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ABOUT THE AUTHOR: MARTIN PORTER (Executive Director) has been providing information resources to entertainment technology professionals for more than 25 years. Originally a consumer electronics columnist for Rolling Stone, Premiere and GQ magazines, he has since worked as an industry consultant, editorial director and publisher for over 25 publications in professional audio, video, broadcast, electronic systems, and music. His company, Martin Porter Associates has provided consulting services to a range of trade and consumer events including the Consumer Electronics Show (CES), Audio Engineering Society (AES), National Systems Contractor Association (NSCA), and the International Recording Media Association (IRMA). He is the founding publisher of Medialine magazine and was a founding producer of Entertainment Media Expo (EMX), and the Surround Music Awards.

Opinion: Where’s UV’s guy in the turtle neck (or hoodie)?

I just came off of a day-long UltraViolet download. Eight hours of data and details about the next big Hollywood format. There were 250 of some of the smartest folks in home entertainment, all counting that UV will once again make home entertainment the cash engine that drives the Hollywood machine. Read more

Has Entertainment Failed Brian Dunn and Best Buy?

by Marty Porter

Hollywood could have done a lot more to help keep Brian Dunn his job.

You don’t need to be reading this newsletter to find out that the Best Buy CEO was shown the door earlier today amidst lousy financial reports and following a blitzkrieg attack by Wall St. analysts.  Growing online sales (aka digital media) was not enough to make up for a decline in TV and laptop sales (aka physical media).  Meanwhile, Apple is devouring the entire consumer electronics category with their own products and their own stores — even though the blue shirts at Best Buy sell about 13% of their iPhones in North America.

It’s ironic too that the hottest CE category (connected devices) are the very products that are breeding the perceived demise of a big box house living in a commoditized, virtual world of mobile devices, apps and downloadable entertainment.

Probably Dunn was too much of an old-school retail guy anyway — having worked his way up from the store level over 28 years.  If Best Buy is going to survive they’re going to need go Apple-style in their stores while they buy time building a digital strategy that the analysts will buy into — while we all, as a collective industry, figure out what we’re going to do when (not if) what’s happening to Big Blue happens to our  own Big Blu.

Dunn’s ultimate ouster started with an article on Forbes.com entitled “Why Best Buy is Going out of Business…Gradually” Read it here.

This was matched by an equally vicious attack published on AOL Finance entitled “9 CEOs who Need to Get Fired”  Read it here.

Wedbush Securities analyst Michael Pachter explained it best in a Bloomberg.com article late last month when he was quoted as saying: “With the Internet and smartphones, we don’t need to shop at Best Buy to figure out which TV or electronics we want. Their solution may be good for 2011 but will be irrelevant by 2014. Technology is going to pass them by like they’re standing still.”

Pachter should have thrown in a few A-words (Apple and Amazon) while he was at it because there’s where all the money’s going — those are the retailers that are successfully fighting the lowest prices at Costco and Wal-mart with an elegant shopping experience combined with anywhere, anytime entertainment.

But remember — as a collective industry — we had a silent pact with all our retail partners; they’ll sell our discs as long as those discs are driving people into their stores.  The fact that Dunn failed at his job doesn’t exactly make us look very good at holding up our half of the bargain.

Business Insider was the first to spot the role of entertainment in Best Buy’s decline when it reported in a recent posting the fact that its  entertainment category (games, DVD, Blu-ray) had dropped from 14% last Q4 to an ugly 20% decline this Q4.

So what do we do?  A healthy physical retail presence for home entertainment is in everyone’s best interest.  A mission of supply chain experts (digital and physical) need to start camping out in Richfield, Minnesota helping shore up their distribution backbone, while the marketing types need to spend some all-nighters creating a host of event-driven special Hollywood-style events for new releases.  Meanwhile, the digital dudes have to accelerate their roadmap for the future — they need to quickly help Best Buy and all our industry’s retail partners build out their digital entertainment infrastructures so they can drive traffic to their new storefronts on the web.

In a world of where a none-company named Instagram gets $1 billion from Facebook — valuation is all about digital strategy.  With Apple’s retail genius Ron Johnson off the short-list of potential execs as he recreates JC Penney, Best Buy is left nothing else by a digital play.  Don’t be surprised when their new CEO comes knocking on home entertainment doors in Hollywood someday soon asking to know how we’re going to help him build web traffic moving forward — and when that day comes, we better have a really good answer — for our customer and for ourselves.

Some more to say about Sony…

by Martin Porter

I’ve been thinking a lot about Stringer stepping down at Sony and the Game Dude (Kazuo Hirai) now put in charge. This corporate tango could actually revive the brand for a next gen of connected, online entertainment.

If I’m reading this move right, Sony of tomorrow will be a front-end for an insanely deep, personalized, digital archive of the greatest entertainment in history, much of which it already owns. The televisions and mobile devices will become commoditized — valued more for how much they learn your voice patterns and gestures than for the features they tote. In other words, consumer electronics will become nothing more than the new physical media in the eyes of the consumer. Commanding an omnipresent library of socially-networked entertainment will be everything.

The Sony that we knew has always been the television division. It’s now bleeding losses, dependent upon competitors for its components, and unable to compete apparently even in the next gen of OLED TV. Stringer is a television guy — CBS through and through — and in an age of Facebook IPOs, broadcast television is so old school.

The Game Dude is beholden to no legacy brand. He aims to be the master of the Internet, not the airwaves. He just so happens to own a record label, a movie studio, and a megamoney TV team — not to mention the next generation of Hollywood filmmaking (i.e., post-film).

A generation of content consumers has been brought up thinking that the Sony PlayStation is a portal to a wondrous world of online entertainment and interactive gaming. They know nothing about a declining hardware brand. They know that it’s all about the network, not the gear — something Sony finally figured it out for itself.

Good move. This is going to be fun to watch.

We Are All Netflix!

By Marty Porter

One of the smartest men in our industry has made a huge public misstep. But don’t be smug. We’re all Reed Hastings. We’re all having a helluva time dealing with digital. We’re all Netflix.

Over the past few months, roughly 14 million Netflix DVD subscribers have been characterized as out of touch and old-fashioned. Those DVD subscribers who also use Netflix’s streaming service felt the company had told them to take a hike in price or just take a hike.

Well, over eight hundred thousand of them took that hike in the last quarter. In an age where the Tea Party has demonstrated the empowerment of a community thanks to social media — at the same time as Wall Street is being Occupied — our industry’s customers are telling us something loud and clear:

“Don’t mess with the DISC!”

And yes, we’re all messing with the DISC. Living in our Hollywood bubble we’re becoming so enamored with the “Next Big Format” that we’ve stopped selling and supporting the only product that can pay the bills to get us across the digital finish line. Let’s be honest, we’ve been screwing up this “format transition” for years. In music we let the CD prematurely kill the audio cassette and we probably could have handled the video cassette to DVD transition a lot more profitably. And when we moved to high definition…well, you know that story all too well.

That’s because (admit the truth) we’re all personally “going digital” so fast that we forget that we’re a minority customer demographic — a fraction of what the market really demands. Admit it — the majority who are reading this article really love getting Netflix streamed (it’s a streaming deal) and more and more of us are leaving those red envelopes unopened for weeks on end before sending them back.

In spite of all of us, Blu-ray is a success. Are we so blinded by our own behavior patterns to not celebrate this fact? It is the only form of physical media that is digital — which will give it legs! Newsletters, magazines, even CDs aren’t connected devices. A Blu-ray player is.

What’s more, cool people are developing cool things that will make the format even cooler. If only we paid a little more attention to it, allocated more resources for innovation and put the studio smarties to work on making it better.

That’s why MESA, in cooperation with DEG, is holding the first Blu-Tech conference on Dec. 7 at the Universal Hilton. It’s time for all of us, once again, to take a reality check of all the smart and innovative things that are going on behind the scenes to serve a product that makes us money — a product that our end customers tell us they enjoy.

Join us at the conference. For one day, at least, let’s Occupy Burbank with the message:

“We are the 14 million. Don’t mess with the DISC!”

The Truth About Security Audits

With so much to lose doesn’t it make sense for the entertainment industry to agree on a single vendor security auditing standard?

Something is broken in the content security world and nobody has figured out how to fix it.  Ask any post house, replicator in town — anyone who’s handling invaluable pre-release content on behalf of the studios, game companies or record labels.  They’ll tell you that they are being audited ad nauseum by studios, industry associations, consultantcies, etc.  One post house in town told me that it performed over 100 independent security audits last year alone, with serious cost in time, productivity, and auditing fees.  There’s CDSA (which I run), MPAA, Microsoft, ISO, plus studios that also conduct their own review of a vendor’s content security procedures.  A vendor will successfully gain accreditation or review by one body just to be called the next day for another audit by somebody else.

Don’t get me wrong — security audits are essential.  In fact, standards need to get tighter and everyone needs to huddle around best practices and proven solutions that plug the possibility of a costly security breach.

But redundancy simply doesn’t make sense.  It costs everyone money.  And when it comes to security there’s simply no money to waste — especially with the new front exploding in the world of online piracy that could sink the entire ship if we’re not careful and if we’re not spending our money wisely.  Paramount CTO Chris Carey’s presentation on the true cost of Internet piracy at ESCA EDGE last June was a wake-up call for the home entertainment industry.  It made it clear that a decade of trying to put disc pirates out of business and making sure that a colorist doesn’t walk out of the post house with your next blockbuster on a hard-drive in his pocket, needs to advance to the equally (and potentially more) pressing issue of pirate cyberlockers aided by search engines and government agencies who drain the value of our Intellectual Property.

Obama had to make a tough decision.  How did he hold onto Iraq while he moved resources to Afghanistan?  Our industry has to make a similar choice.  How do we secure the pre-release media front while we get our head around putting online pirates out of business?

But there’s more — more vendors than ever before to manage, audit and secure.  It used to be you only needed to audit your post houses and your replicators — large, well-managed international corporations that already had security systems and risk management policies in place.  But the connected world and new, desktop technology tools have led to a proliferation of vendors throughout the world.  Captioning is being done by a specialist in his Eastern European home, while music is being mixed in a basement studio in Brooklyn, and game code is being written in the backwoods of the Canadian rockies.  How do you audit these remote and often small corporate partners?  Electronic Arts CISO Spencer Mott has a solution he describes on page 26 of this Journal.

Consolidated security audits is one way to save. Let’s dump all the standards into a single database, analyze the gaps, delete the overlap and come out with a single checklist that everyone agrees to and that can be executed by a single auditing body that can do the job  best in the most cost–effective way.  And let’s find an acceptable way to share the findings within the parameters of the law.

Let’s finally clean up our act on this still-essential legacy battle so we can focus resources and energies on the troubles ahead.

MESA Membership Update

Since our launch in September of 2009, MESA has grown to 35 member companies involved in the creation, production and distribution of physical and digital media & entertainment. Join these companies in the dialogue and collaborate within our industry:

Founding Members
ModusLink
Savvis
Testronic Labs

Members
3rdi Q.C.
AGI Media
AGI Polymatrix
Akamai
Arvato Digital Services
Axway
Blufocus
Budco
Butler Mail Services
Capgemini
Cinram International
Creative Impact Agency
EO3 Consulting
Eurpac
Fusion92
Giant Interactive
Global Polymers
Green Enterprise Movement
GXS
Jargon Technologies
JVC America
North Highland
Oracle
p design lab
Rovi
Scanavo
SilkRoute Global
Sony DADC
Sony Digital Authoring Center (DAC)
Sterling Commerce
Technicolor
Teradata
WebConcepts

For information about MESA contact Margaret Sekelsky at (516)641-0259 or e-mail margaret@MESAlliance.org

MESA Membership Update

MESA has grown to 17 member companies involved in the creation, production and distribution of physical and digital media & entertainment.  Join these companies in the dialogue and collaborate within our industry:

Founding Members
Capgemini
Savvis
Testronic Labs

Members
Axway
BluFocus
Cinram
Ditan
EO3 Consulting
Green Enterprise Movement
Macrovision
Nexpak
Scanavo
Sony DADC
Technicolor
Telefuture Partners
Teradata
Webconcepts

For information about MESA contact Guy Finley at (917)513-5963 or e-mail guy@MESAlliance.org

Our latest member advertisement

ESCA – Studio Technology Executives To Huddle on the Future of Hollywood at Industry Conference

Warner, Paramount, Sony, Disney, Fox Panel is an Industry First

In an industry first, senior technology officers and executives from five of the major Hollywood Studios will joining together on a single panel at the Entertainment Supply Chain Academy (ESCA) in Los Angeles, June 23-24.

The session, a roundtable discussion on where Hollywood is going and the economic realities of the industry’s digital transformation, features insights from Darcy Antonellis, President, Warner Bros. Technical Operations; Chris Carey, Executive Vice President, Worldwide Technical Operations, Paramount Pictures; Chris Cookson, President, Sony Pictures Technologies, Sony Pictures Entertainment; Art Hair, Chief Technology Officer, Walt Disney Studios; and Andy Setos, President of Engineering, The Fox Group.

Topics for this esteemed group of technology experts and visionaries will include emerging technologies, outsourcing, windows/release schedules, and future business models for Hollywood service providers. In keeping with this year’s ESCA theme of building new formats, improving product category sustainability, and making the most effective technology decisions on future directions, each of the panelists will address the impact that today’s economic climate will have on their individual studio’s strategies.

Now in its fourth year, ESCA is the only industry conference that’s all about driving profits and building sales.

To register and for full program details visit:
www. entertainmentsupplychain.com

ATTENTION VENDORS AND SERVICE PROVIDERS: Take advantage of the 50% early bird discount price on registration before June 12!

Greener Gaming Gathering (G3) Announced!

MESA is proud to announce an invite only, free meeting of great significance to the service providers to the Video Game industry

Sponsored by AGI Polymatrix and held in association with the Entertainment Merchants Association, MESA will be presenting our first Video Game Sustainability Luncheon — the Greener Gaming Gathering (G3) featuring an exclusive presentation by Darin Dickson, Senior Buyer for Video Game Software at Wal-Mart Stores, Inc.

In addition there will be a presentation by Cody Sisco, Manager Advisory Services, Business for Social Responsibility as well as a panel of experts on game sustainability issues related to replication, packaging and transportation.

Also, this event will be webcast to registered attendees as well. If you are unable to attend in person but would like to register for the webcast sign up today.  Please note that availability is open to the first 50 registrants who select “webcast” on the registration page.

The meeting and luncheon is scheduled for June 1, 2009, 10:30 – 1 pm

Burbank Airport Marriott Hotel & Convention Center
2500 Hollywood Way
Burbank, California 91505 USA
Phone: 1-818-843-6000

This event is for members and invited guests of our alliance and space is extremely limited.  Contact Guy Finley (guy@MESAlliance.org) and RSVP via the website below if you plan to come. In case of cancellation contact: cdieterich@entmerch.org

To register now visit www.gamesupplyacademy.com/green

Event Sponsor:

MESA Exec to Focus on Storage at NAB

MESA EXEC TO FOCUS ON STORAGE TECH AND SERVICES AT NAB

What is the future of consumer entertainment storage? Future trends point toward a content landscape featuring a physical and electronic media mix where the end-user will be able to obtain their programming from many sources. What’s in store for future storage and what does it mean to content owners and their service providers?

Guy Finley, MESA Director of Community Development, will be moderating a panel on this subject as part of the official NAB program in Las Vegas on Sunday, April 19 as part of the 3rd Annual Conference on Creative Storage! at the Flamingo Hotel. “Higher resolution in theatres and in homes and mobile devices are driving enormous growth in demand for digital storage,” says Finley. “This session will demonstrate how major media equipment suppliers, service providers and their entertainment industry customers expect to adapt a widening array of storage solutions in all aspects of content creation and distribution.”

Featured panelists will include SAVVIS Senior Director of Media and Entertainment Markets, Tom Moran who also serves as Chairman of the Digital Supply Chain Committee of MESA. Moran is the primary architect of business-to-business systems that are now the industry standard practice for production and distribution of media content electronically as opposed to the more costly, risky and time-consuming processes associated with handling physical media.

Other panelists include Sandra Benedetto, Director, Pro Video Sales & Product Planning, Pioneer Electronics who will be highlighting the Blu-ray format’s application in the professional market, illustrating how its large storage capacity, advanced A/V codecs and interactive and network capabilities provide a viable solution for industrial, mass storage, enterprise archive systems.

Tony Jasionowski , Senior Group Manager, Panasonic Corporation of North America (PNA) Technology Liaison & Alliances Group (TLAG) will also be explaining during the Q&A how this rapidly expanding High Definition (HD) packaged movie media format is also growing in IT, broadcast and professional work flow applications for
archiving and publishing.

Meanwhile, Richard Bullwinkle, Chief Evangelist, Macrovision, will be speaking about how today’s “everywhere, everytime” media landscape is changing the game for the storage industry, demanding storage devices and remote storage sites that present a seamless user interface.

“The session will also discuss the tough question, ‘Who ultimately owns the user interface?’ especially as the industry continues to build storage and consumer devices with content streaming from multiple sources. The presentation will address some of the next generation technologies, such as interoperability-based and guidance solutions, that could drive more revenue for content delivery providers and storage device manufacturers in the ecosystem,” he explains. New technologies, applications and data scheduled to be presented include:

• Marvell’s SheevaPlug, an embedded computer that plugs into the wall socket and runs network based services with PC class processing power, enabling easily configurable and readily accessible storage in the home and providing remote, always-on data access and sharing capabilities
• Microsoft’s 228TB tapeless workflow system for its XBOX product line and internal post production lines of business
• Key data management trends for production storage including: scale-out architectures for animation, special effects as well as active archives; the implementation of security technologies to maintain security within and between facilities during production and post-production workflows; as well as the impact of security on content delivery as it moves towards a much more decentralized business model.
• Tom Coughlin of Coughlin Associates will also present data from the 2009 Digital Storage for Media and Entertainment Report, as well as the just released 2009 Digital Storage in Consumer Electronics Report. He will also give some results from the 2009 Storage Survey of Media and Entertainment Professionals (done in cooperation with SMPTE). Copies of a summary of the Media and Entertainment Professional Survey will be made available at no charge to conference attendees.

MESA members benefit from a $100 discount for the entire conference program. Simply enter your priority code 1233709387 when you register at the event site: www.creativestorage.org

GameStop’s Mike Mauler talks with GameDaily about the complexities of the supply chain for interactive entertainment

In advance of the conference next month, GameDaily BIZ caught up with Mauler to discuss the challenges and opportunities in the video game supply chain. Read the whole interview here: Mike Mauler Interview

Mike Mauler, Senior Vice President of Supply Chain and Refurbishment for GameStop, Inc., will deliver one of two keynote addresses at February 11th’s GameSupply Academy in Burbank. His speech, entitled, “Supply Chain Optimization: Opportunities in Collaboration,” will address how achieving an agile, cost-effective supply chain will benefit video game customers through improved service levels and increased profitability for all partners.

Welcome to the Media & Entertainment Services Alliance

In response to growing demand for a collaboration platform for media and entertainment service providers, the Media & Entertainment Services Alliance (MESA) has been announced.   The Alliance, which will launch at the beginning of 2009, will focus on industry-wide issues affecting the production and distribution of both digital and physical media & entertainment in today’s changing business and technology climate.

MESA will represent those companies that provide creative, production, distribution, information and technology services for home video, interactive games, music and electronic publishing.

These organizations are critical partners as content holders reorganize their supply chains, innovate new business models and maximize their assets for a range of new technologies and emerging distribution channels.  We will represent the working community that will get the job done as media & entertainment expands its reach and role in response to consumer demand for a widening range of physical and digital formats.

Central to MESA’s membership benefits are a timely schedule of focused face-to-face business meetings and conferences held in conjunction with other leading industry trade groups, a solutions-based web community featuring online collaborative tools, and a series of special interest task forces.

The MESA management team includes Martin Porter, Executive Director, Devendra Mishra, who will serve as Chief Strategist for the group and Guy Finley who will serve as Director of Community Development.