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‚Ä¶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: ‚ÄúWith the Internet and smartphones, we don‚Äôt 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‚Äôre standing still.‚ÄĚ
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.
A unique company with an innovative business model needs a creative, innovative solution to its manufacturing challenges. ¬†Redbox revolutionized the entertainment industry 10 years ago by democratizing access to movies with a simple, yet effective, business model: Give consumers convenient access to the hottest new releases at an incredible value. Today, Redbox is a key destination for entertainment, offering DVDs, Blu-ray‚ĄĘ and video games at more than 34,500 kiosks across more than 29,000 retail locations nationwide. A Redbox kiosk is located within a 5-minute drive of 68 percent of the U.S. population and the company recently rented its 2 billionth disc.
As Redbox is in the retail business ‚Äď not the manufacturing business ‚Äď they were not aware of some of the advancements in mold, molding, automation and decorating technology that would allow them to increase productivity, efficiency and quality, while reducing costs, including the costs of decorating.
As Redbox planned for future needs, the company began a sourcing process to find a plastics supplier to serve both current and future product needs. ‚ÄúWe did an extensive search for plastics companies, looking for a long-term partner to develop a mold and to manufacture the disc case, which is the primary product our customer carries with them,‚ÄĚ says Brad Weinshenker, Director of Engineering for Redbox. Evco Plastics, a leading contract injection molder/manufacturer headquartered in DeForest, Wisconsin, was chosen for the project.
‚ÄúAs we started project discussions with Evco Plastics, we were led to a solution involving a high-tech mold and molding technology ‚Äď automated in-mold labeling ‚Äď that would involve leading-edge automation technology that would be instrumental to giving us the flexibility we need,‚ÄĚ says Weinshenker.
Evco shared opportunities for Redbox to improve efficiencies and reduce costs from the current mold and molding process.¬† ‚ÄúWe explained to Redbox that they could be doing much better in a stack mold and using automated in-mold labeling (IML) technology for their decorating,‚ÄĚ says Gary Racine, Market Development Leader for Evco Plastics. ¬†‚ÄúWe talked to them about our ability to produce a part at lower cost, with better quality, better efficiency and better throughput.‚ÄĚ Read more
Holiday Spending: Online Retail Already Up 14 Percent; High Consumer Expectations for Tech Purchases
Some encouraging consumer data on the eve of this year‚Äôs hotly anticipated holiday shopping weekend:
‚ÄĘ Holiday shoppers already have spent $9.7 billion online in November, a 14 percent increase from the corresponding period in 2010, reports comScore. The firm forecasts that online retail spending for the November‚ÄďDecember period will reach $37.6 billion, representing a 15-percent gain versus last year. ‚ÄúWith the persistent backdrop of macroeconomic uncertainty and continued high unemployment, consumers appear to be increasingly favoring the online benefits of convenience and lower prices,‚ÄĚ says Gian Fulgoni, comScore‚Äôs chairman.
‚ÄĘ Roughly half of U.S. consumers (51 percent) plan to shop at either e-commerce sites and/or brick and mortar stores this holiday weekend, spending an average of $224 per shopper, Deloitte finds (via TWICE). Deloitte, which conducted a survey of 1,000 consumers last week, reports that 66 percent of Thanksgiving weekend shoppers plan to visit brick-and-mortar stores on Black Friday. Nearly one quarter (23 percent) plan to shop in stores at midnight on Friday, while 17 percent plan to shop on Thursday.
‚ÄĘ Consumer expectations for technology spending have reached their highest level of the year, even as confidence in the economy has sunk to an all-time low, according to the Consumer Electronics Association (CEA). The CEA‚Äôs Index of Consumer Technology Expectations (ICTE) rose to 91.2, its highest level since December 2010. ‚ÄúTech continues to grow and remains well above year-over-year levels on the heels of the strongest monthly gains for electronics and appliance retail sales since November 2009,‚ÄĚ said Shawn DuBravac, CEA‚Äôs chief economist and director of research. ‚ÄúStrong retail sales in October, coupled with growing consumer intentions to purchase innovative new technologies, is well timed as we move fully into the holiday shopping season this week.‚ÄĚ
Billboard is instituting a minimum pricing threshold on its long-running sales charts, casting a frown upon music retailers‚Äô most aggressive promotion tactics as record labels seek to stabilize the value of CDs and digital tracks.
Under the new policy, albums that sell for less than $3.49 during the first four weeks of their release ‚Äúwill not be eligible for inclusion on the Billboard album charts and will not count towards sales data presented by Nielsen SoundScan.‚ÄĚ Nor will singles that sell for less than 39 cents during their first three months of release, Billboard states.
The policy goes into effect the week of November 21, enabling the magazine to exclude from its reporting any rock-bottom Black Friday music promotions that may be in the offing.
The changes are chiefly in reaction to Amazon’s 99-cent sale of Lady Gaga‚Äôs ‚ÄúBorn This Way‚ÄĚ in May, which attracted hundreds of thousands of customers to the online retailer in its relentless fight for market share against Apple’s iTunes. At the time, Billboard allowed ‚ÄúBorn This Way‚ÄĚ onto its sales charts, noting that neither Lady Gaga‚Äôs management nor Interscope, the album‚Äôs distributor, played any part in the promotion. (Indeed, Amazon reportedly paid full wholesale price for each copy of ‚ÄúBorn This Way‚ÄĚ that it nearly gave away, taking a loss in the neighborhood of $7.40 per unit.)
Bill Werde, Billboard‚Äôs editorial director, defended the policy change¬†in a note this week, stating that the magazine‚Äôs decision followed ‚Äúmuch thought and consultation with the industry.‚ÄĚ
Werde said that the magazine settled upon $3.50 as its threshold price because it represents half the average wholesale price of an album. The new policy, Werde added, ‚Äúwould not interfere with any regular or semi-regular pricing currently in effect at any of the five biggest retailers ‚ÄĒ Walmart, Amazon, iTunes, Best Buy and Target.
‚ÄúBillboard doesn‚Äôt want to control the marketplace. We just want to count it,‚ÄĚ Werde said. ‚ÄúBut free or almost-free albums don‚Äôt represent a marketplace.‚ÄĚ
However, retailer discounts remain an undeniable music market driver. The current top selling album at Amazon‚Äôs MP3 store, Coldplay‚Äôs ‚ÄúMylo Xyloto‚ÄĚ (released Oct. 24 by Capitol/EMI), fetches just $4.99, roughly half the album‚Äôs price on iTunes.
Meanwhile, only two titles on Amazon‚Äôs top 10 chart on Friday sold for prices higher than $7.99: Drake‚Äôs ‚ÄúTake Care‚ÄĚ (released Nov. 15 by Cash Money/Universal) and Adele‚Äôs ‚Äú21‚ÄĚ (released in February by XL Recordings/Columbia).
While packaged media remains the perfect gift for many holiday shoppers, digital entertainment goods are increasingly working their way onto shoppers‚Äô lists as well.
Nearly one third of consumers (31 percent) plan to purchase music or movies on disc as holiday gifts in 2011, according to Deloitte‚Äôs annual holiday survey. Some 20 percent plan to purchase videogames as holiday gifts, while 35 percent plan to purchase books.
A majority of consumers (59 percent) plan to spend more or the same on holiday gift shopping overall as they did in 2010; Deloitte expects total holiday sales between November and January (excluding motor vehicles and gasoline) to reach between $873 and $877 billion, representing a 2.5 to 3 percent increase from the same period in 2010. A PDF of Deloitte‚Äôs full report is here.
Meanwhile, more than a quarter of U.S. shoppers (27 percent) plan to buy digital goods such as music or movie downloads, as well as Facebook or Xbox credits, as gifts this holiday season, according to research from Elastic Path Software. Still, physical gift cards are the preferred way to give digital content: 58 percent of holiday shoppers buying digital gifts plan to give cards redeemable for digital goods.
Notably, the average total gift budget among those planning to purchase digital goods is $440, nearly $100 more that of more ‚Äútraditional‚ÄĚ gift buyers ($349). More stats from Elastic Path here.
Spotify is beginning to market gift cards for digital music at UK chain Morrisons, joining the ranks of digital entertainment companies seeking to establish a physical retail presence. As paidContent points out, Spotify joins the likes of iTunes, Facebook, and Zynga in marketing gift cards at brick-and-mortar retail.
Sales data is scant on digital entertainment gift cards in particular, but the overall gift card segment continues to grow. Nearly 60 percent of U.S. consumers say gift cards are the No. 1 item they plan to give to others this holiday season, according to gift card service provider Ceridian Stored Value Solutions.
More on Spotify and Morrisons at Music Week.
Consumer spending on mobile and social games ‚ÄĒ along with downloadable games and content, pre-owned physical titles, rentals, and game subscription services ‚ÄĒ outpaced sales of new console and PC titles by more than 20 percent during the second quarter, according to new data from the NPD Group.
Sales via digital and “other” physical monetization methods totaled $1.74 billion during the quarter, compared to $1.44 billion spent on new packaged games, NPD says. The spending levels represent a shift from the first quarter of 2011, when consumers spent eight percent more on new physical releases ($2 billion) than on digital content, used titles, and rentals ($1.85 billion). But the Q2 spending was enough to put the digital and “other” game businesses on top for the first half of the year ($3.59 billion to new physical game software‚Äôs $3.44 billion).
Clearly, this is not an apples-to-apples comparison. Since social and mobile games often don‚Äôt have console counterparts, the spending data may represent less of a format shift than an expansion of the overall games market. Nevertheless, with music and video, the rise of digital game markets coincides with a mature physical distribution platform, and a challenge at retail to engage shoppers with new packaged media products.
NPD also does not disclose how large a percentage of “other” game spending is claimed by used discs and rental services ‚ÄĒ which, as in the video market, represent either lost sales or new revenue opportunities, depending on your perspective.
The total amount spent by consumers on hardware, content and accessories is estimated at $4.5 billion for the second quarter of 2011, an increase of one percent versus Q2 2010, NPD says.
Amazon.com would be able to postpone collecting sales tax from California‚Äôs consumers until September 2012, under a tentative deal between the company and the state‚Äôs legislators (via the Los Angeles Times).¬†In exchange for the ‚Äúsafe harbor‚ÄĚ from California sales tax collection, Amazon would end its effort to put the state‚Äôs recently-enacted sales tax law to public vote in a ballot referendum.
In the interim, Amazon would continue to lobby federal lawmakers in Congress to settle the tax issue for online retailers. ‚ÄúIf [Amazon] can‚Äôt get Congress to act by next July, then they will start to collect the tax in September 2012,‚ÄĚ says California Assemblyman Charles Calderon. ‚ÄúIf by chance they get Congress to act, then that would trump the state law.‚ÄĚ
California Governor Jerry Brown has yet to comment on the legislators‚Äô tentative deal with Amazon. Brown rejected previous compromise proposals on grounds that the revenue from the new sales tax ‚ÄĒ projected to be $200 million annually ‚ÄĒ was too critical to the state.
More at the San Francisco Chronicle, which reports that California could sign off on the “safe harbor” deal as soon as Thursday.
GameStop has stopped selling copies of a hit new video game in its brick-and-mortar stores, as the retailer attempts to contain customer outcry over its initial response to a publisher‚Äôs promotional offer.
Square Enix, publisher of the PC video game ‚ÄúDeus Ex: Human Revolution,‚ÄĚ included in the title‚Äôs physical packages coupons for free online access to the game at OnLive, a video game streaming service. But GameStop, which is developing a streaming service of its own, regards OnLive as a competitor (via Wired).
The retailer, which appears to have learned of the promotional offer only after its outlets received copies of the game, first directed its store staff to remove and discard the OnLive coupons from the “Deus Ex” boxes, and still sell the copies as new (via GameSpy). That move has riled some customers, even as GameStop defends its policy on its Facebook page.
Coverage of the episode by the gamer press (more at¬†Ars Technica,¬†Joystiq and¬†USA Today) may be giving OnLive a greater publicity boost than the ‚ÄúDeus Ex‚ÄĚ promotion would have on its own. The company, whose investors include AT&T and Warner Bros., launched its streaming service in the U.S. last June. It currently offers more than 100 games for rental or permanent-access purchase; customers can play games on their computers or via Internet-connected TVs.
Square Enix issued a statement on Wednesday acknowledging that it had not made GameStop aware of the OnLive promotion. The publisher pledged to ship the retailer new boxed PC copies without the OnLive offer, noting that it ‚Äúrespects the right of GameStop to have final say over the contents of products it sells and to adjust them where they see fit in accordance with their policies….Square Enix invites gamers who want to purchase the PC version of ‘Deus Ex: Human Revolution’ without additional coupons to buy the game at any one of over 4,000 GameStop stores in North America or purchase a digital download copy online from www.gamestop.com.‚ÄĚ
Comparable store sales at GameStop declined by 9.1 percent during the company‚Äôs second quarter (ended July 30), as hardware sales ebbed and new game titles ‚Äúunderperformed.‚ÄĚ However, pre-owned game sales during the quarter topped $633.1 million, a 12 percent increase from GameStop‚Äôs second quarter of 2010.
Used games, which are a leading profit source for GameStop, comprised 36.3 percent of the retailer‚Äôs total sales for the quarter, up by nearly five percentage points from the year-ago period. GameStop says that its digital business also exceeded its quarterly expectations, with sales increasing by 69 percent year over year.
With Sony Corp.¬†dropping the price of its entry-level PlayStation 3 console by $50 to $249, U.S. retailers could see a sales boost in both hardware and software. ‚ÄúIt is safe to assume that confidence across the entire industry just lifted,‚ÄĚ video game retail analyst Jesse Divnich tells Reuters. Some observers speculate that Microsoft might respond with a corresponding price cut to its rival Xbox 360 console (via Gamasutra).
As of year-end 2010, disc sales and rentals still provided a slim majority of film studios‚Äô revenues, according to a new report from the Entertainment Merchants Association (EMA).
General sell-through declines notwithstanding, DVD and Blu-ray disc sales and rentals accounted for 51 percent of studio revenue, the EMA says, while box office receipts accounted for 26 percent; premium/pay TV packages accounted for 16 percent and video-on-demand/electronic sell-through accounted for is 7 percent.
Within the disc category, rentals helped offset declines in DVD sales in 2010. As with studios‚Äô overall product mix, the makeup of the rental business is changing. EMA also projects that the subscription services will command half (50 percent) of home entertainment consumers‚Äô overall rental spending in 2011, followed by kiosks (28 percent) and traditional brick-and-mortar stores (22 percent).
More information on EMA‚Äôs ‚Äú2011 D2 Report: Discs & Digital‚ÄĚ is available at the association‚Äôs website, entmerch.org.
Specialty retailer Hastings Entertainment reported a net loss of $3.6 million for the first six months of its fiscal 2011 (ended July 31), compared to net earnings of $0.9 million for the same period in 2010.
Hastings chief executive John Marmaduke faulted the company‚Äôs second quarter loss on a weak slate of home entertainment and books. ‚ÄúFurthermore, we continue to be impacted by the shift toward the digital delivery of books as well as the increasing growth of rental kiosks and subscription-based services in movie rentals,‚ÄĚ Marmaduke said.
During its second quarter, however, Hastings reduced its shrinkage expense by approximately $0.8 million, while trimming costs to return products to vendors by $0.3 million, compared to the same costs during the second quarter of fiscal 2010.
Marmaduke also announced that Hastings has opened a new concept store in Littleton, Colo. to further pursue the market for pre-owned packaged media. The store, called Tradesmart, offers some 400,000 predominantly used books, CDs, DVDs, Blu-ray discs, and videogame software and hardware, along with other products.
Twentieth Century Fox Home Entertainment has reason to sing about home entertainment sales: its animated family film ‚ÄúRio,‚ÄĚ released on disc Aug. 2, sold 2.5 million copies in its first six days, according to the studio.
Combination Blu-ray and DVD packs represented 40 percent of sales (1 million units) during the six-day period, Fox says.
‚ÄúRio‚ÄĚ was a big-screen hit earlier this year, earning nearly $39.2 million during its domestic opening weekend in April and $143.3 million in domestic theaters to date (via Box Office Mojo).
The DVD release has received promotional support from 50 brands ‚ÄĒ including Chiquita, which tied in with ‚ÄúRio‚ÄĚ for its theatrical run (via Variety). The fruit brand has been including $3 coupons for the ‚ÄúRio‚ÄĚ disc on millions of its bananas, avocados, and pineapples in supermarkets nationwide.
Blockbuster LLC plans to maintain operations of more than 1,500 brick-and-mortar stores nationwide under new contracts with property owners, comprising more than 90 percent of the stores that were offered at the chain‚Äôs bankruptcy auction in April.
‚ÄúBy lowering pricing and offering competitive summer promotions, we‚Äôve brought millions of customers back into Blockbuster stores in the last three months,‚ÄĚ said Michael Kelly, Blockbuster president, in a statement. ‚ÄúToday, more than 100 million people live near a Blockbuster store.‚ÄĚ
The chain had about 1,700 outlets when it was acquired by Dish Network in April. A Dish spokesman tells TheWrap that the chain would be closing about 200 outlets, primarily due to landlords declining to renew store leases. However, spokesman Marc Lumpkin said the company could open new Blockbuster stores, ‚Äúparticularly in those areas where we wanted to keep stores open but the landlords didn‚Äôt renew leases.‚ÄĚ
Having received no proposals from ‚Äúgoing concern‚ÄĚ bidders, Borders Group plans to close the entertainment retailer‚Äôs 399 outlets, subject to the approval of a U.S. bankrputcy court.
Some stores and facilities could close as soon as July 22, with Borders expecting to complete the liquidation by the end of September.¬†The loss of brick-and-mortar retail space is not without ramifications for book and magazine publishers, not to mention DVD and Blu-ray marketers; news of the liquidation, however, hardly comes as a surprise to the industry.
‚ÄúWe were all working hard towards a different outcome, but the headwinds we have been facing for quite some time, including the rapidly changing book industry, eReader revolution, and turbulent economy, have brought us to where we are now,‚ÄĚ said Mike Edwards, Borders Group president, in a statement. Edwards related similar sentiment in a letter to the company‚Äôs 10,700 employees obtained by The Wall Street Journal.
Meanwhile, Kobo, the e-reader company with whom Borders had partnered, continues to assume direct support of Borders customers‚Äô e-book accounts. Following Borders‚Äô liquidation announcement, Kobo reiterated its corporate independence from the chain in a statement to TechCrunch: ‚ÄúAs one of the early investors in Kobo, Borders has a minority stake in our company and serves as part of our distribution in the U.S. along with Walmart, Best Buy, Sears and other retailers. As a member of the broader book publishing and retailing community, we are watching Borders‚Äô story with interest and send our best wishes to all the people of Borders.‚ÄĚ
Borders Group is reportedly in last-ditch talks to save at least some of its 400 remaining bookstores from liquidation.
The company is in discussions with Birmingham, Ala.-based Books-A-Million, the Wall Street Journal reports, although the scope of the proposed deal with the regional bookstore chain is not known.
Private equity firm Najafi Companies, whose acquisition proposal drew creditor objections last week, ‚Äúreluctantly‚ÄĚ declined to bid on Borders by a July 17 deadline (via Bloomberg). With an auction for the company set for July 19, the only bid is reportedly from a group of liquidators led by Hilco Merchant Resources and Gordon Brothers Retail Partners.
A committee of unsecured creditors for The Borders Group is objecting a proposed private-equity takeover of the company, favoring instead a court-supervised liquidation of the entertainment retailer (via The New York Times). In a bankruptcy court filing on Wednesday, the creditors argued that the Najafi Companies private equity firm ‚ÄĒ whose Direct Brands unit owns the Book of the Month Club and Columbia House ‚ÄĒ had not promised to continue operating the company as part of its proposed acquisition. That would leave Najafi free to liquidate the company on its own, the creditors say (via Ann Arbor Business Review).
Liquidation is not yet a certainty, the Times reports: Najafi and other potential suitors can still bid for the company at a court-supervised auction for Borders, scheduled to begin on July 19.
The U.S. Supreme Court handed entertainment retailers a victory today, with seven of its nine Justices striking down a California law that would have prohibited the sale or rental of violent videogames to minors.
Five Justices said the 2005 California statute ran afoul of the Constitution‚Äôs freedom-of-speech guarantee.¬†Expressing a measure of approval for the videogame industry‚Äôs self-regulatory efforts ‚ÄĒ under which retailers limit the sale of ‚Äúmature‚ÄĚ-rated games to consumers age 17 and older ‚ÄĒ the majority of the Court declined to view violent games as materially different than books, movies, or other forms of entertainment that depict violent scenes.
‚ÄúCalifornia‚Äôs argument would fare better if there were a longstanding tradition in this country of specially restricting children‚Äôs access to depictions of violence, but there is none,‚ÄĚ wrote Justice Antonin Scalia in the majority opinion. ‚ÄúCertainly the books we give children to read ‚ÄĒ or read to them when they are younger ‚ÄĒ contain no shortage of gore. Grimm‚Äôs Fairy Tales, for example, are grim indeed.‚ÄĚ
Scalia added that states could not regulate violent content under the ‚Äúobscenity‚ÄĚ exception to the Constitution‚Äôs First Amendment protection. The obscenity exception ‚Äúdoes not cover whatever a legislature finds shocking, but only depictions of ‚Äėsexual conduct,‚Äô‚ÄĚ Scalia wrote, citing an earlier Supreme Court decision that upheld a New York law restricting sales of sexually explicit material.
California, in its argument before the Court, also failed to prove that violent videogames caused harm to minors. The studies that the state submitted, Scalia wrote, ‚Äúshow at best some correlation between exposure to violent entertainment and miniscule real-world effects, such as children‚Äôs feeling more aggressive or making louder noises in the few minutes after playing a violent game than after playing a nonviolent game.‚ÄĚ
The Entertainment Merchants Association, which argued retailers‚Äô case before the Supreme Court, hailed the ruling as a win for the game industry at large.¬†‚ÄúThere now can be no argument whether videogames are entitled to the same protection as books, movies, music, and other expressive entertainment,‚ÄĚ said EMA president Bo Andersen in a statement.
Although the Supreme Court decision is the final word on the 2005 California law, several Justices signaled that they would have upheld the prohibition ‚ÄĒ either as it was enacted or with certain changes to its wording.
Justice Samuel Alito, writing for himself and the Court‚Äôs Chief Justice John Roberts, praised the California law as a ‚Äúpioneering effort to address what the state legislature and others regard as a potentially serious social problem: the effect of exceptionally violent videogames on impressionable minors, who often spend countless hours immersed in the alternative worlds that these games create.‚ÄĚ For Alito and Roberts, the law failed only because its definition of ‚Äúviolent videogame‚ÄĚ was ‚Äúimpermissibly vague.‚ÄĚ
But with the majority of the Court seeming to require from lawmakers some proof that violent interactive content causes real-world harm, Alito lamented, ‚Äúa state must surmount a formidable (and perhaps insurmountable) obstacle if it wishes to prevent children from purchasing the most violent and depraved videogames imaginable.‚ÄĚ
Justice Stephen Breyer, who would have let the California law stand, questioned the wisdom of creating a distinction between violent content and obscene material.
‚ÄúWhat sense does it make to forbid selling to a 13-year-old boy a magazine with an image of a nude woman,‚ÄĚ Breyer wrote in dissent, ‚Äúwhile protecting a sale to that 13-year-old of an interactive videogame in which he actively, but virtually, binds and gags the woman, then tortures and kills her? What kind of First Amendment would permit the government to protect children by restricting sales of that extremely violent videogame only when the woman ‚ÄĒ bound, gagged, tortured, and killed ‚ÄĒ is also topless?‚ÄĚ
The full Brown v. Entertainment Merchants Assn. decision is available at the Supreme Court’s website.
Home entertainment‚Äôs fitness niche appears to have hit its stride.
Overall sales of fitness discs in 2010 were up by 7 percent from 2009, fueled by home video extensions of TV shows such as ‚ÄúThe Biggest Loser‚ÄĚ and ‚ÄúDancing with the Stars,‚ÄĚ according to Nielsen (via Reuters). Studios tell Reuters that such workout DVDs, along with yoga titles, have been adding weight for several years now.
Indeed, a Lionsgate workout DVD by The Biggest Loser‚Äôs Jillian Michaels ‚ÄĒ first released in 2008 ‚ÄĒ has spent 1,150 days on Amazon‚Äôs top 100 chart of DVD titles, and currently sits at No. 10.
As the U.S. Supreme Court nears the end of its annual term, the dispute between the state of California and video game merchants over the sale of violent video games to minors still awaits resolution.
Observers had anticipated that the high court might issue an opinion in the Brown v. Entertainment Merchants Assn. case on Thursday, but no decision has come. California is seeking the power to reinstate its 2005 law criminalizing the sale of games that feature a certain level of violence to consumers under age 18. The Entertainment Merchants Association (EMA) maintains that such video games are a form of speech protected by the First Amendment of the U.S. Constitution. The retailers‚Äô trade group prevailed in two lower-court decisions.
It has been more than seven months since the parties to the Brown case argued their positions before the Supreme Court. The outcome, however, may not be so cut and dry. As USA Today reports, the longer the wait is for resolution, the longer Court opinions generally are; the Court‚Äôs nine justices are also more likely to issue multiple concurring and dissenting opinions instead of, say, a single unanimous ruling.
More speculation on the case, which could well be a legal toss-up, at The Hollywood Reporter.
Interscope and Universal Music Group Distribution shipped 2.1 million copies of Lady Gaga‚Äôs ‚ÄúBorn This Way‚ÄĚ before its May 23 street date, according to Billboard. But with Amazon.com‚Äôs 99-cent sale of the album‚Äôs MP3 version on its release day ‚ÄĒ along with a repeat of the promotion on May 26 ‚ÄĒ CD editions moved just 449,000 units during the first week of release.
Billboard notes that Interscope likely would have reduced shipments had it been aware of Amazon‚Äôs promotional plans; under current distribution practice, record companies often ship fewer than two copies of an album for every unit expected to be sold in the first week. Now, the magazine reports, Interscope could be facing returns of several hundred thousand units from retailers, unless it offers stores a ‚Äúsweetener‚ÄĚ to keep the inventory.
In one of¬†its first promotions as a Dish Network subsidiary, Blockbuster is seeking to drive traffic to stores by renewing a 99-cent-per-day rental price for ‚Äúthousands‚ÄĚ of titles. The campaign echoes past efforts of the brick-and-mortar chain to keep pace with Netflix and Redbox. Blockbuster also offers customers free movie rentals through July 4.
GameStop reported increased net earnings of $80.4 million for its first fiscal quarter (ended April 30), up 6.9 percent year over year, as comparable-store sales of pre-owned game products grew 9.5 percent.
Used games continued to represent GameStop‚Äôs largest source of gross profit ‚ÄĒ worth some $300 million during Q1 of 2011 ‚ÄĒ with a margin of 48%.
Among other highlights, the specialty retailer‚Äôs digital sales increased 53 percent over 2010, with each segment within the category experiencing ‚Äústrong growth‚ÄĚ during the quarter.
Sales of new release games contributed as well: the top five selling games for the retailer during the quarter were Nintendo’s “Pok√©mon Black and White,” “Mortal Kombat” from Warner Home Video Games, Capcom’s “Marvel vs. Capcom 3: Fate of Two Worlds,” “Call of Duty: Black Ops” from Activision,¬†and THQ’s “Homefront.”
With Dish Network working to close its acquisition of Blockbuster by April 25, the company has told a U.S. Bankruptcy Court in Manhattan that it plans to assume leases on more than 500 Blockbuster stores (via The Wall Street Journal). Blockbuster‚Äôs post-bankruptcy physical presence could span as many as 1,000 locations under the Dish plan. But even that number would represent a further contraction of the movie-rental chain; at present, Blockbuster operates approximately 1,700 stores.
Reviewing the U.S. launch of the 3DS handheld videogame system with USA Today, Nintendo of America president Reggie Fils-Aime says the company deliberately worked to avoid the retail shortages that impacted the introduction of the Wii console during the 2006 holiday season.
‚ÄúWe staged supply [of the 3DS] so it would not sell out,‚ÄĚ Fils-Aime said. ‚ÄúWe had product going direct to store and we also had product in [the distribution centers of] retailers, so they could easily replenish when they had stores running low on inventory.‚ÄĚ
Fils-Aime said that retailers sold 400,000 3DS systems to consumers during its first week of availability ‚ÄĒ an ‚Äúexceptional‚ÄĚ number, according to the Nintendo executive.
Analysts had expected the company to sell considerably more 3DS systems, however, leading some to speculate that Nintendo is now facing the opposite of what it confronted during the Wii launch: oversupply. While Cowen & Company had expected the handheld system would sell 750,000 units in the U.S., a more conservative prediction by Wedbush Morgan of 500,000 units wound up being off by 20 percent (via GamesIndustry.biz).
Publishers are expressing doubts that Borders can meet the goals it lays out for itself in the restructuring plan that the bankrupt bookseller presented to creditors on Wednesday. Publisher sources tell The New York Times that the realization of new distribution efficiencies and other cost-cutting measures is not enough to restore shipments of new-release product under previous terms.
Meanwhile, fellow entertainment retailer Blockbuster is wending its way through the same Manhattan bankruptcy court as Borders. Blockbuster appears before the court today in a review of the Dish bid. Outside the courtroom, however, one analyst has downgraded Dish Network shares, warning that the Blockbuster acquisition would impact the satellite television company‚Äôs financials. More at The Hollywood Reporter.
Demand for Internet-connectable TVs and 3D home entertainment ‚Äúdid not materialize‚ÄĚ as the industry expected over the last year, according to Best Buy ‚ÄĒ which reported 1% revenue growth and lower profits for its most recent fiscal year (ended Feb. 26).
Sales of entertainment hardware and software declined by low double-digit percentages during the retailer‚Äôs fourth quarter, Best Buy said. Ahead of the 2010 holiday season, the retailer trimmed shelf space for music and movies to place greater emphasis on videogames and other home entertainment products.
Brian Dunn, the retailer‚Äôs chief executive, pointed to ongoing economic concerns and new home sales declines as factors that have impacted consumer spending on TVs, notebook computers, and other CE staples (via Home Media Magazine).
Brick-and-mortar retailer Hastings Entertainment posted an annual profit in 2010, on lower revenues, as it added new products such as comic books to more of its store outlets. ‚ÄúDue to our flexible multimedia store model and seamless selection of new and used products,‚ÄĚ says Hastings chief executive John Marmaduke, ‚Äúwe believe that Hastings Entertainment is a sustainable retailer and we will see profitable growth and a bigger market share as many of our competitors cease to exist.‚ÄĚ
Comparable-store revenues for movies increased by 6.3% in Hastings‚Äô fiscal 2011 (ended Jan. 31), driven by sales of new and used Blu-ray movies, along with boxed DVD sets and used DVDs. Comp sales of videogames increased by 4.7%, driven by sales of new and used PlayStation 3 and Xbox 360 titles, along with hardware accessories.
In a tie-in deal between Walmart and Universal Pictures, some 3,000 Walmart stores are marketing 100 exclusive licensed products based on the studio‚Äôs Easter Bunny-themed film, ‚ÄúHop.‚ÄĚ While the retail campaign serves to promote the film, which debuts in theaters April 1, the range of value-priced ‚ÄúHop‚ÄĚ products focuses on items such as candy, toys, and apparel.
The campaign marks another evolutionary step in the merchandising relationship between Walmart, historically the top seller of DVDs in the U.S., and major studios. The ‚ÄúHop‚ÄĚ tie-in follows a similar program that Walmart unveiled with DreamWorks Animation ahead of that studio‚Äôs theatrical release of ‚ÄúHow to Train Your Dragon‚ÄĚ one year ago.
In further consolidation among distributors of packaged entertainment media, Alliance Entertainment announced late last week its acquisition of EDGE Entertainment Distribution, a distributor of some 140,000 music and movie titles.
Financial terms of the transaction were not disclosed. EDGE primarily serves independent music retailers, public libraries and college book stores, while Alliance is the largest wholesale distributor of CDs, DVDs and videogames in the U.S., with customers including Amazon.com and Barnes & Noble.
Alliance itself was acquired in September 2010 by a joint venture between investment firms Platinum Equity and The Gores Group. Platinum is among those reported to have bid for assets of Warner Music Group as well.
‚ÄúAlliance has a long-standing commitment to serving the distribution needs of the music industry and independent retailers in particular. Alliance understands their needs and looks¬† forward to continuing to deliver the high level of customer service they deserve,‚ÄĚ said Bryan Kelln, president of portfolio operations for Platinum Equity, in a statement. ‚ÄúAs the market for distributing media content continues to evolve, we will keep pursuing opportunities to grow and diversify Alliance‚Äôs business organically and through additional acquisitions.‚ÄĚ
More at Billboard.
With Blockbuster‚Äôs creditors lifting their objections to a sale of the company, a bankruptcy court approved of an auction plan late Thursday (via Bloomberg). The ruling enables Blockbuster to avoid a forced conversion of its Chapter 11 bankruptcy into a Chapter 7 liquidation.
A group of lenders including investment firm Monarch Alternative Capital have bid $290 million for the Blockbuster. The bankruptcy court ruled that others, including Blockbuster senior debt holder (and former board member) Carl Icahn, could bid for the company at the auction, the date of which has yet to be set.
Announcing its Chapter 11 bankruptcy filing on Wednesday, Borders said that it must immediately close 200 of its 642 U.S. stores to successful reorganize operations, according to court documents obtained by Bloomberg.
Counsel for the country‚Äôs second-largest bookseller stated that the stores targeted for closure are currently losing $2 million per week.
The company also announced that it had received commitments for $505 million in debtor-in-possession financing led by GE Capital, Restructuring Finance. ‚ÄúThis financing should enable Borders to meet its obligations going forward so that our stores continue to be competitive for customers in terms of goods, services and the shopping experience,‚ÄĚ said Borders Group president Mike Edwards in a statement. ‚ÄúIt also affords Borders the opportunity to move forward in implementing the appropriate business strategy designed to reposition Borders to be a potentially vibrant, national retailer of books and other products.‚ÄĚ
Highlights of Amazon‚Äôs fourth quarter earnings, announced Thursday:
‚ÄĘ Net sales for the quarter (ended Dec. 31, 2010) rose 36% from the same period in 2009, to $12.95 billion ‚ÄĒ marking the first quarter in which the online retailer topped $10 billion in sales. Worldwide media sales increased by 12% during the quarter, to $5.23 billion ‚ÄĒ representing 40% of the company‚Äôs total business.
‚ÄĘ Amazon is now selling more Kindle e-books than paperback books in the U.S. Since the beginning of the year, for every 100 paperback books Amazon has sold, the company has sold 115 Kindle books. Amazon said the comparison includes sales of books where there is no Kindle edition, and excludes free Kindle books. ‚ÄúLast July we announced that Kindle books had passed hardcovers and predicted that Kindle would surpass paperbacks in the second quarter of , so this milestone has come even sooner than we expected ‚ÄĒ and it‚Äôs on top of continued growth in paperback sales,‚ÄĚ said Amazon chief executive Jeff Bezos.
‚ÄĘ North America segment sales (U.S. and Canada) were $7.21 billion in Q4, up 45% from 2009. The North American business represented more than half of the total sales for the quarter (56%).
‚ÄĘ While net income increased 8% year-over-year in Q4 to $416 million, some analysts had expected higher profit margins (via Reuters). Amazon announced last year plans to open 13 new distribution centers; the company said on an earnings call that it was continuing with those plans.
Borders informed publishers yesterday that that the brick-and-mortar bookstore chain is close to securing refinancing from lenders such as GE Capital, according to The New York Times. However, the retailer, which recorded a $74 million loss during its most recent quarter, may ask publishers to loan the company cash to cover a portion of its debt.
Meanwhile, the chain continues to cut costs, reportedly eliminating 15 managerial positions yesterday.
Blockbuster says in bankruptcy court papers that it will close 72 stores in undisclosed locations by the end of the year, along with another estimated 110 during the first quarter of 2011 (via Home Media Magazine).
The chain operated some 2,800 stores in the U.S. as of early October. Blockbuster aims to renegotiate leases for its remaining outlets to preserve their profitability.
Ten Quick Chek convenience stores in New York and New Jersey are hosting digital music kiosks from NCR Corp. and MOD Systems, offering customers the ability to purchase MP3 songs and albums from ‚Äúall major labels‚ÄĚ as well as independents.
The Download2Go kiosk deal marks Quick Chek‚Äôs entrance into the entertaiment products category. ‚ÄúWe are excited to bring digital music products to our customers that differentiate our brand, attract new customers, and integrate well into our sales and marketing campaigns,‚ÄĚ says John Schaninger, Quick Chek‚Äôs VP of sales and marketing. The company operates 125 locations in New Jersey and the southern part of New York State.
Download2Go kiosk customers transfer music onto SD cards, USB drives, or directly to portable music players, paying for their purchases with a credit card.
The rollout follows MOD Systems‚Äô deployment of Download2Go digital movie kiosks this summer in 30 InMotion Entertainment stores in airports throughout the U.S.
‚ÄúRetailers are looking for opportunities to capture customer interest in digital entertainment or take back sales that have shifted from their stores to online,‚ÄĚ says Anthony Bay, MOD Systems chief executive. ‚ÄúConsumers can now build their digital music collections outside the home without requiring connectivity, while retailers can sell the latest entertainment content in a way that drives impulse purchases and repeat customer visits.‚ÄĚ
Nearly half of Black Friday shoppers (42.1%) purchased books, CDs, DVDs, Blu-ray discs, or videogames during the post-Thanksgiving weekend, according to a National Retail Federation survey conducted by BIG Research. The percentage is up from 40.3% in 2009, and 39.0% in 2008.
The holiday weekend saw an increase in the total number of shoppers: 212.5 million, up 8.7% from 2009. Average spend per shopper (for all purchases) rose 6.4% from last year, to $343.31.
The increased spend in entertainment media coincided with more shoppers purchasing other discretionary items such as jewelry and toys.
‚ÄúWhile Black Friday weekend is not always an indicator of holiday season performance, retailers should be encouraged that a focus on value and discretionary gifts has shoppers in the spirit to spend,‚ÄĚ says NRF chief executive Matthew Shay.
Individual media and entertainment companies enjoyed early holiday season success. Nintendo estimates that retailers sold 900,000 combined units of the Nintendo DS family of portable gaming systems and 600,000 Wii consoles between Sunday, Nov. 21, and Saturday, Nov. 27 (via Business Wire). Meanwhile, Piper Jaffray analysts visiting brick-and-mortar Apple stores on Friday reported brisk iPad sales (via Business Insider), while Apple offered one-day discounts on other products online.
Holiday Marketing: Walmart Touts Midnight Deals; Apple to Host Online ‚ÄėEvent‚Äô; Barnes & Noble to Offer DVD Discounts
Some more last-minute announcements related to holiday sales of entertainment products at major retailers:
‚ÄĘ The vast majority of Walmart stores will be open 24 hours on Thanksgiving Day, with in-store specials commencing at midnight and 5:00 a.m. on Nov. 26. Midnight deals include more than 90 DVD titles including ‚ÄúLord of the Rings‚ÄĚ and ‚ÄúIce Age‚ÄĚ for $1.96; some 60 Blu-ray titles including ‚ÄúThe Dark Knight‚ÄĚ and ‚ÄúSuperbad‚ÄĚ for $5 each; and Disney‚Äôs ‚ÄúToy Story 3‚ÄĚ DVD for $10.
‚ÄĘ Apple plans to hold a one day ‚Äúshopping event‚ÄĚ at its online store on Nov. 26, according to a new teaser page at its website. The company gives few details but promises ‚Äúdozens of great iPad, iPod, and Mac gifts.‚ÄĚ
‚ÄĘ Barnes & Noble will sell ‚Äúhundreds‚ÄĚ of DVD titles for 30% to 50% off in stores beginning Nov. 26. On Monday, Nov. 29, the discount on select DVD and Blu-ray titles climbs as high as 80% at the retailer‚Äôs website (www.bn.com).
On the heels of announcing last week that customers could send Kindle e-books as gifts, Amazon.com debuted a gifting feature at its MP3 store. Recipients of MP3 gifts receive notification from Amazon via email within five minutes of purchase, reports CNET; the site notes that customers, at least as of yet, cannot set the time and date of gift emails (for, say, birthdays or holidays).
In addition to adding functionality to its MP3 store, Amazon continues to wage aggressive price promotions for digital music. The site this week is offering $3 credits toward MP3 album or song purchases, with a ‚ÄúGET3MP3S‚ÄĚ promotion code valid through Nov. 29.
Trans World Entertainment is looking for Blu-ray and increased market share to drive further growth of its specialty retail outlets‚Äô video sales, which increased 2% during the company‚Äôs most recent quarter (ending Oct. 30).
The company, which operates the f.y.e. and Suncoast retail chains, attributes its broad assortment of video titles to the comparable-store sales gain. Video currently represents 44% of Trans World‚Äôs business.
During a call with analysts, chief executive Bob Higgins added that competing entertainment retailers, while maintaining their Blu-ray sections, ‚Äúhave all significantly downsized their music and DVD departments…So we feel this gives us a great opportunity with the selection that we have to continue to grab market share and to grab more physical business‚ÄĚ (transcript via Seeking Alpha).
Higgins attributed the company‚Äôs overall 5% comp sales decline during the third quarter to the traditionally slow nature of the period, combined with the postponement of ‚Äúa number of new releases‚ÄĚ to the fourth quarter.
Total sales for GameStop’s third quarter (ending Oct. 30) increased 3.5% to $1.90 billion, while comparable store sales in the U.S. were up by 5.3%, the company announced yesterday.
Market share gains on new releases such as ‚ÄúHalo: Reach‚ÄĚ and ‚ÄúMadden NFL 2011‚ÄĚ drove a 9% increase in new software sales, GameStop added.
‚ÄúBased on brisk sales trends of new software titles and motion controller launches,‚ÄĚ said chief executive J. Paul Raines, ‚Äúwe are enthusiastic about our business and have raised our full year earnings guidance.‚ÄĚ The company now expects full-year earnings per share to represent a 16% to 19% increase over 2009.
Walmart will market a Magnavox wireless Blu-ray player for $69 on Black Friday, according to a leaked ad circular (via BFAds.net).¬†The player, which also features compatibility with the Vudu movies on demand service, currently sells for $118 at Walmart.com.
The retailer also will offer more than 60 Blu-ray titles for $5 each on Black Friday, along with some 90 DVD movies for $1.96 each and more than 60 TV series on DVD for $12 each.
The four-disc ‚Äúcombo pack‚ÄĚ of Disney/Pixar‚Äôs ‚ÄúToy Story 3,‚ÄĚ which includes Blu-ray, DVD, and digital versions of the movies, represents 80% of the title‚Äôs high-definition sales at retail since its Nov. 2 debut, Disney chief executive Bob Iger told analysts yesterday (via Home Media Magazine).
Iger also noted that if ever there was a title to stand as an exception to sell-through‚Äôs downward trend, it‚Äôs ‚ÄúToy Story 3.‚ÄĚ ‚ÄúIt‚Äôs a title that just makes a lot of sense for people that are going to let their kids watch it multiple times to own versus rent,‚ÄĚ he said.
The four-disc SKU is currently selling for about $25 at mass merchants, nearly half off the set‚Äôs $45.99 list price. Target also markets an exclusive version of the combo pack that includes a Buzz Lightyear toy for $36.99.
Blu-ray players are among the nearly 60,000 items for which Walmart.com now offers free shipping, as part of a holiday promotion that steps up the retailer‚Äôs competition with the likes of Amazon.com and Target.
The free-shipping offer runs through Dec. 20, and carries no minimum purchase value, according to the retailer. The New York Times¬†reports that with shoppers still strapped for cash, shipping rates are poised to play a bigger role in retailers‚Äô holiday-season fortunes this year; competition on shipping could intensify in 2011 if Walmart decides to extend its holiday program.
While it also offers free home shipping on select videogame titles, Walmart’s free-shipping option for individual Blu-ray discs and DVDs ‚ÄĒsuch as Disney‚Äôs four-disc ‚ÄúToy Story 3‚ÄĚ Blu-ray/DVD/digital copy set ($24.98) ‚ÄĒ is “site-to-store,” necessitating customer pickup at a local brick-and-mortar outlet. In comparison, Amazon offers the same ‚ÄúToy Story 3‚ÄĚ¬†set for $24.99, one penny less than the minimum required for the site‚Äôs ‚Äúfree super saver shipping.‚ÄĚ (Amazon customers also can pay $79 to receive a year’s worth of two-day shipping on all purchases.)
Target shoppers will be able to pick up recently-released DVDs of ‚ÄúToy Story 3‚ÄĚ or ‚ÄúGrown Ups‚ÄĚ for $13 each on Black Friday, according to a leaked circular posted by sales watchdog site BFAds. Multi-disc TV DVD sets of shows such as ‚ÄúThe Office‚ÄĚ and ¬†‚ÄúThe Simpsons,‚ÄĚ meanwhile, will sell at a deeper discount of $12.99 each ‚ÄĒ a 67% discount from the season sets’ current prices.
Special pricing on select catalog DVD movies starts at $1.99.
Over in Target‚Äôs electronics department, shoppers will be able to purchase a $179 Sony wireless Blu-ray disc player for $99.
California‚Äôs deputy attorney general, Zackery Morazzini, faced tough questioning from the U.S. Supreme Court yesterday, in the state‚Äôs petition before the high court to reinstate a 2005 law restricting the sale of violent videogames to minors.
But the Court also grilled Paul Smith, counsel for the Entertainment Merchants Association (EMA), on the group‚Äôs assertion that violent videogames were a form of speech protected by the First Amendment of the U.S. Constitution. The industry likely won‚Äôt know the upshot of the oral argument session until next June, when the Court is expected to issue its ruling on the case (Schwarzenegger v. EMA).
Justice Antonin Scalia cut Morazzini‚Äôs opening statement short to ask how California defined the ‚Äúdeviant‚ÄĚ violence that would render games subject to the criminal statute. Later in the session, Justice Elena Kagan expounded upon Scalia‚Äôs question, asking Morazzini, ‚ÄúHow do we separate violent games that are covered from violent games just as violent that are not covered?‚ÄĚ
Morazzini replied that a jury could be instructed with expert testimony and clips of gameplay to judge the violent content for itself. ‚ÄúI‚Äôm not concerned about the jury judging,‚ÄĚ Scalia responded. ‚ÄúI‚Äôm concerned about the producer of the games who has to know what he has to do in order to comply with the law. And you are telling me, well a jury can — of course a jury can make up its mind, I‚Äôm sure. But a law that has criminal penalties has to be clear. And how is the manufacturer to know whether a particular violent game is covered or not?‚ÄĚ Read more
By Marcy Magiera
BEVERLY HILLS, Calif. — Amazon.com opened the Blu-Con 2010 conference here by telling a room of more than 400 industry execs how they can expand Blu-ray Disc sales by giving consumers more titles and easier Internet connectivity.
Bill Carr, Amazon‚Äôs VP of music and video, invoked the voice of the Amazon customer, saying that ‚ÄúBlu-ray is a product customers love,‚ÄĚ but that the format also comes up short, particularly in the area of selection.
‚ÄúBroad selection is critical to signal Blu-ray is here to stay,‚ÄĚ Carr told the Blu-Con audience. ‚ÄúCustomers need to be confident in the format to build deep libraries.‚ÄĚ
The retailer said that within five years of DVD‚Äôs introduction, there were more than 20,000 titles available at retail. By comparison, there are under 5,000 Blu-ray titles available today, he said. Amazon carries 150,000 individual titles on DVD, he said, and just 4,000 on Blu-ray. ‚ÄúIt will be a great day when those numbers are the same, or Blu-ray is higher.‚ÄĚ
Among the movies most requested on Blu-ray by Amazon customers: the original ‚ÄúStar Wars‚ÄĚ trilogy (episodes 4-6), ‚ÄúThe Lord of the Rings‚ÄĚ trilogy, ‚ÄúFinding Nemo,‚ÄĚ ‚ÄúLawrence of Arabia,‚ÄĚ and ‚ÄúPulp Fiction.‚ÄĚ
After consumers adopt Blu-ray, they spend four times the amount on software that they did a few quarters prior to their Blu-ray purchase, Carr said. After the initial transition, spending stays high, but Blu-ray customers still buy as much as 50% of their movies on DVD, due to Blu-ray‚Äôs limited selection and price premium, Carr said.
At an average price premium of $10, Blu-ray accounts for a little less than half the sales volume of a title, Amazon found. But if there were no price premium for the newer format, Blu-ray might account for 90% of sales volume, according to the retailer.
Combo packs also stimulate Blu-ray adoption, Carr said.
He addressed hardware and the need for consumer education, noting that while Internet-connected Blu-ray players enable multi-format consumption, connection rates for Blu-ray players are still relatively low.
Firmware updates, and the lack of consumers getting the ones they need, generate many consumer complaints to Amazon, Carr said, recommending that more players need to ship with an internal wireless antenna.
‚ÄúA connected Blu-ray player is an even better customer experience,‚ÄĚ Carr said.
The move to Blu-ray 3D requires even more comprehensive customer education, he said. To help with that, Amazon recently launched a series of one-minute videos on its site answering frequently asked questions on home 3D.
The Entertainment Identifier Registry (EIDR) aims to simplify consumer transactions for digital entertainment with an identification standard for content that‚Äôs functionally similar to the UPC code for packaged goods and the ISBN system for books.
Leading the new, nonprofit coalition are the major studios‚Äô MovieLabs initiative; cable operators‚Äô CableLabs group; and firms Comcast and Rovi. Backers include Deluxe, Universal Pictures, Neustar, Paramount Pictures, Sonic Solutions, Sony Pictures Entertainment, Walt Disney Pictures, Warner Bros. Entertainment, Motion Picture Association of America, Civolution, Vobile, and INA (L’institut national de l’audiovisuel).
The registry, which is expected to be available to member companies in early 2011, will catalog and assign a single, unique ID unit to movies and TV assets (from feature-length programs to clips and composites) that can be used for both physical and digital media. Content producers will gain efficiencies in postproduction and distribution by using the standard, EIDR says, while content distributors will gain greater assurance that the right assets/products are being distributed to consumers.
The organization offers a whitepaper on how the registry works at http://eidr.org/whitepaper-download/.
Blockbuster says that it has received final authorization from the U.S. Bankruptcy Court for the Southern District of New York to obtain $125 million in “debtor-in-possession” (DIP) financing from certain of the company‚Äôs senior noteholders (via PR Newswire). The financing, BusinessWeek reports, will enable the company to pay studios and fund general operations.