Posts Tagged ‘DVD’

When a Butterfly Flaps Its Wings – Pete Putman

Two weeks ago, I wrote about the decline in television sales and how manufacturers are scratching their heads trying to figure out a way to kick-start consumer interest and get those cash registers jingling again, as the all-important 2012 holiday selling season is barely two months away.

 

Misery loves company. Hollywood is in a similar pickle as declining sales of movies on optical disc and increasing use of streaming video-on-demand (SVOD) are challenging revenue projections, particularly for ‘weak’ theatrical releases that could previously count on back-end physical media sales to make up revenue.

 

The steady decline in optical disc sales and rentals since 2005 has been well-documented by myself and other industry analysts, and has been tracked and confirmed by a number or research organizations. While it is true that Blu-ray disc sales continue to grow, they haven’t made up for the drop-off in DVD sales and rentals – and are unlikely ever to do so.

 

What’s ‘hot’ these days is streaming and playback of movie and TV show files on portable devices. On a flight back from California last week, the passenger next to me enjoyed Battleship on an iPad, downloaded from iTunes. While making a trip to the restroom, I noticed at least ten other passengers watching video on tablets, e-readers, and even a smart phone.

 

In contrast, just about every laptop I spotted appeared to be open to a word processor or spreadsheet program. I had my Toshiba laptop with me on the flight, along with a couple of Blu-ray movies, but the combination of a tight middle seat and a very large passenger to my right made using my laptop difficult, so I opted to read an eBook on my Nook Simple Touch instead.

 

But I digress. In a recent Home Media article, Viacom CEO Philipe Dauman was quoted as saying that the continuing decline in optical disc sales has led Hollywood to change their economic model, forcing producers, directors, and actors to share in the risk of a movie and reap any rewards at the back end instead of getting a large upfront payment.

 

“We don’t mind sharing the upside [of a movie with talent] as long as we don’t have a downside, or we have a sharing of that risk,” said Dauman. “Digital revenues are growing, but it’s not a perfect transference [with disc sales] at this point.” As a result, Viacom is one of many content owners seeking to make up revenue by licensing programming to SVOD companies Netflix and Amazon Prime Instant Video.

 

Some movies are produced exclusively for DVD and Blu-ray sales. This is a big part of Disney’s revenue stream, as they are the largest producer of packaged media. But Disney has already taken steps to move to a SVOD model, ramping up a digital delivery portal two years ago to transition away from physical media for its ‘direct to disc’ releases.

 

The explosive growth of packaged media in the 1980s and 1990s – something Hollywood vigorously fought against at the start – turned out to be a very profitable business in the end, and strong sales on VHS and DVD after a theatrical run made it possible to ‘greenlight’ some movies that otherwise would have been major box office flops. (The Austin Powers series is a good example.)

 

But the butterfly started flapping its wings about seven years ago with the first stirrings of streaming video (YouTube). That gentle breeze has now turned into a storm, with movies and TV shows watched across an almost bewildering variety of platforms.

 

And that storm is impacting TV sales as well. With new e-readers from Amazon and the latest iPhone now coming to store shelves, buying a new TV or upgrading an older model isn’t at the top of nearly as many holiday shopping lists as it would have been two years ago.

 

Even the digital video recorder – an integral part of the transition to digital TV a decade ago – is threatened by SVOD. A recent Advertising Age article points out that media companies and ad buyers are anticipating a day in the near future where demand for ‘anywhere, anytime’ playback will displace the ability to skip advertising.

 

According to Alan Wurtzel of NBC Universal, “Video on demand is going to play a major role in how people consume video going forward.” Subscribers to  SVOD services can already watch recent episodes from major broadcast networks and a few pay TV channels ‘on demand’ on almost any device, but they give up the ability to skip advertisements.

 

Not surprisingly; TiVo, the company that basically invented the DVR, is in the thick of this transition. The article quoted Tara Maitra, senior vice president for TiVo’s content and media sales and operations, as saying that consumers really don’t care how they access programming as long as it is on their own terms.

 

What does all of this portend for the display industry? Simply that consumer demand, going forward, won’t be for big, cheap, and thin televisions stuffed with apps and other goodies. No; it will be for small, ‘go anywhere’ displays that offer higher resolution, brighter screens, improved viewing angles, and enhanced sound. And consumers will demand improved wireless access with higher broadband speeds to fully enjoy movies and TV shows, served up from ‘the cloud.’ (Can’t have a storm without clouds!)

 

It all starts when a butterfly flaps its wings.

 

(This article originally appeared on Display Central on Monday, September 24.)

DEG Cranks Up The 3D Hype Machine

Last Tuesday, the Digital Entertainment Group, an advocacy group comprised of CE manufacturers and Hollywood content producers, released a study conducted by research firm SmithGeiger that claims 3D TV owners are overwhelmingly happy with their purchases.

This is hardly earth-shaking news, considering the source. The DEG’s job is to promote things like 3D and the Blu-ray optical disc format. Both are key parts of the revenue stream for TV manufacturers and movie studios.

The survey, which you can read here, does reveal many interesting ‘a-has!’ if you read carefully between the lines. Let’s take them in order.

Quote: “Of those who view programming in 3D, an overwhelming 88 percent rated the 3D picture quality positively, compared to 91 percent for their 2D picture quality.” Really? Why didn’t 3D picture quality rate as high as or higher than 2D picture quality? Wasn’t that a key consideration in buying a 3D TV in the first place?

Quote: “And, 24 percent of those who view 3D at home reported watching more television – in 2D and 3D – since purchasing their new 3D TV.” OK, can we break that down a bit further? How much more TV were they watching, on average? 10% more? 50%? 75%? We don’t know. And what’s the breakdown between increased 3D and 2D viewing? Again, we don’t know.

Here’s what I found much more interesting: 75% of the people in the DEG study who bought a new 3D TV did NOT report watching more 2D or 3D programming after their purchase, while 1% are actually watching less TV. Why? Because there wasn’t enough 3D programming to watch?

Does ‘watching more television’ include DVDs and Blu-ray movies? We just don’t have enough details here, so the ‘24% reported watching more TV’ claim is statistically meaningless without context. (And what about that 1% who are now watching less TV? Interesting…)

Quote: “Also, 85 percent of 3D TV owners surveyed would prefer to watch half, most, or all of their programs in 3D.” Looking at the tables actually provided by DEG, 14% said they’d watch most programs in 2D. But the group that said “it would be an even split” (using the report’s own wording) came to 23%, and a group that is stuck at 50-50 clearly does not favor either side – even though the DEG counted this group in the 85%.

I read the results this way: 62% of respondents clearly would watch everything or most programming in 3D, while 23% don’t lean either way and 14% prefer 2D. If you are trying to make a case that there is a clear preference for 3D, the numbers presented say that 37% of the sample group does not prefer to ‘watch most or all programming in 3D.’ While that still presents a 2:1 ratio favorable to 3D viewing, it is quite different from the 85% figure claimed by the DEG.

Quote: “Of the 3,100 3D TV owners surveyed, only a handful experienced any discomfort when using active shutter 3D glasses.” All right, I’m intrigued – what is “a handful?” Read further into the report and you will see that (a) 18% of respondents “never feel like I fully adjust to the glasses” while an additional 8% state that, “it takes several minutes for me to adjust to the glasses.” That is a total of 26% respondents who either have on-going problems with 3D glasses or take a long time to get used to 3D eyewear.

And the DEG survey numbers are in line with research done in human vision response by several universities and the American Optometrists Association. At the ADA/3D@Home conference in New York City a couple of months ago, the estimates I heard were that as much as 25% of the general population cannot see 3D correctly.

If the DEG thinks 26% is “a handful,” they are delusional.

Quote: “With an average of 2.38 pairs of glasses at home, it is clear that 3D TV owners are actively using their 3D TVs for viewing 3D.” If I had drawn that conclusion from the statistics presented in this survey, I would have gotten a big, fat “F” from my statistics professor at Syracuse University, not to mention my logic professor at Seton Hall!

Here’s what he would have said to me: Make sure you have all of the facts before you draw any conclusions! Facts such as: Anyone who bought a Samsung 3DTV in the past year got 2 pairs of glasses with it as part of a 3D starter kit. Did you buy an LG Infinia 3D TV bundle last fall? You got four pairs of glasses with it.

In fact, so many promotions bundled two or more pairs of glasses with the purchases of a 3D TV that the fact that the average home had 2.38 pairs doesn’t mean very much at all. Nor does it allow us to draw any definitive conclusions about how often viewers are using their TVs to watch 3D. All it means is that the average 3D TV owner has about 2 pairs of 3D glasses.

Quote: “More than 7 out of 10 of those surveyed use a Blu-ray 3D or 3D-capable player.” For what purpose, exactly? The survey question is incomplete, as it doesn’t ask specifically whether respondents “use a Blu-ray 3D or 3D-capable player” to watch 3D, a mix of 3D and 2D content, or mostly 2D content?

Here’s my question: How many of those Blu-ray players are mostly being used to watch Netflix streaming, and how often?

The accompanying chart shows that 87% use a cable or satellite set-top box, while 71% use a Blu-ray or other 3D-capable player (not a PlayStation 3), and 61% use a DVR or TiVo.

But the chart also says that 28% of respondents use a standard-definition DVD player. Why include that number, as it’s not relevant to 3D content playback? 34% of respondents have a Nintendo Wii (as I do), and it’s not a 3D delivery platform, either.

The survey goes on to mention that that “44 percent of 3D TV owners purchased their Blu-ray player bundle with their TV.” If these purchases really were 3D TV bundle deals, then 44% of 3D TV owners actually got a free Blu-ray player as part of their TV bundle. That was made quite clear in the advertising and marketing for various 3D TV bundle packages. Maybe the DEG isn’t quite clear on the meaning of the words “free” or “bundle?”

At the May 24 Connected TV and 3D event in New York City, DEG president Ron Sanders (also president of Warner Home Video) stated,  “The results of this landmark study clearly show that 3D TV owners are overwhelmingly happy with their 3D experience…this bodes well for the future of the Home 3D category.”

Really? My statistics professor would have been ROFL at hearing that. Here’s what my conclusions are.

(1) 75% of the survey respondents who bought a new 3D TV aren’t watching any more TV as a result of that purchase. That could mean they aren’t that enthusiastic about 3D, or that they just bought the TV as an upgrade and made sure it had 3D capability in it that they may or may not use. We don’t know enough to say – SmithGeiger didn’t ask.

(2) About two-thirds of the respondents want to watch most if not all of their programming in 3D. That is an interesting number and one which should be re-sampled a year from now.

(3) 26% of the respondents either cannot use 3D glasses at all or have measurable difficulty in adapting to 3D eyewear. That’s right in line with educated estimates and is a substantial impediment to widespread 3D TV adoption.

(4) The average number of pairs of 3D glasses in survey households is not substantially higher than the number of free glasses given away in 3D TV bundles. And we have NO idea how often they are being used, as SmithGeiger never bothered to ask.

(5) We know that 7 out of 10 respondents have Blu-ray players. We also know that many respondents have cable and satellite boxes. There are more of the latter than of the former. (Stop the presses!) What we DON’T know is how often those Blu-ray players and set-top boxes are being used to watch 3D content.

In fact, it’s mind-boggling that SmithGeiger didn’t ask any questions respondents about the number of hours per day, week, and month they actually spend watching 3D content!

Other fun tidbits:

(6) 78% of PlayStation 3 owners have upgraded their consoles for viewing 3D Blu-ray movies, and 76% of PS3 owners upgraded to play 3D games. Yet the following chart in the DEG study shows that only 7% of PS3 owners play 75 to 100% of their games in 3D, while 59% (by far the largest group) said that 25% or less of their game-playing is in 3D. There’s a disconnect here.

(7) 55% of 3D TV owners “would definitely” buy a 3D TV again. What – only half? I thought 88% of them loved their 3D TV picture quality! 25% of respondents said they “would probably” buy another 3D TV, while 14% said they “might or might not.” 7% said they “probably would not or definitely would not” buy a 3D TV again.

I interpret those numbers to mean that roughly half of the survey respondents are either (a) lukewarm about, (b) indifferent to, or (c) opposed to buying a 3D TV again.

That hardly constitutes a ringing endorsement for 3D TV, so it’s surprising that SmithGeiger didn’t ask the logical follow-up question: “Please list the reasons why you would buy or not buy a 3D TV again?”

Given the DEG’s position as industry cheerleader for 3D and Blu-ray, I’m not at all surprised in the way the survey results were stated. There is clearly a need for objective, in-depth analysis of why people have purchased 3D TVs, how they use them, and what their like and dislikes about 3D TV are.

But this survey and report doesn’t do the job. It’s clearly presented as more ‘spin’ that fact. There are too many holes in its methodology and flaws in its results  to be taken seriously as an objective analysis of the trends in 3D TV adoption rates and the factors that drive them.

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.

Panasonic’s 2011 TV and Blu-ray Press Briefings

Last Tuesday and Wednesday, Panasonic held press briefings on its 2011 TV and accessory product line at the House of Glass on 25th Street in New York City. Good choice of venue, considering all of the plasma and LCD TVs that were set up for inspection in front of enormous floor-to-ceiling windows.

 

As usual, plasma still rules the roost at Panasonic, although LCD technology continues to make inroads. This year, you’ll find 19 new models of plasma TVs and a few new glass cut sizes, such as 55 inches (replaces the 54-inch size) and 60 inches (goodbye, 58 inches).

 

The line breaks down into three categories (and I’m using Panasonic’s descriptions here) – twelve Full HD (1080p) 3D plasma TVs, four 1080p FHD plasma sets, and three 720p plasma TVs. (Yes, there is still a market for 720p plasma.)

As usual, Panasonic's got 3D plasma covered.

The fact that almost two-thirds of all new Panasonic plasma TVs are 3D-ready reflects the market’s response to higher-priced 3D TVs in 2010: Consumers just weren’t interested in paying a premium for 3D. Now, you can get into a 3D plasma TV for as little as $1100 (TC-P42ST30), while a 50-inch set will cost you $1,500 (TC-P50ST30).

 

The top-of-the-line models carry the VT30 suffix and are being marketed in 65-inch and 55-inch sizes (TC-P65VT30, $4,300 and TC-P55VT30, $2,800). Readers may recall that Panasonic’s first 3D offering a year ago was a 50-inch plasma with two pairs of active shutter glasses for $2,800 through Best Buy, so you can appreciate just how much pricing has changed over time.

 

In addition to the pair of VT30 models, there are four GT30 plasma 3D TVs from 50 inches ($1,900) to 65 inches ($3,700), and four ST30 variations that also range from 50 inches ($1,500) to 65 inches ($3,300). In the non-3D 1080p (S30) plasma category, Panasonic has four choices from 42 inches ($800) to 60 inches ($1,900), while the three 720p sets are priced at $600 (TC-P42X3), $700 (TC-P64X3), and $800 (TC-P50X3).

 

Many of these sets offer the VIERA Connect feature, which provides a host of connected Internet TV channels and specialized apps. Like Samsung, Panasonic is also hosting a connected apps marketplace and will open its platform and middleware technology to third-party developers and manufacturers.

No matter what the technology is, everyone eventually finds a way to goof off with it.

Some of the more interesting apps that I saw included wellness and fitness apps from Body Media and ICON, one of which lets you track your weight on TV. (Somehow I think that’s not going to be very popular with couch potatoes.) Of course, Skype is ever-present, as are Twitter and Facebook apps and Hulu Plus. And it goes without saying that Netflix is also on all VIERA Connect TVs.

 

Over on the LCD side, Panasonic raised some eyebrows by unveiling two of the smallest 3D TVs I’ve seen to date. The TC-L37DT30 (37 inches, $1,300) and TC-L32DT30 (32 inches, $1,200) both use IPS (In Plane Switching) LCD glass, generally the better choice for TVs as it doesn’t have any off-axis color shift issues. And both TVs have LED backlights, which aren’t too common in this screen size.

 

I checked out some 3D content on both panels and it was surprisingly free of crosstalk, a problem that often pops up with LCD 3D TVs due to all of the polarizers in the optical path. Both models have the full VIERA Connect suite and also claim a 240 Hz refresh rate.

 

Panasonic also has three E3-series models (32, 37, and 42 inches) which also employ LED backlights and will sell for $700, $800, and $950, respectively. Instead of full VIERA Connect features, these models offer Easy IPTV (Netflix, Amazon, and CinemaNow, plus Napster, Pandora, and Facebook).  Another 42-inch LCD model (TC-L42E30) will ticket at $1,100 and adds easy IPTV plus LED backlighting and 120Hz processing, while the TC-L42D30 is a full 1080p LCD TV with VIERA Connect for $1,150.

Who knew there was a market for 32-inch 3D TVs? (Is there?)

What’s interesting is that Panasonic now has as many 42-inch LCD TVs in their line (3) as they do plasma (3). What does that say about the future of 42 inches as a plasma TV size for Panasonic? Company representatives replied that Samsung and LG also sell plasma, but those companies are known largely as LCD TV brands. In contrast, Panasonic built its rep on top-notch plasma picture quality. Is it a price point play? Could be, as the 42-inch LCD sets have higher MSRPs than the equivalent PDPs. Maybe we’re getting closer to the day where 42-inches will just become an LCD size.

 

Over in the Blu-ray department, Panasonic has four new models, one of which left me scratching my head. To set things up here, I should mention that Blu-ray player prices have taken precipitous drops in 2010, and that has resulted in an upwards spike in BD player sales. But I would venture – and so far, anecdotal evidence supports me – that consumers are buying Blu-ray players mostly for the connectivity features (spelled N-E-T-F-L-I-X).

 

Right now, you can buy several Blu-ray players now for less than $100, and more than one analyst firm predicts we’ll have $40 and $50 BD players by the end of 2011. Not surprisingly, the price premium assigned to 3D BD players has largely evaporated; I picked up a Samsung BDP-C6900 last fall for $244 and you can find them on line for about $170 now.

 

The ‘connectivity thing’ is clearly driving a majority of BD player sales. So it was a puzzler to see Panasonic’s new DMP-BD75 in the lineup, as this $99 2D player has no provision for WiFi connectivity; only a conventional RJ-45 Ethernet jack. Bad choice! Consumers don’t want to hard-wire Blu-ray players; they want to use a WiFi connection. But the DMP-BD75 doesn’t even have a WiFi dongle option. This product could be gone from the line as fast as it appeared.

Three of the four new Blu-ray players are 3D models.

The other three players make a lot more sense. The DMP-BD310 ($399) is the blue-chip model and comes with VIERA Cast and 2D to 3D conversion, plus built-in WiFi connectivity and dual HDMI outputs. Skype is also included, bringing conference calling and an answering machine to your TV. (What WILL they think of next?)

 

Stepping down, the DMP-BD210 is ticketed at $299 and has the same features, but only one HDMI output. Both models have touch-free drawer operation – simply wave your hand along the top cover and the disc drawer opens and closes automatically. (Kids are going to have a lot of fun with that!) The DMP-BD110 lops another few bucks off the price, but doesn’t have built-in WiFi or the ‘magic door’ option. A WiFi dongle is available as an option.

 

I should mention that WiFi setup and network configuration on all three 3D models is a quantum leap from 2010s models, which practically required you to have Microsoft network certification to complete the process. Now, it’s as easy as setting up a Cisco/Linksys Wireless-N router, which is to say that the BD player basically does all the work. ‘Bout time!

 

Panasonic also has a new portable Blu-ray player (DMP-BD200), a portable DVD player (DVD-LS92 -really? Who uses those anymore?), and believe it or not, two new DVD players. One has progressive scan, while the other is upconverting.

 

Given that progressive scan DVD players are selling for about $35 these days and upconverting models are around $50, you have to wonder why Panasonic even wants to play in that space anymore. I say, ditch the red laser format and just go blue – the players are certainly cheap enough…

CE Pro's editor Grant Clauser is suitably impresed with the new soundbar.

I also saw a few demonstrations of new soundbar technologies and home-theater-in-a-box (HTiB) products, three of which are built around Blu-ray playback and two around DVD playback. The most interesting product was the SC-HTB520 soundbar, which is packaged with a separate wireless subwoofer and sells for $400.

 

In the demos I sat through, this soundbar did a surprisingly good job creating a virtual surround sound field and would be of interest for folks who don’t have the space or inclination to set up six different speakers. I could see this soundbar installed with lots of family room TVs (like my 42-inch Panasonic plasma) to add a little spatial separation for prime time TVs shows and sports broadcasts.