Entertainment Industry

Category: Blu-ray Discs

Netflix deal with Warner Bros. includes delay in queues

Under a new deal between the two companies, Netflix users won't just have to wait 56 days to rent Warner Bros. movies on DVD. They'll have to wait 28 days to add the movies to their queues.

As part of the Warner's continuing effort to boost its DVD, Blu-ray, and video-on-demand business, the studio's new deal with Netflix throws up a new roadblock for people willing to wait and get the movie as part of their monthly subscription.

Beginning Feb. 1, when the new agreement goes into effect, Netflix customers won't even be able to add Warner movies to their queues until four weeks after the DVDs go on sale, a knowledgeable person not authorized to speak publicly confirmed. They would then have to wait another four weeks until Netflix starts shipping the discs.

Under the companies' previous agreement, users could add discs to their queues even before they went on sale. Warner executives apparently believed that policy made it easier for consumers to wait, confident that the discs would arrive eventually.

But now when users search for Warner's "A Very Harold and Kumar Christmas," which goes on sale Feb. 7, the Netflix website simply says the movie is not available. Consumers will have wait until March 6 to add the film to their queues and until April 3 to get it in the mail.

Warner Bros. has been on the leading edge of a group of movie studios that have taken steps to encourage consumers to buy DVDs and Blu-ray discs or rent movies via video-on-demand, transactions that are far more profitable for the studios than rentals via Netflix or Redbox.


Netflix expects heightened competition from Amazon.com

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Netflix growing again, barely beats fourth quarter expectations

-- Ben Fritz

Photo: A shot of Netflix's web results for "A Very Harold & Kumar Christmas."

Home entertainment spending rises for the first time since 2008


Amazon's Kindle FireSpending on home entertainment totaled $3.9 billion in the third quarter of this year, up 5% from a year earlier, marking the first increase since the recession took hold in 2008.

Purchases of recorded movies fell to $1.7 billion in the latest period, down 4% from the third quarter of 2010, a new report from Digital Entertainment Group shows. 

The continued drop in consumer purchases of movies came despite the growth in popularity of Blu-ray discs. Sales of films Blu-ray discs, an increasingly popular format, were up 58%, but that wasn't enough to offset a decline in DVD sales.

The video rental market also was soft, staying relatively flat at $1.8 billion. The closing of hundreds of Blockbuster outlets helped push rental revenue from physical stores down 29%. The loss of Blockbuster stores was partially offset by gains in rentals at Redbox kiosks.

Digital revenue, increasingly important for the home entertainment business, showed double-digit percentage gains. Spending on online rentals and purchases jumped 56% to $811 million as subscription streaming services such as those offered by Netflix and Amazon.com gained popularity. The increase also reflects a decision by Netflix to report its revenue from streaming separately from its movies-by-mail revenue.


Hollywood downloads a post-DVD future

Disney sells to Amazon, renews with Netflix

Redbox raises price to $1.20, readies for second battle with studios

— Dawn C. Chmielewski

Photo: Amazon.com is bulking up its Amazon Prime service, in part to provide entertainment content for the company's new Kindle Fire tablet. Credit: Emile Wamsteker / Bloomberg 

Blu-ray making up for only some of the drop in DVD sales

The number of Americans buying movie discs dropped 9% from 2009 to 2011, but would have fallen more dramatically without the growth in high-definition Blu-ray discs, according to a new report.

In total, 116 million Americans are estimated to currently buy movies on DVD or Blu-ray, according to the NPD Group, down from 128 million in 2009. However, 26 million of those people are buying discs on Blu-ray, which are more expensive for consumers and more profitable for makers than standard DVDs.

The percentage of the population who are buying Blu-ray discs jumped from 9% in 2010 to 15% in 2011, according to two online consumer surveys conducted by NPD.

"While Blu-ray may not be the replacement for DVD that many once hoped for, it is certainly adding strength to the physical video-disc market," NPD entertainment industry analyst Russ Frushtick said in a statement.

The report did not include any data on digital distribution, a market that is also growing and helping to make up for some, but not all, of the downturn in DVD sales and rentals. A recent study by IHS Screen Digest said that Internet purchases and rentals of movies jumped 38% in 2010 to $385 million.

However, it did say that 50% of people who intended to buy a Blu-ray player were interested in part because many such devices also provide access to "subscription video download services" such as Netflix.

Also helping is that Blu-ray players and discs have been falling in price. "The fact that prices are now within the budgetary range acceptable to rank-and-file consumers is helping bolster the overall value proposition of the Blu-ray format," Frushtick said.

The NPD analyst also noted that the downturn in movie disc sales during the first three months of 2011 was magnified by a lack of popular movies, as indicated by soft box-office returns for the industry in the fall of 2010.

That drop was indicated in financial results for two studios. Universal Pictures' home entertainment revenue fell 24% in the first quarter of 2011, while Walt Disney Studios reported a 14% drop.

-- Ben Fritz


DVD revenue plummets 44% in 2010, SNL Kagan study says

Online movie downloads up 40% in 2010, surpassing TV sales for first time


Hollywood studios grappling with when and where to release their movies on DVD, digital

For consumers already confused about when a movie goes on sale on DVD and Blu-ray versus its availability on video on demand, digital download, Netflix and Redbox rental and Netflix online streaming, life could get even more complicated.

On Tuesday at Blu-Con, a conference focused on the Blu-ray market, the presidents of home entertainment from five studios -- 20th Century Fox, Lionsgate, Sony Pictures, Universal Pictures and Warner Bros. -- gathered for a panel to discuss the state of their businesses.The Beverly Hills conference comes as studios are searching for new ways to boost revenue in the face of a slowly shrinking DVD market in which consumers are increasingly opting for inexpensive rentals instead of higher-priced purchases. Blu-ray sales and digital downloads are not growing enough to make up the difference.

The executives said the biggest issue they face is sorting through a proliferating array of distribution platforms and figuring out when and where to release their movies and at what price in order to maximize profits. Such staggered release strategies are known in Hollywood parlance as "windows."

"The most difficult conversations and the biggest meetings I have been involved in at the studio have been on this subject," said Universal's Craig Kornblau.

In a blunt assessment, Kornblau admitted that while consumers are eager to get their hands on movies through every platform as soon as possible, it's not always in the studios' interest. "We want to advantage methods that are more profitable," he told the audience of home entertainment industry professionals. "We don't have an obligation to give consumers what they want when they want it."

Most studios allow consumers to rent movies via the Internet or cable video-on-demand (VOD) the same day DVDs go on sale, though sometimes they push back that date for films they feel have particularly strong sales potential. Universal's animated box-office hit "Despicable Me," for instance, goes on sale Dec. 14, but won't be available on VOD until 23 days later, after Christmas shopping.

Universal is also one of three studios, along with Fox and Warner Bros., that has cut deals with Netflix and Redbox through which those two companies, the nation's biggest DVD renters, can't offer their films until 28 days after the DVD release. (Sony recently instituted a similar delay for some of its movies on Netflix.)

The effectiveness of those 28-day delays caused some disagreement on the panel. The Fox, Universal and Warner executives all said they have seen sales increases of 10% to 15% on their new releases compared with similar past titles. They attributed the better-than-expected performances to the fact that the movies weren't available to rent through Netflix and Redbox.

But Sony's David Bishop, whose studio signed a deal to offer DVDs the same day they go on sale through Redbox's $1 per night rental kiosks, has seen different results. "We have not seen any erosion on our sell-through performance," he claimed.

Warner Bros.' Ron Sanders said his studio's only problem with the 28-day window for Redbox and Netflix is that it's not long enough. "To be honest, I think it's a little short today versus what we probably need," he said. "That will get revisited as those deals expire."

Kornblau, meanwhile, said the studios are likely to play with the availability of movies through Netflix's Internet streaming service, which has grown rapidly in the last year and now accounts for more of the company's viewing hours than DVDs shipped through the mail. "While there are things in the Netflix system that are clearly cannibalistic [to sales], there are things we can change," he noted. "They can pay us more or we can reduce the quality of what we give them."

At the same time, the executives noted that the studios are expected to launch "premium VOD" for certain movies next year in which consumers can rent a movie within a month or two of its theatrical release and before the DVD goes on sale for as much as $20 or $30. That would create an entirely new window for the home entertainment business.

With all the talk of slicing windows in new ways in search of bigger profits, Fox's Mike Dunn admitted there's a potential downside: confusing or frutstrating customers. "If you slice the pie with too many slices, no one is satisfied," he said to laughs and nods from his fellow panelists.

-- Ben Fritz

The Morning Fix: Oscar working on timing. Hasbro and Discovery not toying around. `Superman' has its director.

After the coffee. Before yet another flight to New York.

The Skinny: Discovery's and Hasbro's new kids channel doesn't premiere until Sunday, but the critics are already pouncing. Can't Google everyone with Google TV. "Superman" has its next director. The FCC wants more dirt from Comcast and NBC Universal as part of its review

Oscars on the move. The Academy of Motion Pictures Arts & Sciences wants to move the annual Oscar Awards telecasts from its current home of the end of February or early March to January or early February. The motivation is to make the Oscars one of the first awards shows instead of the last so there is less chance of awards-show fatigue impacting the telecast's ratings. The challenge is finding a new home that won't get run over by football. Huh? That's right, football. See, the NFL wants to expand its regular season to 18 games (that's a debate for another day) and if (when) that happens, it will mean the Super Bowl and probably some of the playoffs will get pushed well into February. That means the Oscar folks (and host network ABC) have to find a home where they won't bump up against all that football hype on rival networks and still get ahead of other shows. The scoop from the Los Angeles Times.

Not toying around. On Sunday, Discovery and Hasbro will launch "The Hub," a new cable channel aimed primarily at kids age 6-11. Not only will it face tough competition from entrenched channels such as Viacom's Nickelodeon and Disney's Disney Channel and Disney XD, it will also be scrutinized by media watchdogs. That's because there are concerns that Hasbro will try to make the network into nothing but ads for its toys. The channel's boss, respected kids TV executive Margaret Loesch, says that won't be the case and that only about 20% of Hub shows are based on Hasbro products. But will that be enough to silence the critics? More on The Hub from the Los Angeles Times.

Google this! Google, the search engine that wants to become the connector between the Internet and the television, unveiled its content partners, but the list was more notable for who wasn't on it. While several cable networks, including CNBC, HBO and Turner Broadcasting are on board, the big broadcast networks are steering clear of Google -- for now anyway. To get Google TV, at least in its early incarnation, you'll need either a Sony high-definition TV set, a Blu-ray player or a special set-top box. In other words, it may take a little while for this thing to take off. More on Google's small-screen dreams from the New York Times.

Peace accord. Mexican broadcaster Grupo Televisa is shelling out $130 million for a 5% stake in Univision and an additional $1.07 billion in convertible debt that translates into 30% of Univision's shares, according to the Wall Street Journal. Besides giving Univision a much needed infusion, it ends years of acrimony between the two media giants.

And the backlash begins. Although many critics are worshiping "The Social Network" and already talking about how many Oscar nominations it should get, gripes about the portrayal of women in the movie are starting to surface. Missing from the movie, says Rebecca Davis O'Brien in the Daily Beast, are women who aren't "doting groupies, vengeful sluts, or dumpy, feminist killjoys." 

He's baaack! Former NBC Enertainment chief Ben Silverman is back to doing what he does best -- making new versions of successful shows. He's near a deal to make a sitcom for ABC based on an old Latin American comedy called "I Hate This Place." Not sure what's more ironic, that ABC -- whose old entertainment chief Steve McPherson loathed Silverman -- will be home for the show or that Deadline Hollywood, which relished in Silverman's downfall at NBC, was where the story was leaked.

Super Director. Zack Snyder, whose credits include "300" and "Watchmen," has been tapped to direct the latest version of "Superman" for Warner Bros. and Legend Pictures. Chris Nolan will produce. Deadline Hollywood on the choice and what Snyder's thoughts are about taking on the franchise.

Where's mine? The Wrap makes the shocking discovery that even in a field as challenged as journalism, there are some people pulling down huge salaries. Next you'll tell me there are hockey players making big bucks too. The hook for the story is that Michael Ausiello, an Entertainment Weekly writer best known for his television casting scoops, is launching his own website, backed by the owners of Deadline Hollywood. Hey, if someone wants to pay top dollar for content, you'll get no complaints from me.

Inside the Los Angeles Times: Thomas Tull, the chairman of Legendary Pictures, is buying out his original investors and has new partners in Fortress Investment Group and Fidelity. The Federal Communications Commission wants more inside information from Comcast and NBC Universal as part of its review of their pending merger. 

-- Joe Flint

Follow me on Twitter and I'll tweet you something special. Twitter.com/JBFlint

'Avatar' breaks record on small screen, too

Twentieth Century Fox's 3-D blockbuster "Avatar," which set a box-office record with $2.7 billion in worldwide ticket purchases, has performed a similar feat in the living room, surpassing "The Dark Knight" as the top seller of Blu-ray discs, according to researcher Screen Digest Inc.

James Cameron's sci-fi adventure film overtook the past record holder, "The Dark Knight," just two weeks after "Avatar's" April 22 release on home video, Screen Digest found.

U.S. retailers sold an estimated 2.41 million copies of Avatar on Blu-ray by May 2, edging out the cumulative 2.40 million Blu-ray copies of Warner Bros.' "The Dark Knight" that sold over 73 weeks, according to Screen Digest's analysis of Nielsen VideoScan data.

Based on VideoScan sales to date, and sales of other recent blockbusters, Screen Digest projects that 13-week sales for "Avatar" on disc could reach 14 million copies, with 3.9 million copies on Blu-ray and 10.1 DVDs. That would put it ahead of "The Dark Knight’s" 13-week total of 13.4 million units.

Record Blu-ray disc sales of "Avatar" are further evidence that high-definition home video is catching on with consumers, after a bruising yearlong format war paralyzed sales until early 2008 and the recession further damped sales.

The number of homes with Blu-ray players nearly doubled from 2008 to 2009, and hardware sales this year are on pace to reach more than 32 million households. Sales of movies are on a similar trajectory, with the number of discs sold increasing 94% from 2008 to 2009, and poised to more than double this year, compared with a year ago.

 “The growing percentage of major hits now selling on the Blu-ray Disc format can be attributed to the huge growth in the number of households that own a Blu-ray Disc player," said Tom Adams, founder of Adams Media Research, which was acquired in 2007 by Screen Digest.

-- Dawn C. Chmielewski

Photo: James Cameron at the premiere of "Avatar" at Grauman's Chinese Theatre. Credit: Robyn Beck / AFP/Getty Images


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