Posts Tagged ‘DVD’

Everything Old Is New Again: Goodbye To The VCR

This past summer, the Funai Corporation of Japan decided to stop manufacturing videocassette recorders (VCRs) after several decades, citing their inability to source parts as the reason.

What’s that you say? You didn’t even know anyone was STILL making VCRs in 2016?

A reporter for the Washington Post was referred to me by The Society of Motion Picture and Television Engineers (SMPTE) for some pithy quotes about the demise of the VCR, which had its debut in the United States 40 years ago this past summer. Yes, the ½” videocassette format has been around for some time, with the most popular iteration being the VHS format developed by Japan Victor Corporation, better known as JVC.

Sony also had a ½” videocassette format for home use called Betamax, and in many ways, it was a better way to record and watch TVs shows along with movies. But Sony’s insistence at keeping Betamax a proprietary format (a la Apple with Mac OS and iOS) eventually doomed it.

In contrast, JVC licensed VHS to a long list of companies: Panasonic. Hitachi, Philips. RCA. Zenith. GE. Sharp. You name the CE company; they probably sold a VHS VCR at some point. And that had a lot to do with the success of the format, which soon migrated to consumer camcorders. There was even a short-lived digital version (D-VHS) for recording HD programs and playing back movies in HD, starting in the late 1990s. Blu-ray soon killed that off, though.

When you think about it, the VCR was really at the top (or bottom) of a family tree that leads directly to today’s streaming, on-demand video services. And here’s why – the VCR created the concept of time-shifting; recording a TV program so you could watch when you wanted to, not when CBS, ABC, or NBC said you could.

VCRs also gave us the ability to skip through commercials, pause, and rewind to watch a clip over and over again. Or the entire show, for that matter. After Hollywood lost the famous Sony vs. Universal Studios Supreme Court decision in early 1984 – which ruled that making recordings of TV shows for home viewing was considered “fair use” under copyright statutes – the floodgates opened.

Not long after, studios started making movies available on VHS and Betamax cassettes for sale. Enterprising individuals, noting the $90 and $100 price tags for movies on cassette, opened small video rental clubs. For having your credit card on file, you could rent a movie for $5 or $6, making sure to rewind it (or paying an extra fee) and returning it for another movie.

Hollywood studios weren’t happy with this turn of events until smarter heads realized the additional revenue stream could add millions to the bottom line. And so companies like Blockbuster and Hollywood Video came into existence, happily raking in the cash as stacks of rental cassettes walked out the door every night.

The introduction of the DVD format almost 20 years ago (yes, it HAS been that long!) posed an immediate threat to the VHS format. (Betamax had long since folded its tent and left town.) Now, you didn’t need to rewind anything, and there was no annoying, blinking “12:00” indicator staring at you the entire time.

Bet of all, you could now jump through chapters of a movie by looking at I-frames. Fast forward, pause, and reverse were still available, but in theory, an optical disc would long outlast a VHS tape. It didn’t take long before video rental stores started replacing VHS tapes with DVDs, and by 2005, it was almost impossible to find a movie on VHS.

That was the first year that DVD sales began to decline, although rentals held their own for a few more years. Looming on the horizon were two new HD optical disc formats – HD DVD and Blu-ray – and Hollywood was giddy anticipating wheelbarrows of cash coming in. (True fact: The first Austin Powers movie was largely ignored at the box office and made most of its money through DVD rentals and purchases.)

But there was a fly in the ointment. About 7 years earlier, a company called TiVo unveiled something called the digital video recorder, or DVR. This gadget would let you record analog broadcast and cable TV programs to a hard drive – no tape or disc needed. TiVo sold a subscription program guide service, which is where they made most of their money. I had one of the first Philips-made TiVo units (14-hour capacity) and bought a lifetime subscription for $99 back in 1999, using a dial-up connection to refresh the program guide.

So now we could record a TV program, skip the commercials; fast-forward, pause and rewind, and simply delete the file when we were done. “Did you TiVo Letterman last night?” soon became water cooler talk. Along the way, we had obviated the need for any kind of recording media – tape or disc – in favor of solid-state storage.

A year after DVD sales started their decline, I bought one of TiVo’s first HD DVRs. It accepted CableCARDs, so it would work with Comcast. And it had dual DVRs (Wow!) so I could record two programs at once. It was big and noisy, but it served me well for 9 years.

Along the way, companies like Comcast, Time Warner, Charter, Dish Network, Verizon, and DirecTV came out with their own DVRs, some of which could record 4 or more shows at once. Now, you could record movies in high definition and watch them at your pleasure on your brand-new big-screen plasma or LCD TV.

And that brings us to the present day. Hollywood Video is long gone, and Blockbuster is bankrupt; its assets bought by Dish Network. The Blu-ray format, having vanquished HD DVD, isn’t the cash cow that Hollywood anticipated as more and more video and movies are watched via ever-faster streaming connections. DVD players – once selling for $1,000 – can be found for $19.99. And Blu-ray players with WiFi are widely available for about $50 – $70.

Netflix has now evolved into a streaming media monster, as has Amazon. YouTube, a pioneer in streaming shared videos, now offers a “red” premium tier, free of commercials. HBO and Showtime, along with ABC and CBS, have started subscription streaming services that can be purchased without a cable or satellite subscription. Episodic TV series are being produced for streaming channels and they’re not scrimping on production values.

So we’ve come full circle. My Comcast Xfinity set-top box is a DVR, but it streams channels from a cloud server, not from an internal hard drive. My contacts at Comcast tell me we’re not far from the day when there won’t be any set-top (or sidecar) receivers at all – your smart Ultra HDTV with WiFi will do all the heavy lifting. (After all, smart TVs are basically computers with big display screens these days.)

Today, you can go quite happily through life without having to wind a tape or load a disc in order to watch HDTV.  And that’s exactly the way things were forty years ago. Weird, right? Except you now have hundreds of channels to choose from; all of which can be streamed on-demand depending on the service you subscribe to.

Time-shifting. Commercial skipping. DVDs. Blu-ray. DVRs. Chapter searches. Video streaming. All of these grew directly out of that first VHS VCR that was sold 40 years ago.

And all you need to watch it is a smart TV and a remote. Everything old is indeed new again…

 

 

 

 

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.