Amy Jo Smith: Recollections From DVD to DEG

As the digital entertainment business celebrates 25 years, so does DEG.

DEG was there at the beginning, and I with it, when the DVD Video Group was formed in 1997 with the express purpose of promoting the first digital entertainment format — DVD — in collaboration with content owners and hardware makers. 

I have so many fond memories and proud moments. Among the proudest was the formation of DEG Japan, where senior Japanese executives met under the guise of the DEG brand for meaningful dialog and to see what worked in their market. They were so self-guided; it was really inspiring to see.  And, more recently, the creation of the Hedy Lamarr Awards to honor women making strides in entertainment and technology, an initiative championed by Marc Finer, who has worked side by side with me at DEG since day one. 

I share these thoughts and a few more of my personal touchstones in an effort to focus not so much on the business details as on the business “flavor.” And that flavor is pioneering, revolutionary, one of art pushed forward by technology, and of a team bonded by common goals and shared experience.

DVD

Warren Lieberfarb

Warren Lieberfarb, the Warner Home Video president known far and wide as the “Father of DVD,” had the vision of putting a movie on a CD, named it DVD and, with no small amount of chutzpah, assured everyone that consumers would buy and collect movies going forward.  I had been in many meetings with Warren, but it wasn’t until I heard him convince a room packed with naysayers at CES 1998 that I finally understood: Warren was a force of nature, and he was going to make it happen. DVD was the most significant disruption the entertainment industry had experienced, and it became the fastest selling consumer electronics product in history.

DVD-Audio

DEG helped launch DVD-Audio at the music industry trade show NARM in San Antonio in 2000. It was amazing to see the jaws of both music enthusiasts and experts drop when they heard classics like Fleetwood Mac’s Rumors or Joni Mitchell’s Both Sides Now.  It was music they had heard countless times, but now they were hearing it differently.  It came alive. DVD-Audio’s quality notwithstanding, digital won the race in the music business and DVD-Audio was a casualty as a mainstream format. 

You’ve Got Mail

Over the years, DEG helped promote many popular titles when they came out on DVD and Blu-ray Disc.  One of my favorites was a promotion we did for Warner Home Video’s launch of You’ve Got Mail in New York City, where we passed out daisies in Central Park. My now-husband Jeff walked by and got some flowers.  When we actually met two years later, we realized that our first encounter was me giving him daisies in the park!

DEG Bags

DEG quickly became known for its coveted bags we’d give away at events, particularly the DEG Annual Reception at CES.  The bags were stuffed with dozens of DVDs, then Blu-rays, plus lots of other fun branded items.  I have many memories of the bags, but my favorites are receiving counterfeit bag tickets from attendees trying to score extra bags; walking through Heathrow Airport and seeing an executive from Paramount using the bag (pictured); and visiting the old city in Jerusalem and spying an executive’s teenage son using the DEG backpack!

Emiel Petrone

Emiel Petrone

As DEG chair, Disney’s Bob Chapek asked the Board of Directors to attend CEDIA, the trade show where the coolest home entertainment technologies of the time were displayed. Everyone agreed and found it a meaningful visit, punctuated by a VIP tour of show of the floor by DEG’s technical director, Marc Finer (known to most as “Finer”). Our founding chair, Emiel Petrone of Philips, led an after-dinner run to White Castle for burgers, which became a DEG tradition at CEDIA, despite seeming like a better idea in the moment than it ever did the next morning.  After Emiel passed away in 2004, Bob picked up the mantle and rallied us all to continue the CEDIA midnight White Castle run in Emiel’s honor.

9/11

(Photo courtesy Wiki Commons)

DEG was holding a meeting at Giant Interactive in New York when the attacks of 9/11 happened. We watched in horror as we realized our colleague John Beug from Warner Music lost his wife and mother-in-law in one of the planes. They would turn out to be among 3,000 others who perished that day. Stranded in New York City, I spent the next few days with DEG colleagues. We were all there for each other, giving support. Every year since, Jeff Stabenau of Giant, Gene Kelsey (then of Panasonic), Leslie Cohen (then of Sony Music), Paul Bishow (then of Universal Music Group) and I connect on Sept. 11 to honor the memory of others.

4K

DEG established DEG Japan as a means of flowing more information of emerging technologies to the membership.  Attending DEG Japan’s annual meeting and Blu-ray Prize celebration was always a highlight. It’s been a pleasure to know and work with Tsukagoshi-san, formerly of Disney, and many others.  Each trip was punctuated with a visit to Sony worldwide headquarters to visit their lab. I’ll never forget the moment they showed me 4K in their state-of-the-art theater. Colors and images came alive in a way I’d never imagined.

Board leadership

Over these 25 years, one thing that always strikes me is how the Board leaders, all executives with demanding day jobs, took the time to guide the organization, knowing that doing so would help grow the industry and, in turn, grow their businesses. I’m blessed that they all took the time to mentor and lead me, and that I may call each a friend, not just a colleague.  DEG would not be marking 25 years in 2022 if it hadn’t been for their vision and leadership.

Amy Jo Smith is president and CEO of DEG: The Digital Entertainment Group, the leading home entertainment trade association and the descendant of the DVD Video Group, formed in 1997 to promote DVD.

Starting a Revolution: A Candid Conversation With Warren Lieberfarb, the ‘Father of DVD’

The digital revolution in home entertainment may never have happened had it not been for Warren Lieberfarb, whose vision of movies on disc ultimately led to the creation of the DVD. As president of Warner Home Video, he forged an alliance of film studios, consumer electronics companies and computer manufacturers to bring his vision to fruition. This, in turn, set the stage for a digital revolution in which consumers are easily able to watch or buy the latest movies and shows over the internet or through their cable provider — or subscribe to Netflix or any of the other subscription streaming services that also owe their existence to this iconic visionary. Now 78, the “father of DVD” — and recipient of the prestigious Wharton Infosys Business Transformation Award — sat down at his Brentwood, Calif., office for a lengthy conversation with Media Play News about the development and launch of DVD.

See also: 25 Years of Digital Entertainment – The Disc That Changed the World

MPN: Warren, what was your initial vision for DVD?

Lieberfarb: The goal was to have a new form of packaged media based on digital and optical technologies that had both material and manufacturing cost advantages relative to videocassettes. A corollary to cost superiority would be the ability to offer discs at attractive consumer price points and that would equate to transactional profitability greater than that of the royalties expected to be derived from pay-per-view and inherently greater profit potential than videocassettes. Pay-per-view was seen as the competing threat to the VHS rental ecosystem. Moreover, the vision I had was to have a product that could be manufactured in seconds rather than in

Warren Lieberfarb, March 2022

the real time of the movie, as high-speed tape duplication had failed to gain traction. This would optimize the efficiency of the supply chain. Finally, a five-inch video-disc was seen as having the size and appearance — and, thus the popularity and familiarity — of the audio compact disc. Lastly, I believed that we had to offer superior picture quality to videocassettes, broadcast and cable TV (comparable to the laserdisc in video resolution) — and superior sound to stereo, i.e. 5.1 channel sound comparable to that required by the Advanced TV Standard. It was also apparent that if this could be perfected, it would enable playback not only on hardware connected to TVs, but also on compliant PCs — and even offer the possibility to replace the CD-ROM due to this new disc’s capacious data capacity that was inherently a necessity to meet the audio and video feature set. Therefore, interoperability between the TV and PC was another aspect of the initial vision.

MPN: When did you first envision movies on disc?

Lieberfarb: It was in the late 1960s, when I was exposed to Philips’ efforts to develop a laserdisc, which preceded the compact disc.

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MPN: Your efforts intensified when we saw the VHS market, which had been booming throughout the 1980s, began to slow down a little bit.

Lieberfarb: The signals of that which was impacting the VHS rental market came from the fact that rental incidence was declining among DirecTV subscribers. DirecTV had a significant increase in the number of channels that it offered consumers versus that which cable offered, including the compelling NFL Sunday Ticket. And in those households that became DirecTV or Dish subscribers, the incidence of renting videocassettes precipitously declined. It was my view that cable, to compete with digital satellite, would have to increase its channel capacity. It would accomplish this by upgrading its plant to a hybrid fiber-optic and coaxial cable architecture. The number of channels on cable, therefore, would increase. More channels, more choice, equated to households being less apt to rent from the local video store.

The writing was on the wall that home video’s long-term future was at risk due to the next generation of digital cable and digital satellite. The solution, in my mind, if the goal was to keep packaged media viable, was to offer superior quality, both audio and video, on a format that people were familiar with and that they associated with quality — namely, the compact disc. I had to find a way to deliver higher-quality video, at lower product costs than VHS, so that the notion of buying and owning would provide convenience, especially to families with children, enabling every household member to program what they want, when they want, where they want … at a price point ultimately in the neighborhood of $10 to $12.

MPN: When did you first present this concept, this vision, to the Warner brass, to your superiors at Warner Bros.?

Lieberfarb: In 1986 or thereabouts, when Philips approached me to support the CD Video, which was 20 minutes of audio and five minutes of video clips on a five-inch CD. Philips had the notion that this would enable a second format for the music industry akin to the environment when they had both LPs/cassettes and 45s. … This never succeeded. … But the CD Video player would also be able to play a laserdisc. And I looked into the economics of laserdisc manufacturing, and ultimately discovered that in high volumes, the laserdisc had the potential to be half the product cost of a VHS tape. So in ’86, I became intrigued by this notion of whether we could use this effort to launch CD Video as, in fact, a Trojan Horse to get laserdisc off the ground.

Well, the chicken and eggs to make that happen, the Catch-22 to make that happen, never came together. And before you knew it, the question of how do you put video on a CD-like substrate became my mission. We’re now up to about 1988. I entered into an agreement with Philips to together determine whether there had been advances in MPEG compression that would enable 120 minutes of at least VHS quality to be encoded on a CD. We were never able to achieve that with MPEG-1 video. It was only when MPEG-2 video compression had been standardized that we were able to not only get VHS quality, but to in essence approximate laserdisc quality as well as 5.1-channel audio. At this point in time I was willing to compromise laserdisc quality for the cost superiority of a CD vis-à-vis VHS.

MPN: After the 1989 acquisition of Time Inc. by Warner Communications, you suddenly had a new CE partner, Toshiba, that had been brought in through the newly formed Time Warner Entertainment venture. Philips at first was going to work with you to co-develop the DVD, but then wound up teaming with Sony to develop an alternative format called MMCD.

Lieberfarb: MMCD stood for Multimedia Compact Disc. Its maximum data capacity was 3GB, and its principal objective was to preserve the patent position that Sony and Philips had in the compact disc by extending it to video. They designed it to use the physical structure of the compact disc and the existing optical pickup of the compact disc. The data capacity was far below that which Toshiba and Warner were developing because we were designing a product to have the video resolution comparable to the FCC’s Advanced Television Standard, 5.1 digital sound, interoperability with a personal computer, and data capacity for the bonus material that people would see as added value, in addition to the movie itself.

MPN: So now we have two opposing camps. How did we get to a unified format? How did we avoid another VHS versus Betamax battle, where both formats came to market and slugged it out?

Lieberfarb: Sony and Philips … tried to convey the notion that our product was theoretical, could never actually be made in quantity, and was, in essence, vaporware. … So we had to find a way to stop these hostile actions of Sony and Philips, and how did we do it? In 1992, the head of the antitrust division of the Justice Department had issued a set of new guidelines for the enforcement of antitrust law in high-technology industries. Well, there was a provision in these policy guidelines that stipulated the misuse and abuse of a dominant patent portfolio to stifle innovation and limit competition in an emerging technology would be a violation of the Clayton Act and/or the Sherman Act. What is the misuse and abuse of a dominant patent portfolio to stifle innovation and limit competition? Fictitious product announcements, vaporware, premature product announcements were all seen, from an antitrust standpoint, as in violation of the Sherman Act or Clayton Act. Well, I had all of this evidence of Philips and Sony’s behavior. We went to the Justice Department and its antitrust division examined the evidence we had accumulated. They already had Sony and Philips under investigation for anti-competitive practices on the licensing of CD patents to CD manufacturers. They expanded their investigation to include the anti-competitive behavior they were engaged in against what we at the time had code-named TAZ, as in the Tasmanian Devil, and the threat of an antitrust action caused Sony and Philips to capitulate and agree to support DVD.

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MPN: That led to other CE companies lining up behind DVD as well, and the computer industry was not far behind. Where did that leave Hollywood?

Lieberfarb: Each studio had a different story that I had to engage them on in order to win support.

Let’s take Paramount. At the time, Viacom owned Blockbuster as well as Paramount. We’re in the period 1997, 1998, and Blockbuster had finally come to realize that its inventory model — namely, of buying videos at $65 wholesale and renting them, and having limited copy depth of the new hit movies — resulted in inadequate inventory to meet demand for new releases. Thus, consumers became increasingly frustrated and dissatisfied by the video rental experience. People had gone past the stage of being satisfied with renting older movies; they wanted to see the current releases. And this phenomenon evolved the longer they owned their VCRs. We had concluded a test with the management of Blockbuster in which we provided, at a wholesale price of $2 per unit, high levels of inventory of Eraser, an Arnold Schwarzenegger movie, and Tin Cup, a Kevin Costner movie with Rene Russo about golf, so as to validate that a higher level of inventory, minimal wholesale prices, and a revenue-sharing arrangement would result in higher rental transactions and would be margin-accretive to both Blockbuster and the studios. In other words, in a quid pro quo for the lower wholesale price, Blockbuster would agree to a revenue-sharing arrangement with us. This was initiated when the president of Blockbuster was the ex-Walmart executive Bill Fields, and he and his management team wanted to experiment with a copy-depth/revenue-sharing arrangement.

Warren Lieberfarb (center) at the 1997 VSDA convention with Toshiba executive Koji Hase (left) and the late Russ Solomon, founder of the Tower Records and Video chain. Tower was an early retail supporter of DVD. (Media Play News archive photo)

Then [Viacom chairman] Sumner Redstone fired Bill Fields for failing to meet his first-quarter forecast — which was based on the prior year’s first quarter, which had the Titanic phenomenon — and was now taking charge of Blockbuster himself until he finds John Antioco. Blockbuster built a new warehouse in Texas. Blockbuster was entering into revenue-sharing deals with every studio based on data that was coming from the Warner experiment. The then-chairman of Paramount became an adversary of DVD. He thought it would cannibalize the VHS business and he didn’t believe the financial models that DVD would become a high-volume, mass product that would exceed the profitability of VHS rental. Sumner Redstone created an investor day in Texas where he was going to show the new warehouse and how they were repackaging the product from the studios so that they were suitable for being inventory in this new revenue-sharing model. There was some kind of new packaging that he developed and he wanted a common distribution center for the whole country. And he had an entourage of Wall Street analysts on their way to Texas. But the one studio he didn’t have to revenue-share its product was Warner Bros. And he had promised Wall Street that he’d have 100% studio support for this new model. So Sumner calls me from his plane and claims that I had driven his stock price down by telling certain analysts on Wall Street that we were not going to support his revenue-sharing initiative. I said I would never meddle with providing confidential information to analysts, and that I viewed all of that as proprietary between us. “But I will tell you, Sumner,” I said, “until Paramount supports DVD with day-and-date releases at sellthrough prices, we won’t be revenue-sharing our product in Blockbuster stores.” A day later, the chairman of Paramount called me and said we had Paramount’s commitment for supporting DVD.

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Which brings me to Fox. [Studio chief] Bill Mechanic believed that DVD was dead on arrival because it did not provide record capability. The CD didn’t provide record capability, and the use of the VCR had evolved in most countries to being essentially used for playback of pre-recorded material instead of time-shifting. So I tried to make the claim to Mechanic that record capability was irrelevant. If we had quality that was superior to VHS, and we had a price that was fair, the offtake of DVD and related content sales would be an accretive business and it would be addressing the threats we’ve faced from the expansion of channels and video-on-demand on cable.

Home entertainment executive Ben Feingold, movie producer and record executive Saul Zaentz and music legend Quincy Jones salute Warren Lieberfarb (third from left) at the 2003 Home Entertainment Summit. Zaentz won three Best Picture Oscars, for One Flew Over the Cuckoo’s Nest, Amadeus and The English Patient (Media Play News archive photo)

Well, Fox was launching The Fox Family Channel with Haim Saban as its partner. Haim had a global success with “Mighty Morphin Power Rangers.” But The Fox Family Channel found itself, in the Time Warner Cable system, at a very high position on the dial. The Fox Family Channel wanted to have a much lower dial position. And I conveyed to the leadership of The Fox Family Channel that there might be a way to get a lower dial position. I was hopeful that News Corp. and Fox Family Channel senior management would convince Bill Mechanic and Peter Chernin that the DVD was an accretive new business that they should support with day-and date-availability at sellthrough prices. I’m not privy to what transpired, but in the end they got a lower dial position, and we got DVD.

MPN: There were other battles as well, most notably Divx, the pay-per-play variant championed by the CEO of Circuit City, one of the big consumer electronics retail chains. That one generated a lot of press at the time. But Divx didn’t last long, with CE manufacturers reluctant to support the format because they didn’t want to confuse the consumer. And then, of course, there was digital VHS, the cassette’s last stand, which likewise went nowhere. When did you first know DVD was going to be a massive success?

Lieberfarb: When Divx failed and we had unanimous support from the studios, unanimous support for a de facto standard, unanimous support from the consumer electronics industry, unanimous support from the PC industry, an agreement on obligatory content protection technology incorporated in both the content and on the hardware, and the support of Best Buy, Target, Walmart and even video rentailers, as well as Columbia House. The tracking studies we were doing on awareness and satisfaction, week in and week out, kept showing that people loved the product. So we not only gave consumers something they really wanted, but we also created a completely new ecosystem of authoring, encoding and replication that enabled a dramatic transformation in the distribution model for home video on a global basis.

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

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

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

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

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

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

Beginnings

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

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

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

Read our EXCLUSIVE Q&A with Warren Lieberfarb

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

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

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

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

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

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

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

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

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

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

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

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

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‘A True Pop Culture Phenomenon’

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Decline

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

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

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

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

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

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

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

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

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

The only problem was, there were two of them.

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Next-Generation Blues

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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The War Is Over

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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A Third Generation of Disc

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

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

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

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

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A Proud Legacy

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

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

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

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

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

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

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

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

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

Looking Back: 1997 — The Dawn of the DVD Era

Twenty-five years ago, the home entertainment industry was at a turning point. Videocassette rentals, the backbone of the business since it was launched in 1977, were in a slump as the novelty of renting movies wore off. Hoping to revive the business, a consortium of studio executives led by then-Warner Home Video president Warren Lieberfarb developed a new business strategy that involved putting movies on a five-inch disc, which consumers would purchase rather than rent. The soon-to-be-launched DVD was the talk of CES 1997 in January, and dominated the show floor in July at the annual Video Software Dealers Association (VSDA) convention. Not all studios were onboard, and few realized at the time just how enormously successful the DVD would be — and how it would ignite a digital revolution in entertainment that has given us streaming, Netflix and even the ability to watch movies on our phones.

Jim Wuthrich: Lifting and Shifting From the Disc Into the Digital Stream

“Put it on a Disc.” That was the name of our relay team that back in August 1995 ran the 200 miles from Mount Hood to the Oregon coast over a 24-hour period.

I didn’t have a clue how that phrase would come to dominate my career.

The startup company I was working for at the time in Portland, Creative Media, was my introduction to DVD as it pivoted from the early computer multimedia era of CD-ROM.  One of our first DVD products was the Blockbuster Guide to Movies and Video, recently ported from CD-ROM to the higher capacity DVD.

That product led me to Southern California in 1998 to join the Warner Bros. team that was launching movies on DVD.  When I walked through those doors on the famed Warner Bros. lot, I would never have imagined I would still be here 24 years later, but it’s a testament to a company and industry that is ever-changing.

Those early days were frenetic — much as they were at the startup I left.  Warren Lieberfarb [at the time, Warner Home Video president and the “father of DVD”] was a missionary, resolute in the belief that people would want to own and collect movies, and he was determined to make the format a success.

It wasn’t a forgone conclusion.  There were naysayers everywhere: “Movies are one viewing and done, why would anyone want to own?”; “DVD isn’t the future; digital tape will win the format war”; “DVD players are too expensive, no one will buy.”

But Warren saw the future and tirelessly drove his staff, industry and detractors until DVD became one of the fastest-growing consumer electronics formats in history.  It was a fun, heady time.  The breakout was the first The Matrix movie.  I remember speaking with my mother, who said she bought The Matrix DVD, which was interesting because it wasn’t her type of movie, but more to the point, she didn’t own a DVD player!  When asked why she bought it, she said she heard so much about it, she just had to buy it.

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On a large title we’d ship 20+ million discs, host lavish launch parties and debate spending millions on advertising “chase” campaigns.  There were many innovations including special features (behind the scenes/making of/documentaries), connected discs which enabled content updates and “virtual” theater events with the director, and E Copy, a digital copy of the film that could be stored on a computer.

There were format wars (Divx/Blu-ray/HD DVD) that spilled over to the front page of The Wall Street Journal, business model innovations (rental revenue sharing, subscription by mail), discovery of latent consumer interest in TV series (DVD was the original binge format), and hijacked trailer trucks full of DVDs (because of their value).

As successful as DVD was, it would only be a bridge to the next chapter in distribution: digital, delivered over the internet.  Eliminating the physical disc was the ultimate efficiency tool, promising near instantaneous global distribution, where and when needed.

Physical media is inherently inefficient in that predicting consumer demand down to the individual store is fraught with either not enough or too much product, and the resultant lost sales or “returns” (excess inventory) could have a major impact on profitability.  Internet-delivered movies and TV shows also freed up endless “shelf space” so even the most obscure movie or TV series could find a listing in a digital retailer’s database.

But there were challenges, too, including slow internet speeds, data caps, digital rights management, getting it to the TV, rights and supply chain issues.

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The early days of digital were a lift and shift of the physical world in that the predominant business model was transactional; either a rental (video-on-demand, or VOD) or “ownership” (electronic sellthrough, or EST).  The MVPDs and satellite companies were offering VOD or PPV and eventually expanded into EST, but it was the internet-based businesses that had the biggest impact.  There were many retail pioneers, including Movielink, the studios’ ill-fated joint venture.  iTunes extended their innovation of unbundling the music album to TV, allowing consumers to buy individual episodes of TV shows versus the whole series; they also were one of the first to offer special features from a digital menu familiar to DVD users and were the first to build a global footprint.  Other early pioneers that are still offering transactional include Vudu, Xbox, Amazon and Google.

Another concept borrowed from the world of physical media was buy-and-play anywhere. Back then, digital platforms were silos where the content was captive to the platform it was purchased on, unlike DVD, which could be bought at any retailer and played on any DVD player.

Ultraviolet (UV) was an attempt to add more utility to a digital purchase, so that a movie bought through retailer “A” could be played back at retailer “B” — which was particularly helpful  in the early days, with limited ways to playback on TVs.  Eventually, the entitlement concept pioneered by Ultraviolet was replaced by Movies Anywhere, with a more robust retailer and studio network.

Today, digital video is everywhere, but the dominant business model has shifted from transactional to subscription.  An undeniable consumer bargain, the all-you-can view subscription buffet continues to enjoy tremendous growth as it spurs the industry to create ever-more storytelling.

It’s interesting to note that the other formats have not gone away. The transactional market generated over $8 billion in consumer sales through DVD/Blu-ray and transactional digital last year — the majority purchased by consumers who also have subscription services.  For fans of movies and series, there has never been a better time.

Having seen it all, I can retire the “Put it on a Disc” shirt.  I have a new one to wear now that says “HBO Max.”

Jim Wuthrich is president of content distribution for WarnerMedia and chair of DEG: The Digital Entertainment Group.

‘Media Play News’ to Celebrate 25 Years of Digital Entertainment

To commemorate the 25th anniversary of the U.S. launch of DVD, Media Play News is producing a special project celebrating DVD’s legacy and chronicling the digital revolution in entertainment that it triggered.

“Without DVD, there would be no digital delivery of movies, no streaming, no Netflix,” said Media Play News publisher and editorial director Thomas K. Arnold. “DVD was not just the most successful consumer electronics product launch in history, but it also led to the mass digitization of content, particularly on the library side, which opened the door to every avenue of digital delivery we have today, including streaming.

“And let’s not forget that Netflix began life as a DVD-by-mail rental service.”

The project, “25 Years of Digital Entertainment,” will consist of a detailed chronology that will be split between March and April issues of Media Play News, and feature exclusive interviews with such key players as Warren Lieberfarb, the father of DVD, and Bob Chapek, CEO of The Walt Disney Co.

“25 Years of Digital Entertainment, Part 1: The Disc That Changed the World” will focus on the development, launch and subsequent success of DVD as well as its two successor formats, Blu-ray Disc and 4K Ultra HD.

“25 Years of Digital Entertainment, Part 2: The Digital Stream” will chronicle the history of digital distribution, from its cable pay-per-view roots to the first attempts to deliver video-on-demand by the telcos right up to the present surge in subscription streaming.

Media Play News also is producing a series of podcasts that will be available on Spotify, Apple and other leading platforms, as well as a commemorative book.

In addition, essays by industry leaders reflecting on the DVD launch and its legacy will be published online throughout March and April and also will be included in the book.

Dr. Gerhard ‘Gerry’ Weber, Top European Warner Home Video Executive, Dies at 86

Dr. Gerhard “Gerry” Weber, who launched Warner Home Video in Germany in 1982 and later became one of the studio’s top home entertainment executives, died on Jan. 11, just three days after his 86th birthday. His cause of death was complications from Alzheimer’s.

Weber retired in 2002 as SVP and co-managing director of Europe, the Mideast and Africa, based in London. He shared this position with Ron Sanders, who later took charge of Warner Home Video on a worldwide basis and ultimately rose to president, Warner Bros. Worldwide Theatrical Distribution and president, Warner Bros. Home Entertainment.

Weber is survived by his wife, Karin Müller-Weber; daughters Franziska and Anne-Tess; and son Lucas. A third daughter, Katrin, died in 2014.

Born in Stuttgart, Germany, on Jan. 8, 1936, Weber began his career in 1956 at Siemens, the big German industrial company. He later was project manager at business consultancy Baumgartner before shifting over to the entertainment industry in 1968 with his appointment as controller and CFO of Liberty/United Artists Records in Munich. Within three years, he had been promoted to managing director.

In 1972 Weber moved over to Metronom Music GmbH in Hamburg, a subsidiary of Polygram, as deputy managing director and then managing director. After three years as deputy managing director at Phonogram, another Polygram subsidiary, Weber in January 1982 joined WEA Music Gmbh, also in Hamburg, as managing director, marketing and sales, music and video. By the end of the year, he was managing director of the newly launched Warner Home Video operation in Germany.

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Over the next 20 years, Weber held a series of progressively more responsible international positions at Warner Home Video. He served as chairman of the German trade association for the video industry, Bundesverband Audiovisuelle Medien e.V. (BVV), which represented the interests of German as well as international program suppliers. He also mentored Warner Bros. veteran Willi Geike, who spent 38 years in senior leadership roles and ultimately rose to president and managing director, Warner Bros. Germany, Austria, Switzerland (GAS) and Poland, a post he held until October 2020. 

“Under his leadership, Gerry developed an incredible management team that helped run Warner Home Video Germany, one of the five major markets,” said Warren Lieberfarb, the Warner Home Video president hailed as the father of DVD. “He went on to hold a number of leadership positions throughout Europe, and what set him apart was his management style, proven leadership and thorough knowledge of the market, the product and the industry.” 

After retiring, Weber served on the advisory board of a prominent Hamburg-based real estate fund.

Weber’s wife, Karin, recalls, “We loved to travel. We spent our holidays hiking or skiing in Switzerland, and many times visited London and Devon. Our last far-away trip was to Calgary to pick up Lucas in 2018 and doing a round trip through the Rocky Mountains. Gerry always took care of us. … He was a deeply caring husband and father.”

Looking Back: 2011 – Slow Recovery From the Recession

Ten years ago, home entertainment executives were more upbeat than they had been in years. The business posted its first positive quarter since the start of the 2008 global economic meltdown. With a 20% year-over-year sales gain, Blu-ray Disc was rejuvenating the physical disc business, while 3D Blu-ray was the talk of CES. And studio marketers were enthralled with the prospect of digital distribution, with a consortium of studios and other companies launching UltraViolet, a cloud-based “digital locker” that lets consumers stream and download purchased content to multiple platforms and devices. David Bishop, at the time president of Sony Pictures Home Entertainment, called UltraViolet “a major game changer.” The nascent streaming business, meanwhile, stumbled when Starz Entertainment ended content license renegotiations with Netflix, which meant the service would soon lose access to Disney and Sony Pictures movies.

Hollywood Mourns Death of Beloved Publicist Ronnee Sass

Veteran Hollywood publicist Ronnee Sass, who left her mark on home entertainment through lavish release campaigns for classic Warner Bros. movies such as Gone With the Wind and The Wizard of Oz — and an engaging, ebullient personality that made her a favorite among talent and journalists alike — died March 20 at the age of 72 after a battle with leukemia.

She is survived by her husband of 23 years, Evan Diner, a brother and two nieces.

See also: Remembering Ronnee Sass in pictures

Acclaimed director Richard Donner (The Omen, Superman, The Goonies, Lethal Weapon) said of Ms. Sass, “In all my years at Warner’s, many of the brightest days were dealing with Ronnee Sass, because she cared for the people as much as the project. And she cared for both a tremendous amount.”

Ms. Sass began her home entertainment career at what was then Warner Home Video in 1995, after working in film distribution and co-founding an independent PR and advertising agency in Baltimore — Wolff, Freed and Greenberg.

Ronnee Sass

For most of her Warner Bros. career, Ms. Sass’ focus was on publicizing the studio’s rich library. Over the next 20 years Ms. Sass was instrumental in big anniversary campaigns for such storied classics as Citizen Kane, Gone With the Wind, Singin’ in the Rain, Casablanca, Blade Runner and The Wizard of Oz. She even brought the surviving Munchkins to Beverly Hills for a gala DVD release party for the latter film’s 65th anniversary in 2004 — and to New York five years later for the movie’s 70th anniversary release, a campaign that included a nationwide balloon tour. In January 2006 Sass was promoted from executive director of publicity and promotion to the newly created position of VP of publicity and promotion for theatrical catalog, under Jeff Baker.

“She was the best, most passionate, most beloved publicist in the history of home entertainment, up there with my friend Fritz Friedman from Sony,” Baker recalls. “You lived to see and experience her persona — what a woman! While many of our projects and events were worth covering, Ronnee took them to new heights and the press was never disappointed as she always delivered.”

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Other former colleagues of Ms. Sass agree.

“Ronnee was a consummate professional, working across the industry to bring the Warner Bros. library to fans everywhere,” said Jim Wuthrich, president of Warner Bros. Home Entertainment. “But more importantly, she was a ray of sunshine, always smiling, lighting up any room she entered. She will be missed.”

“Ronnee had multiple talents that included the professional characteristics of an excellent journalist, and a unique forte in relating to people of all walks of life, from the most important celebrity to the average person,” said former Warner Home Video president Warren Lieberfarb, the father of DVD. “She will be missed, but always remembered.”

Ron Sanders, a longtime Warner Bros. executive who most recently served the studio as president of worldwide theatrical distribution while remaining president of Warner Bros. Home Entertainment, said, “Ronnee was that rarest of breeds who was so effortlessly good at solving the communications crisis of the moment, while being a genuinely wonderful human being. She always had a smile or a laugh and made all of us enjoy life more.”

Ronnee Lynn Sass was born in Baltimore, Md., on May 26, 1948. She graduated from Pikesville High School in Baltimore and went on to attend the University of Maryland, College Park. In the early 1980s she worked in film distribution for studio field agencies in Baltimore.

“I first met her in 1982,” said publicist Carl Samrock, who worked for Warner Bros. from 1982 to 1997. “I remember her incredible personality, her ability to relate to people — she just had this way about her, and when I had my own agency between 1997 and 2017, she was our first client. It was just amazing the way she dealt with people like Clint Eastwood, Dick Donner and Billy Friedkin.

“I still remember an event with Warren Beatty — we took a picture of Ronnee with Warren and hung it up on our wall with the caption, Ronnee and Clyde.”

After she left her Baltimore agency and joined Warner Bros., Ms. Sass initially handled aspects of the studio’s theatrical Oscar campaigns. Each year, publicity team members throughout the department would be assigned to staff the broadcast/event, and the Warner costume department would lend out dresses for the women and suits, if needed, for the men.

Ms. Sass left Warner Bros. in 2014.

As word of her death spread, tributes flowed in to her Facebook page, many from the home entertainment community.

Amy Jo Smith, president and CEO of DEG: The Digital Entertainment Group, wrote, “Ronnee’s smile could light up any room. Such a wonderful and lovely person. She will be missed by all but never forgotten.”

Smith was at Warner Bros. in 1997 when DVD was launched and the DEG was founded as the DVD Entertainment Group.

Producer-director Chris Roe, who has produced documentaries on “Creepshow” and The Night of the Living Dead and currently represents legendary actor Malcolm McDowell, wrote a lengthy tribute to Sass.

“Words cannot express the extreme sadness I feel at this time after learning that my good friend Ronnee Sass passed away today,” Roe wrote. “Ronnee was an extremely extraordinary human being. She was the best publicist I ever worked with. We became very close friends during A Clockwork Orange’s 40th anniversary activities for Warner Bros. 10 years ago.

“Ronnee was a force of nature. … In a business where so many go out of their way to brag about how good they are, Ronnee simply showed her brilliance through her thoughtfulness, creativity and work. She had a fierce work ethic. She would work around the clock to get things perfect. … She was a shining example of excellence in her profession.”

Karen Penhale, a longtime associate of Samrock, wrote that Ms. Sass “was a stellar publicist for Warner Bros. who led us through countless amazing and successful publicity campaigns for all of the studio’s great classics. We worked hard, traveled together, laughed, cried, got yelled at by some talent and applauded by others and became dear friends in the process. Having worked with many of the best film directors in Hollywood, we were looking forward to lots of lunches in the future to remember all our great adventures together. I will miss her as will so many, many others as her friends and family now do. RIP dear friend, RIP.”

Ms. Sass was an avid gardener, creating elaborate flower arrangements and centerpieces whenever she could.

In addition to Mr. Diner, Ms. Sass is survived by her brother, Steven, of Baltimore, and nieces Lauren Sass Jacobson of Baltimore and Felicia Greenfield of New York City.

A private family service will be held, followed by a celebration of Ms. Sass’s life, to be scheduled at a later, safer date. Donations in her memory may be made to the Leukemia & Lymphoma Society.

Not Ron Sanders!

In my more than 30 years of covering the home entertainment business, for a wide range of outlets ranging from Video Store Magazine to the Hollywood Reporter, USA Today and the Los Angeles Times, I have witnessed more than a dozen top leadership changes at the major studios.

At Universal Pictures, I witnessed the departures of home entertainment chiefs Louis Feola, Bruce Pfander and Craig Kornblau; at Sony Pictures, Pat Campbell, Ben Feingold, David Bishop and Man Jit Singh. At Fox, I covered our business while Bob DeLellis, Jeff Yapp, Pat Wyatt and Mike Dunn occupied the president’s chair; at Disney, during the years home entertainment was run by Bill Mechanic, Ann Daly, Mike Johnson, Bob Chapek, Lori McPherson and Janice Marinelli. At Paramount, a series of top executive departures began with Eric Doctorow and continued with Meagan Burrows, Tom Lesinski, Kelly Avery and Dennis Mcguire.

When I began covering home entertainment in 1989, what was then Warner Home Video was headed by Warren Lieberfarb. The father of DVD was ousted at the end of 2002 and briefly replaced by Jim Cardwell; since October 2005 Ron Sanders has been in charge.

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Was, that is. Sanders is one of about 600 staffers, many of them  veteran executives, who have been shown the door at WarnerMedia in the wake of the AT&T takeover, which has led to a new senior management team and, some observers have said, a new mindset bent on dismantling the old studio and creating a new Netflix.

Only time will tell whether the reimagining of Warner Bros. is a bold and visionary move or a disaster in the making. WarnerMedia leadership clearly has taken to heart the adage, “Change or die,” and I am sure they are well aware that there is a risk of doing both.

But back to Ron Sanders. While an astonishing array of smart, competent and even visionary home entertainment leaders have been shoved aside, Ron’s departure hits me especially hard.

Quite simply, I never expected him to go.

Ron Sanders, you see, is something of a rare bird in Hollywood. In all the years I’ve known him — and we go back to the early 1990s, when he joined Warner fresh from Procter & Gamble — Ron always struck me as a man of his word, a man of conviction, passion and integrity. He learned the business at a time when VHS rental was a mature business and beginning to decline, and the brightest minds at Warner were busy fulfilling then-president Warren Lieberfarb’s vision of a disc-based format that consumers would buy rather than rent.

DVD, of course, turned out to be one of the most successful product launches in history, reviving the home entertainment business and laying the groundwork for not just digital distribution but also Netflix, which was initially a DVD-by-mail rental service.

Lieberfarb was no dummy and saw something in Ron Sanders. A year after DVD’s launch, he sent him to England in 1998 to run Warner’s home entertainment operations overseas. I remember a long conversation Ron and I had beforehand, weighing the pros and cons of disrupting his life here in the United States and moving his family abroad. Ultimately he decided to go, and when he came back in December 2002 to join the top leadership team after the departure of Lieberfarb, it quickly became evident that Ron was destined for greater things, both at Warner and in the entertainment industry in general.

Less than three years after his return to the United States as head of Warner Home Video’s North American operations, Ron became division president. Under his lead, Warner was consistently No. 1 when it came to innovation and creativity — not to mention market share. He not only steered the ship, but he also charted its future course — and in doing so Warner became something of a beacon for the rest of the industry to follow, much as it had been during the Lieberfarb era through the launch and growth of DVD.

But as successful as he was in business, Ron Sanders was even more successful in something immeasurably more important: success as a human being. As I wrote back in 2013, when he was elevated to a broader role as head of the redubbed Warner Bros. Entertainment, Sanders represented “a new breed of executive we’re beginning to see more and more of in the Hollywood studio leadership ranks: Sensible, reasonable, even affable — a far cry from the desk-pounding tyrants of Hollywood lore. Anyone who knows Ron Sanders, who has worked alongside him, knows how incredibly hard it is to dislike him. When he says something, he means it. When he makes a promise, he follows through. He looks you in the eyes when he speaks to you; he is passionate about the industry, about Warner Bros., about business, about life.”

I concluded my column at the time noting that a veteran journalist, after interviewing Sanders some years back, quipped, “I wish there were more home video presidents like Ron Sanders.”

I just wish there were more people in my life like Ron Sanders.