Posts Tagged ‘Blu-ray’

Is The Bloom Falling Off The Rose for Theatrical 3D?

According to a story in yesterday’s New York Times, the box office take for 3D versions of Pirates of the Caribbean: On Stranger Tides and Kung Fu Panda 2 is falling far below Hollywood’s expectations.

 

In the past, so-called ‘tentpole’ movies have realized as much as 60% of their revenue from 3D screenings. But that’s not the case for Pirates, which had a softer opening than its three predecessors and is seeing only 47% of its revenue coming from 3D screenings.

 

Granted, the Pirates franchise may finally be running out of steam – reviews of this movie have generally been tepid. But the drop for Panda is of greater concern, as animated movies generally do very well in 3D.

 

The Times article stated that Panda sold only $54 million in tickets from Thursday May 26 through Sunday May 29. That is considered a ‘soft’ opening when compared to the original Panda. Of greater concern is the fact that 3D screenings only accounted for 45% of the total box office, even though Panda is expected to be one of the top animated releases for 2011.

 

Ironically, 3D screenings of Pirates are doing very well overseas, where 3D is still a novelty. The movie earned $256 million internationally in its first weekend of release, with 3D driving a good deal of the box office.

No one is quite sure of the reasons for the decline in 3D ticket sales. Richard Greenfield, an outspoken analyst of the entertainment industry for BTIG, stated flatly that “The American Consumer is rejecting 3D,” while Greg Foster of Imax Filmed Entertainment implied that moviegoers have finally “caught on” to the higher prices being charged for mediocre movies presented in the 3D format.

 

The importance of strong 3D box office can’t be understated. A total of 16 movies will be released in 3D by September, and this weekend’s tentpole 3D flick will quickly become yesterday’s news, especially with the likes of Green Lantern and Transformers 3 looming on the horizon.

 

The fact is; a good movie is a good movie – period. Even the best animated films like Toy Story 3 don’t give up anything when viewed in 2D, and it’s rare that an animated feature comes along that actually works better in 3D than 2D (think 2010’s How To Train Your Dragon, one of the best 3D animated movies ever).

 

The Times article opines that it might be a better idea for Hollywood to cut back on the number of 3D releases as American moviegoers are increasingly blanching at paying a premium of $3 to $5 for the privilege of wearing RealD glasses. Greenfield agreed, stating that the Memorial Day results show audiences are quite happy with 2D, thank you very much, and that too many screens have been allocated to 3D.

 

While it may be too early to declare a trend, the 3D picture has clearly changed from 2010. Have 3D movies peaked? If so, what will this trend mean for 3D TV and Blu-ray sales down the road?

The Times They Are A-Changin’

Today is Bob Dylan’s 70th birthday. Whether you like the man’s music or not, there can be no argument that it has had a profound impact on countless artists and bands ever since his first album was released 49 years ago.

 

One of my favorite Dylan tunes is the aforementioned “Times,” and it couldn’t be more appropriate in 2011. The world of media distribution is turning on its head, thanks to the Internet and digital technology.

 

Consider these recent stories. At a meeting of the Telecommunications Industry Association (TIA) last week in Dallas, FCC Chairman Julius Genachowski emphatically stated that there is no need for further debate on the topic of spectrum shortages. Quote: “Any objective observer would have to say that the spectrum crunch debate has been put to rest.”

 

Genachowski, of course, has been advocating that TV broadcasters give up yet another chunk of their spectrum that would be re-assigned for wireless broadband services (something TIA members like Verizon and AT&T are salivating over).

 

Obviously Genachowski feels that the importance of free, over-the-air television has greatly diminished, and that ‘broadband for everybody’ should be the modus operandi going forward, using ‘voluntary’ spectrum auctions to free up UHF TV channels for his pet project.

 

Aside from some technical reasons why using UHF TV channels for wireless broadband isn’t a good idea, Genachowski is clearly overlooking other spectrum that could just as easily be put to the same purpose, such as the 800 MHz analog cellular phone band. (Betcha didn’t know those channels were still in use!) Or, how about the hundreds of MHz reserved exclusively for government use? A 120-MHz bite out of that would hardly be noticed.

 

The point, however, is that Genachowski feels the availability of free digital TV (and free HDTV, I should add) isn’t nearly as important as having broadband access to Netflix streaming, or to eBay auctions, or to the Huffington Post, or to ESPN.com.

 

And that is a sea change in the thinking of the FCC from 1934, when it was created from the old Federal Radio Commission to ‘regulate the airwaves in the public interest,’ to 2009 when the digital TV transition was complete, and the FCC had largely devolved into a glorified spectrum auction house.

 

Wireless isn’t the only place where the old order of media distribution is under siege. Two recent reports from the Digital Entertainment Group and SNL Kagan clearly show that America’s love affair with the DVD is over, and that more and more households are embracing a ‘cloud’ model for accessing and watching movies and TV shows.

 

Kagan’s study revealed that wholesale revenue from DVDs (not Blu-ray discs) in 2010 dropped almost 44% from 2009, even though 2010 was a decent year at the box office. This decline in DVD sales has been evident for nearly six years now, and is picking up speed – Kagan calculates that the annual compound negative growth rate for DVD revenue is over 13% in the past five years.

 

Granted, DVD rental income from $1-per-night kiosks was up last year, and video-on-demand (including Netflix streaming) is in a strong growth mode. Even so, overall consumer spending on entertainment declined almost 11% in 2010, and that’s nothing to sneeze at.

 

The important thing to note here is that streaming is growing by leaps and bounds. As you’ve probably read elsewhere, Netflix now has more subscribers than Comcast (over 23 million). And Netflix streaming is largely what’s driving sales of connected Blu-ray players, not sales and rentals of Blu-ray discs. There’s that ‘cloud’ thing, again!

 

The problem with Netflix streaming is that the revenue that goes back to Hollywood studios doesn’t even come close to replacing the cash cow that DVDs once represented. And that drop-off in revenue will definitely be a sticking point when each studio’s contracts with Netflix are renegotiated in t near future.

 

On the hardware side of things, we’re seeing an accelerating shift away from traditional notebook computers to touchscreen tablets and eBook readers. A recent news story stated that women, who generally read more books than men, are flocking to Barnes & Nobles’ color Nook reader and are also reading more magazines than ever before on said reader.

 

That fact, plus the embedded but largely hidden Android OS that has the potential to turn the Nook into a full-blown media tablet, may be the reason why John Malone’s Liberty Media is making a play for Barnes & Noble. Last Thursday, Malone’s company announced a $1B offer for 70% of the company. The bid price is about $17 per share, which represents a 20% premium over the current stock price.

 

Why would Malone, who made his fortune in the cable TV business, want to own the largest bookseller in the United States? Because he can deliver all sorts of content – print or otherwise – directly to Nooks through a ‘cloud’ structure. (And he might need some of those UHF TV frequencies to do it!)

 

There you have it. TV and movies everywhere, anytime (just not on optical discs). A media center in your coat pocket. Cloud servers set up by everyone from Amazon to Apple. Wireless broadband access to everything, even if it means you have to pay Verizon and AT&T to watch TV programs, over the air, with an antenna. And the increasing likeliness that you will have to pay to watch HDTV content, wherever it comes from.

 

The times, they are indeed a-changin’…

James Cameron Says Half-Resolution 3D Is ‘Good Enough’ for the Home (Updated 4/28/11)

EDITOR’S NOTE: Some readers have taken exception with my description of James Cameron’s statements pertaining to the half-resolution side-by-side and top+bottom 3D formats. Cameron did not endorse passive 3D at NAB; his comments below were limited only to these two frame-compatible 3D delivery systems. Accordingly, I have changed the headline to more accurately reflect his statements.

 

At the NAB show a few weeks ago, James Cameron and Vince Pace announced a new company to assist cinematographers and videographers in the production of 3D movies and TV shows by developing, selling, and leasing 3D camera systems.

 

Cameron feels that in the not-too-distant future, all feature film and TV series production could be mastered in 3D with 2D versions extracted from the digital files. The company has already developed a system for simultaneous 3D/2D production at live events, known as Shadow. It was used during the recent CBS broadcast of the Masters golf tournament.

 

While none of this is earth-shattering news, something Cameron said later during the question and answer period bears mentioning. In response to a question about carrying 3D over conventional broadcast channels, Cameron replied by first describing the side-by-side and top+bottom frame-compatible 3D formats, both of which sacrifice resolution.

 

Side-by-side is used exclusively on 1080i 3D broadcasts, resulting in left eye and right eye images that are anamorphically squeezed into the same video frame. For side-by-side 3D, each image winds up with 960×1080 resolution, while top+bottom images are re-sized to 1280×360. The lost pixels must be interpolated when each frame is anamorphically stretched back to its original size, which is why neither 3D system looks particularly sharp when compared to 3D Blu-ray discs.

 

After Cameron correctly identified side-by-side and top+bottom as being the only practical systems right now for broadcast, he then went on to say, “…full HD 3D would require a doubling of bandwidth, but it’s not necessary right now…you only need full HD for each eye for cinema-sized displays. You don’t need it for home displays. That’s my opinion right now.”

 

You can watch Cameron’s response here – http://www.youtube.com/watch?v=OI8OmPdSfBw&NR=1

 

That comment opened quite a few eyes, particularly mine. Here is the most influential filmmaker of his time when it comes to advanced technology, saying that full HD isn’t needed in the home, and that half-resolution 3D is adequate for now.

 

Really?

 

What about frame-packed 3D Blu-ray discs? I’m sure the Digital Entertainment Group would like to hear Cameron’s perspective on that one. So would any manufacturer of active-shutter 3D TVs. So would any person who just purchased a 3D TV measuring 46 inches and larger.

 

What about passive 3D TVs, which throw away half the vertical resolution from any 3D content? Why would you want to watch less-than-full HD 3D movies and TV shows on one of these sets and just make the problem worse?

 

I would think that Cameron would be strongly advocating for full HD across the board, particularly since one company (Sisivel) already showed a system at NAB 2011 that would accommodate two full-resolution 1280×720 views in a standard 6 MHz channel using H.264 AVC coding. Here’s a picture of what it looks like:

And that is how you pack two full-resolution 1280x720p 3D images into one standard 6 Mhz broadcast...with the help of a little MPEG4 encoding, of course.

The Sisivel system keeps the left eye frame intact; that is the normal 2D view. The right eye frame is broken up into three smaller tiles that are stitched together in the decoder/receiver. It’s not a new trick and is relatively simple to pull off with today’s powerful software and hardware.

 

Granted, ATSC broadcasters do not use MPEG4 encoding. But that’s not the point: Sisivel tried a different approach and came up with a way to handle 720p 3D content without sacrificing any resolution, something that ought to be of interest to ESPN’s 3D content producers who could deliver this format right now over cable and DBS systems.

 

MPEG2 compression systems have also gotten a lot more efficient, perhaps 100% better than they were a decade ago. While it’s not feasible to put a pair of 1920x1080i full-frame signals into a 6 MHz channel, it can be done now with 720p, based on the demos I saw at NAB.

 

No one should ‘settle’ for lower quality 3D if they are simultaneously trying to get the format to take off. There are plenty of sharp technical people out there that are coming up with creative ways to pack multiple HD programs into standard TV channels without compromising image quality. Stay tuned!

Blockbuster And Dish Network: A Marriage Made In Bankruptcy Court

After a late night bidding session, Dish Network has emerged as the winning bidder for the assets of Blockbuster, the once-dominant player in movie rentals and sales. The winning bid was $228 million in cash, and the purchase should be wrapped up by July.

 

Why in the world would Dish want to buy a failed business model? Presumably, they’re really after the emerging kiosk and download revenue streams, and not the declining packaged media operations. But this purchase also gives Dish a new outlet to sell their pay TV services.

 

Even though Blockbuster has closed a third of its stores nationwide, that still gives Dish a good-sized footprint to try and capture more customers at retail.

 

Ergen beat out some pretty heavy hitters for BB, including Carl Icahn and an investor’s group led by Monarch Alternative Capital.

 

In a press release, Dish highlighted Blockbuster’s “more than 1,700 store locations,” as well as its “highly recognizable brand and multiple methods of delivery.” Dish is also angling to buy Hughes Communications’ Internet-by-satellite service for about $1.3 billion.

This TV business is a killer!

In a recent Wall Street Journal story, Blockbuster announced it will let leases on 186 stores expire at the end of this month as it struggles to climb back out of Chapter 11 bankruptcy. Double-digit store closings were predicted for California and Texas.

 

By the time this latest round of closings takes place, Blockbuster will have shuttered 1,145 ‘brick and mortar’ DVD/Blu-ray rental and sales outlets, or more than a third of the stores it had when bankruptcy proceedings started last fall.

Blockbuster is struggling with a prolonged decline in DVD rentals, caused primarily by the popularity of Netflix’ Watch It Now streaming service. DVD and Blu-ray sales have also slipped in the past two years as more consumers have decided they don’t need to own physical copies of movies, but are content to watch them through video-on-demand (VOD), digital downloads, or streaming.

 

Believe it or not, New York-based hedge fund Monarch Alternative Capital has bid $290 million for Blockbuster, and there are likely to be alternate bidders next month at auction. What these companies would be bidding for isn’t exactly clear; no one in their right mind would want to keep Blockbuster’s old business model going when it’s clear that streaming and downloads are the wave of the future.

 

Nevertheless, Hollywood continues to ship DVDs and Blu-ray discs to Blockbuster, and the auction should generate enough proceeds to pay off numerous creditors including the studios.

 

Across the pond, the news is just as bad for Royal Philips Electronics NV, a consumer electronics giant that sells everything from TVs and Blu-ray players to refrigerators and toasters. (I’m still waiting for them to combine a toaster with a TV.)

According to Bloomberg News, Philips expects to lose as much money in Q1 ’11 in the television business as it did in all of last year! The predicted loss is at least $155 million and maybe more. The culprit? Continued downward pricing pressure on all types of TVs as manufacturers and retailers attempt to stimulate sales.

 

This means Philips will suffer its fifth consecutive annual loss in the TV biz, which makes you wonder why they don’t just get out of it altogether as Hitachi has already done in the United States (and may soon be followed by Mitsubishi and JVC, if present economic trends continue).

 

To show you what impact this pile of red ink has, TV sales amounted to almost one-third of all the revenue earned by Philips’ consumer lifestyle division. If one-third of your business activity is losing money, you’d be reorganizing fast. Indeed, the company will get a new CEO this week, but it’s not clear how he can stem the tide.

 

My guess is that Philips will pull the plug on TVs in 2012 if they don’t see a substantial turnaround in profitability through Q4 of 2011. In 2008, they sold the Philips name to Funai for TVs retailed in the United States, a move that is paying off nicely for the Japanese manufacturer. It also generates some royalties for Philips, which is perhaps the best approach to take with what’s left of their European and other remaining markets: Cut bait, and stay with lighting and health care products, two businesses that actually make money.