In the kaleidoscope of business models and formats that make up the home entertainment business, there are some brighter lights.

To those not familiar with the home entertainment business, 4K UHD with HDR and EST may be alphabet soup, but they are the industry stars for those in the know.

EST, or electronic sell-through, is the industry term for digital purchases of content, and in 2018 consumers began to build their digital libraries with gusto, growing the market by double digits. The 4K Ultra High Definition format, with four times the pixel resolution of 1080p HD, and high dynamic range (HDR), featuring wider color gamut, brighter brights and darker darks, is also reinvigorating the market with explosive growth, especially on the physical disc side as consumers take advantage of the full experience only available on 4K UHD Blu-ray Disc.

At the 4K UHD Summit in Los Angeles, director Christopher Nolan noted 4K UHD with HDR is “a mouthful,” but it “really puts us in a position where we can get closer and closer to a theatrical print in the home.” He is a “big fan of the 4K disc because it removes the uncertainties of streaming.

“It’s fantastic for the filmmaker to have a physical media that eliminates the variabilities, the compression and so forth,” he said. “That’s the gold standard that streaming is going to have to reach.” “The 4K UHD format, across both hardware and software, is providing a meaningful boon to our business, creating retail opportunity as consumers look to invest in the most technologically advanced viewing experience in the home,” says Eddie Cunningham, president of Universal Pictures Home Entertainment. “4K UHD discs already account for almost one in 10 new release discs sold in the U.S.”

“4K UHD sales are increasing with each title that is released, and we expect that upward trend to continue into next year,” adds Mike Takac, Warner Bros. Home Entertainment exec VP and general sales manager. “And even with the proliferation and advancements in streaming services, physical discs still offer the best quality viewing experience for home consumers and also are the best value proposition.”

While overall disc sales remain challenged (down 11.5% in the third quarter), sales of 4K Ultra HD Blu-ray Discs, which often include a digital copy, soared 68% in the quarter from the same quarter last year, according to the latest numbers from DEG: The Digital Entertainment Group. At the end of the third quarter, there were 392 titles available on Ultra HD Blu-ray Disc (595 available digitally), according to the DEG. U.S. 4K UHD disc sales are projected to almost double this year to more than 11 million units, Cunningham notes.

David Kite, senior VP of product management and distribution strategy, Walt Disney Direct-to-Consumer & International, says his studio is “excited about growth prospects for 4K UHD on physical as it delivers such a rich visual experience that’s so well suited to movies like ‘Coco’ or ‘Black Panther.'”

“It’s fantastic for the filmmaker to have a physical media that eliminates the variabilities, the compression and so forth. That’s the gold standard that streaming is going to have to reach.” Christopher Nolan

“4K UHD has really transformed the home viewing experience and clearly consumers are getting it,” said Bob Buchi, president, worldwide, Paramount Home Media Distribution, at the Nov. 6 UHD event. “Product sales are up 87% in comparison to the first three quarters of last year.”

The DEG reported more than 4.2 million 4K Ultra HD TVs were sold in the first three quarters of 2018, bringing the total number of U.S. households to more than 42 million, an increase of 80% from the prior year period. Approximately 2.3 million Ultra HD Blu-ray playback devices (both dedicated players and video game consoles) were sold through to consumers in the first nine months of the year.

“Combined with technological advancements in film mastering and high dynamic range color, 4K is now the de-facto media format you didn’t know you couldn’t live without until you experience it fully,” says Miguel Casillas, senior veep of production, home entertainment and digital distribution, at Lionsgate.

The studios are feeding that market for the holiday season with releases such as Universal’s “The Big Lebowski” 20th anniversary 4K Blu-ray set, Warner’s “2001: A Space Odyssey,” and Sony’s “Philadelphia” 25th anniversary 4K Blu-ray, which is being released as part of a partnership with the (RED) Foundation and Coca-Cola to help fight HIV/AIDS.

Meanwhile, years of sowing the seeds of digital collection with an early release window before disc, special features and rights-locker services, including the year-old Movies Anywhere service and app, have finally begun to bear big fruit. Consumers are starting to buy titles digitally in greater numbers. Digital purchases of movies, TV shows and other filmed content rose 18% in the third quarter compared with the same quarter in the year prior, a significant uptick from the single-digit gains posted in prior years, according to DEG data. For the year through Sept. 30, EST spending totaled $1.8 billion, up more than 12% from the comparable period in 2017.

“EST continues to grow, with that consumer base gravitating because of the ease of use and flexibility of digital purchase,” says Jason Spivak, exec VP of worldwide digital distribution at Sony Pictures Home Entertainment. “This growth has also been driven by the continued addition of value to digital purchase, including expanded special feature offerings and interoperability across platforms via Movies Anywhere.” “We are experiencing double-digit growth in EST transactions this year and we expect to maintain that growth through 2019,” says Warner’s Takac. “Our involvement with Movies Anywhere is adding value to the EST consumer by making content easier to access and watch anywhere on a wide variety of devices. For supporting digital platforms, EST ownership includes all the special features available on physical product, making digital ownership an easy to use robust consumer offering.”

“We continue to focus our marketing efforts on educating consumers about the ease of utilizing digital, the advantages of the early window, and the convenience and flexibility of Movies Anywhere,” adds Chris Oldre, exec veep of pay TV, digital and international distribution, Walt Disney direct-to-consumer & international.

Movies Anywhere, the digital movie rights locker storage service and app backed by most of the major studios, is an outgrowth of Disney’s locker service. It celebrated its first birthday in October with 6 million registered users, 150 million movies collected and more than 1 billion minutes viewed. Launched in October 2017 with support from five of the six major studios (Disney, Fox, Warner, Universal and Sony), four of the biggest online retailers, and an opening library of more than 7,300 movies, the service now offers more than 7,500 movies and has added FandangoNow and Microsoft Movies & TV to its digital retailer lineup that included iTunes, Google Play, Walmart’s Vudu and Amazon Prime Video at launch. (Paramount Pictures and Lionsgate are not part of the service, which also does not yet feature TV programming.)

“FandangoNow’s EST business growth is even faster than our VOD growth, and that’s exciting,” says Cameron Douglas, VP of home entertainment for Fandango’s on-demand video streaming service FandangoNow, which joined Movies Anywhere in March.

“4K UHD has really transformed the home viewing experience and clearly consumers are getting it.” Bob Buchi

In addition to Movies Anywhere, interactive extras, premium formats such as 4K UHD with HDR and retailer offerings such as Vudu’s “Mix & Match” (offering multiple digital movie purchases for a lower price) are also boosting digital buying, adds Michael Bonner, EVP of digital distribution at Universal Pictures Home Entertainment.

For some time, the spotlight has been on the subscription streaming video-on-demand business (SVOD), with Goliaths Netflix, Amazon and Hulu dominating, and for good reason. Consumer spending on streaming subscriptions rose more than 30% in both the third quarter and the first nine months of this year, totaling an estimated $3.3 billion and $9.4 billion, respectively, according to IHS Market data cited by the DEG. And the market is about to get bigger. Both Disney and WarnerMedia (the new parent of Warner Bros., HBO and Turner following the AT&T merger) are readying streaming services for 2019.

Disney’s service, Disney+, has been the studio’s streaming focus since it in 2017 announced it would withdraw content from Netflix. Still, Walt Disney CEO Bob Iger in a Nov. 8 fiscal call indicated the studio would retain windows between its businesses.

“The home video window continues to be quite important to us,” said Iger. “You’ll likely see us protect that.”

Home entertainment executives say the different businesses can coexist.

“Our EST business continues to grow and benefit from the adoption of digital services, so we are well positioned across all platforms to serve the consumer anytime, anywhere,” Universal’s Bonner says. “It’s important to recognize the need for choice as consumers navigate the different options available in the home entertainment landscape,” Sony’s Spivak says. “Within that, physical media offers an expanded and optimized experience, as well as a way to build collections. That’s important to a significant portion of the consumer base, and we anticipate the coexistence alongside streaming to continue in a mutually beneficial fashion.”

Source: Variety Media

Jodie Foster will lead her first-ever online course in filmmaking, through a partnership with internet startup MasterClass.

In the class, set to debut in early 2019, Foster will “share what she has learned from her five decades of experience on both sides of the camera,” MasterClass said in announcing the deal. “In her class, she will guide students through every step of the filmmaking process.”

Foster has appeared in more than 40 movies. She’s a two-time Oscar winner, having picked up best-actress trophies for “The Accused” and “The Silence of the Lambs.”

Foster made her film directorial debut in 1991 with “Little Man Tate,” in which she also starred, and has since gone on to direct “Home for the Holidays,” which she also produced; “The Beaver,” starring Mel Gibson; and “Money Monster,” starring George Clooney, Julia Roberts, and Jack O’Connell. Foster also has directed episodes of original Netflix series “Orange Is the New Black,” “House of Cards” and “Black Mirror.” Foster is repped by CAA.

MasterClass, which launched in 2015, focuses on developing and selling celebrity-led online classes. Other showbiz figures who have inked deals with the company include Martin Scorsese, Ron Howard, Spike Lee, Mira Nair, Ken Burns, Judd Apatow, Shonda Rhimes, Steve Martin and Aaron Sorkin.

MasterClass charges $90 for individual courses and offers a $180 annual plan, which provides unlimited access to all new and existing classes from its lineup of celebrity instructors. The San Francisco-based company currently offers more than 45 courses.

Source: Variety Media

Amazon doesn’t offer a “skinny bundle” of streaming TV channels — but its a la carte Prime Video Channels service is having a huge economic impact on the pay-TV business.

According to new estimates from BMO Capital Markets, Amazon’s Prime Video Channels will pull in $1.7 billion of revenue this year, more than double from last year’s $700 million. That’s poised to grow to $3.6 billion in 2020 worldwide.

Assuming the ecommerce giant shares on average 70% of the subscription fees, Amazon will pay out $1.2 billion in 2018 to Prime Video Channels partners — ballooning to $2.5 billion in 2020, the firm’s analyst predicted.

“We believe [Prime Video Channels] is a material driver of standalone [ subscribers for many entertainment companies,” representing anywhere from 25%-45% of total OTT users depending on the channel, BMO analysts Daniel Salmon and William Lowden wrote in the report.

In the U.S., Amazon’s Prime Video Channels currently provides a selection of 156 channels. Those include CBS All Access, WarnerMedia’s HBO, Cinemax, and Boomerang; Lionsgate’s Starz; PBS Kids and Masterpiece; Viacom’s Noggin and Comedy Central Now; Hallmark Movies Now; Lifetime Movie Club; Tribeca Shortlist; BBC/ITV’s Britbox; CuriosityStream; Cheddar; and AMC Networks’ Urban Movie Channel, Acorn TV, Sundance Now and Shudder. All movies and TV shows included with the subscriptions are available to watch on-demand, and many channels also provide live-streaming feeds.

A huge advantage Amazon offers partners is massive scale: It currently has about 75 million Prime Video worldwide (including about 40 million in the U.S.) and is on pace to top 100 million by 2020, BMO’s analysts estimated. Amazon earlier this year announced that it had surpassed 100 million Prime members globally but hasn’t broken out numbers beyond that.

In addition, Amazon removes friction from the OTT-subscription process, letting customers purchase access to a channel with a few clicks and by integrating the video services into a unified service available across several hundred devices.

But there’s a tradeoff: Amazon takes anywhere from 15%-50% of the channel subscription fees (estimated to be 30% on average), with bigger players like HBO and Showtime gaining more favorable splits. That’s compared with those media companies keeping 100% for subs through their own, direct-to-consumer services. Plus, Prime Video Channels removes media companies’ direct customer relationship (and limits the data they are able to collect), the BMO analysts pointed out.

Still, on a per-subscriber basis, media partners earn more from distributing their OTT services through Prime Video Channels than from deals in which their channels are bundled into traditional pay-TV or “virtual MVPD” internet services, like Sling TV, YouTube TV, DirecTV Now or Hulu With Live TV, according to BMO’s analysis.

Meanwhile, Amazon is continuing to expand access to Prime Video — including with Comcast, the U.S.’s biggest cable operator. This week, Comcast began rolling out Amazon Prime Video to Xfinity X1 subs, which includes access most of the channels they subscribe to through Prime Video Channels (with the exception of HBO/Cinemax and CBS All Access because of the programmers’ contractual restrictions in their deals with Amazon).

Amazon first launched the program in December 2015 as the “Streaming Partners Program” in the U.S. with about 20 partners, and has since expanded and rebranded the service as Prime Video Channels. The company has launched Prime Video Channels in the U.K., Germany, Austria and Japan. The BMO analysts identified France, Spain, Italy, Canada, and India as potential markets where Amazon could roll it out next.

Source: Variety Media

Walt Disney’s ABC has sold more than three-quarters of its commercial inventory for its February 24 broadcast of the glitzy awards fest, according to Jerry Daniello, senior vice president, entertainment brand solutions, for Disney ad sales, pacing ahead of its progress at this time last year. He declined to comment on the price of a spot in the event, but two media buyers familiar with negotiations for advertising in the event say ABC is seeking between $2 million and $3 million for a 30-second ad.

“We are working lockstep with the Academy,” Daniello told Variety in an interview. No matter the host or the format, “it’s the biggest event we have on our network.” Commercials tied to the Oscars broadcast and ABC’s red-carpet coverage generated approximately $128 million for the network in 2017, according to Kantar, a tracker of ad spending – more ad revenue than it generates on any other day of the year.

Advertisers didn’t buy time in the Oscars with a specific host in mind, Daniello says. “Most of the interest we had to date was locked in”, he notes. ABC has seen interest in the broadcast, he adds, from automobile manufacturers, retailers, beverage marketers, and makers of consumer technology.

Madison Avenue’s attention to the event – even with a steep price – shows that movie buffs aren’t the only ones infatuated with extravaganzas like the Oscars, despite some of the fluctuations they have suffered in audience. Marketers are also paying top dollar for other events that typically bring in some of TV’s biggest crowds. CBS is seeking between $5.1 million and $5.3 million for a package of TV and digital advertising around its coming broadcast of Super Bowl LIII, according to three people with knowledge of negotiations, and, according to one of those people, around $1 million for a 30-second spot in the network’s February Grammys telecast.

ABC’s Oscars telecast has been beset in recent outings by low viewership. Ratings have more or less tumbled steadily since an Ellen DeGeneres-hosted telecast won 43.7 million viewers in 2014. This year’s broadcast captured just 26.5 million viewers, a 20% drop from the 2017 telecast. ABC in 2016 renewed a deal to broadcast the popular event through 2028.

Despite the audience drop, ad costs for the event continue to rise. ABC sought as much as $2.6 million for a 30-second Oscars spot in its 2018 broadcast. The price in recent years had typically hovered at between $1.8 million and $2.2 million.

Simply put, in an era when TV audiences have splintered around on-demand streaming video, big crowd-pleasers like the Oscars continue to have value – even if they attract fewer eyeballs than they did in the past.

ABC and the Academy have started working with sponsors in recent years to allow more commercials that play off elements of the awards proceedings. In 2018, for example, Walmart used its commercial time to run a series of short films crafted by female directors. The retailer is expected to return to the broadcast in 2019. “We are experimenting with ad formats,” says Daniello. “There is strong interest in developing specific creative elements that link to the content.”

Realizing advertisers are interested in the ability of TV content to drive consumers to seek out information via digital and social media, Disney approached potential Oscars sponsors with research it commissioned with Google examining just that. The study showed ads in live “tentpole” events broadcast on ABC or ESPN in the first quarter drove more than twice the search engagement compared to other broadcasters’ big first-quarter live broadcasts. According to the Google study, search engagement for both ads and content in the 2018 Academy Awards was nearly three times the average of that related to events such as the Super Bowl, the Golden Globes, the Grammys or the Winter Olympics.

Advertisers also know the Oscar playing field is a protected one. The Academy of Motion Pictures and Sciences limits the amount of advertising time allowed in the awards broadcast, meaning the commercials have a better chance of standing apart from the pack. Even so, the Academy has allowed more commercials – between 70 and 80 – in the broadcast in recent years, compared with about 60 between 2007 and 2011, according to Kantar.

The success of the Oscars broadcast is often at the mercy of the slate of films up for honors.. When the top movies nominated are arty films aimed at older audiences, viewership tends to slump. When the nominees for best films are blockbusters, the ratings increase.

In 1998, approximately 55 million viewers tuned in to see the crowd-pleasing “Titanic” win “Best Picture.” Oscar ratings hit a new low in 2008, however, when just 32 million tuned in to see “No Country For Old Men” win the big prize, down from about 38.9 million the year before. Top films in 2018 were not blockbusters, but rather well-received films like “The Shape of Water,” ‘The Post,” “Darkest Hour,” “Three Billboards Outside Ebbing, Missouri” and “The Phantom Thread.”

Source: Variety Media

Netflix Inc said on Monday it plans to raise about $2 billion in debt to fund original shows, acquire content and for possible acquisitions.

The streaming giant said the debt will be in the form of senior notes denominated in U.S. dollars and euros.

Netflix, which plans to spend more than $8 billion in entertainment programming this year, reported blockbuster third-quarter results last week as heavy investment in original shows lured more customers to its fold.

Source: Reuters

Sony Corp has not offered concessions to European Union antitrust regulators reviewing its $2.3 billion offer for control of EMI to become the world’s largest music publisher, the European Commission website showed on Monday.

EU antitrust regulators earlier this month asked rivals and users whether they think the Japanese group would use its greater market power to win better terms in digital media deals.

The deadline for proposed concessions in the European Commission’s preliminary assessment of the deal was Oct. 19. The EU executive’s website showed that Sony had not submitted any.

This could either mean Sony expects unconditional approval or for the Commission to open a full-scale investigation on Oct. 26 at the end of its review.

Sony, which owns a 30 percent stake in EMI, wants to buy Mubadala Investment Co’s 60 percent stake. In July, it acquired the estate of Michael Jackson’s minority share of EMI.

Sony’s new CEO Kenichiro Yoshida is making his boldest strategy move with the deal, which would give the company rights to 2.1 million songs from artists such as Drake, Sam Smith, Pharrell Williams and Sia.

Independent music labels group Impala and the European Composer and Songwriter Alliance have called for the EMI deal to be either blocked or cleared only with major concessions.

Source: Reuters