The past several years have seen declines in home entertainment revenues at the major studios, which has been cause for alarm across Hollywood. But according to several leaders in the industry, while there is still some work to do on their end, the future of home entertainment is looking very bright.
Panelists who shared their opinions during Variety’s Entertainment Matters sessions at CES included Deborah Bothun, US Advisory leader Entertainment Media and Communications, PricewaterhouseCoopers (PwC), David Bishop WW President Sony Pictures Home Entertainment, Mike Dun WW President 20th Century Fox Home Entertainment, Thomas Gewecke President Warner Bros. Digital Distribution, Shawn Strickland CEO Redbox instant by Verizon, Anthony Bay VP Worldwide Video, Amazon.com and Andrew Wallenstein, TV Editor for Variety.
Several factors are spurring greater consumption of content, including:
1) Improved TV quality and size
2) 650M (and growing) consumer devices that play movies anytime anywhere
3) Substantial Growth in Ultra Violet, Cloud and Digital Download
4) Subscription services using sophisticated data to drive more awareness and impulse
The challenge the last few years has been declines at physical retail and trying to replace that impulse experience through alternative media. Another challenge the industry is working on is to streamline downloading to a three-minute process.
All agree there has to be much more emphasis on digital merchandising across the digital delivery footprint to help drive title purchases to get consumer ownership back up to 30% of purchases vs. 20%.
The key to success is anticipating consumer behavior, especially around digital, and making the content suit the medium. It’s no longer one size fits all.
Ultra Violet, the industry standard to purchase in one place, store in the cloud and view across devices, saw significant growth in 2012. It now has 9M accounts and is forecast to almost triple in size in 2013. A big recruitment tool for opening an Ultra Violet account has been an incentive to transfer 10 existing owned titles over for free.
Fox’s segmentation and planning panel study of 6,000 households monitors how consumers media habits change over time. Change in the past has been very slow. But right now people’s media habits are on the move in a very big way. The advanced tech savvy audience makes up 25% of the population, but now account for 50% of all media consumption.
95M people buy DVDs in the recession era, but 38M people are digital only, ripe for a digital purchase. Digital only purchasers right now skew Male, Sci-Fi, Underworld. Never before has there been such defined audiences by medium for movie content.
Amazon, Netflix and Red Box are driving significant business with subscription and on-demand services via gaming units, web portals and through partnerships with carriers. They use sophisticated algorithms to build and maintain relationships with consumers, creating an infrastructure to learn about about their customers and products in order to optimize titles and usability to conversion.
TV seasons are a significant driver for suggestive selling. Subscription customers will watch a single season in a week, then pay on-demand for additional seasons and purchase cross-sold similar properties after viewing a few seasons.
Helping consumers find feature film content in similar ways is driving more ownership. Digital services converting DVD collections into the Ultra Violet cloud is one of the fastest ways to identify an audience, show value and cross merchandise.
Nothing digital has yet replaced the serendipity of the physical retail store, the most critical source of discovery for ownership. Online social discovery is important and needs more emphasis on options that compare your collection to mine. When entertainment consumers see relevant suggestions it sells more product.
Digital Books are doing very well. They have an advantage in that their digital file size is small. Video content file sizes are huge. Platforms to quickly download video content in three minutes will make digital downloads more of an impulse item like books.
Lastly, all agreed upgrades in the content to suit the medium will drive more value and engagement. For example, watching content on tablets needs to be interactive. Total Recall and MIB 3 both had touch screen apps to find out more about the actors, where each scene was shot, etc.–all while watching the actual film. E-books already have similar experiences.
The industry leaders all concurred that 2013 is the beginning of a new renaissance for home entertainment, with more opportunities than at any time in history. But to get back to the future of home entertainment, a greater price value relationship must be offered.
What do you think the future holds for the home entertainment industry? Let us know with a comment.