is still sitting out at sea,” the studio executive said. “And medical supplies are the priority — not boxes of DVDs.”

Independent suppliers are grappling with their own worries, said Ed Seaman, GM of MVD Entertainment Group. These include a steadily shrinking number of smaller replicators who deal primarily in independent film.

But fewer replicators, and replication facilities, is just one of several clogs in the indie pipeline, he says.

“We’ve had some replication delays, but also lots of madness bringing goods in from Europe,” Seaman said. “The flights and capacity for cargo is scarce, and then products are getting lost, misplaced or delayed at the ports —  which, of course, is broadly publicized. This is causing release dates to be missed.”

On top of that, Seaman said, “the cost to bring goods in are nearly triple what they were pre-pandemic. Most of our suppliers and customers are understanding, but in some cases it is really straining relationships. Not fun.”

Additional reporting by Stephanie Prange.

DEG, EMA and MovieLabs Release Updated Digital Supply Chain Specs

DEG: The Digital Entertainment Group, the Entertainment Merchants Association and Motion Pictures Laboratories (MovieLabs), together with member studios, retailers, and service providers, have approved and released four updated supply chain specifications for digital distribution of film and TV.

The specifications were developed and reviewed jointly by the three organizations through the Digital Supply Chain Alliance announced earlier this year. The new updates are designed to expand support for international distribution to ensure all territories receive the right content and facilitate more sophisticated business engagement and improved automation among participants in the digital supply chain.

The updated documents include two comprehensive specifications developed over many years and two more targeted specifications for “core” requirements and use cases. The core specs enable content owners and distributors to start small with a simpler initial deployment, then grow the implementation as needed to meet requirements.

“The Digital Supply Chain Alliance was created to allow us as an industry to move faster and more efficiently towards standards adoption industrywide,” said John Powers, executive director, DEG, in a statement. “We are happy to demonstrate, with the release of these first specs, that this is successfully happening. This is a meaningful step in keeping up with the pace of change in digital distribution.”

“As our members continue to expand the scope and scale of their content offerings, it’s important that our specifications adapt to support them,” said Eric Hanson, VP of industry leadership, EMA, in a statement. “It’s been great having such engaged support from retailers, service providers, studios and TV networks in agreeing on technical solutions to increasingly complex use cases.”

“Working together with the DEG and EMA, we incorporated improvements into the specifications to make them complete enough and robust enough to handle a wide range of situations encountered by our members,” said Craig Seidel, MovieLabs VP of distribution technology, in a statement. “We are very pleased to make these the first specs approved through the Digital Supply Chain Alliance.”

The updates include:

• Common Metadata 2.7 — New features have been added to the Common Metadata specification, including support for franchises and brands, related works, more sophisticated TV internationalization, and technical metadata improvements (e.g., dynamic metadata and additional encoding parameters). The new spec also includes general updates such as new codec-controlled vocabularies, minor corrections and clarifications.
• Media Entertainment Core 2.8 — The Media Entertainment Core Metadata spec defines the core requirements for transferring metadata from publishers to retailers. MEC has been updated to conform to Common Metadata 2.7.
• Media Manifest 1.8 — The Media Manifest spec has also been updated to follow Common Metadata 2.7, as well as adding data to support additional workflow use cases, ability to handle cards in playable sequence, and improved support for TV that reduces the need for territory-specific experiences.
• Media Manifest Core 2.0 — Media Manifest Core 2.0 is the targeted core specification based on Media Manifest 1.8 and Common Metadata 2.7. It includes all the improvements from those specifications and adds full support for episodic content.

The latest specifications can be found on the MovieLabs website www.movielabs.com/md.

Sony Alums Join Data Analytics Company’s New International Division

Data analytics company Algomus/Algo.ai has created an international division based in London.

The company has named Aodan Coburn, formerly EVP International at Sony Pictures Home Entertainment, as president, Algo.ai International. Miguel Geli, previously division CIO for Sony Pictures and European MD of Sony Retail Services Europe, has been appointed COO, Algo.ai International.

Algo.ai comprises a team of software engineers, mathematicians, business analysts, machine learning experts and data scientists with extensive industry knowledge of manufacturing, distribution and retail supply chains to support the use of data to drive savings.

“This significant development reflects our desire to service our current customers on a broader territory basis and supports our ambition to expand both our geographical and industry reach,” CEO Amjad Hussain said in a statement.

“International expansion has been a strategic goal for some time, and with these two key appointments we are now well-positioned to repeat the tremendous growth opportunities we have seen domestically,” said John Daly, president of Algo.ai, in a statement.

“I’m delighted to have the opportunity to play a part in the Algomus story as this innovative company continues on its journey of global growth,” Coburn said in a statement.

“Algo.ai is a company with significant global potential which I am thrilled now to be part of,” Geli added in a statement.

Algomus is headquartered in Detroit, with additional offices in Los Angeles and now London.

Algo.ai created Algo, the world’s first supply chain analyst bot. Algo connects artificial intelligence, augmented reality and automation to retailers, distributors and manufacturers. The tool helps with activities including demand and inventory planning, sales forecasting, new product lifecycle management, and assortment optimization.