Warner "moving away from DVD," focusing on Blu-ray, VOD and DD

[Grubert]

Source: Home Media Magazine

Jeff Bewkes, president and CEO of Time Warner Inc., June 9 said Warner Bros. Studios by 2009 will bow half the number of films in its theatrical slate from two years ago.

[...]

Speaking to investors at the Deutsche Bank Media & Telecommunications Conference in New York, Bewkes said pressure to improve revenue and cash flow growth from its $1 billion filmed-entertainment division meant taking a step back and making more out of less.

“Our motivation is to improve our return on capital,” Bewkes said. “Doing that we believe we can move profit up.”

To accomplish this, the CEO said the studio will focus on building wider consumer adoption of Blu-ray, expanding cable video-on-demand simultaneously with standard DVD (Bewkes said cable VOD generated more than three times the margins of DVD rental) and other electronic distribution.

Bewkes said the elimination of New Line Pictures, which he characterized as a redundant infrastructure, would result in ongoing overhead improvements as well.

He said DVD has been a reliable revenue generator for all studios the past five years. Bewkes said that for every $100 in box office revenue, Warner Home Video extracted more from DVD.

“Our studio still leads in that area because we have scale superiority in worldwide DVD distribution,” the CEO said.

Bewkes said expansion of Blu-ray, VOD and related improvements in electronic distribution by moving away from physical DVD would help grow filmed entertainment.

“Those kinds of things we think in the long run will bring revenue growth to the total film sector,” he said.

[...]

[HDJK]

So there you have it: downloads will replace DVD and Blu-ray will be the next optical medium for many years to come.

I didn't know they want to get rid of New Line. Is there any time frame for that (with all the planned movies like the Hobbits and such)?

[syncguy]

The natural evolution of DVD is blu-ray. Downloads cannot come close to blu-ray with the current Internet and Access infrastructure. A massive injection of capital is needed to make mass-market downloads and streaming to compete with blu-ray. Who would foot the bill for a massive upgrade of the Internet? Will the movie industry do it? I doubt it.

Blu-ray is the future. Therefore we should make sure blu-ray technology is right. Still need to iron out the rough edges....

[EQ3282]

Originally Posted by HDJK

I didn't know they want to get rid of New Line. Is there any time frame for that (with all the planned movies like the Hobbits and such)?

In short, it won't effect movies either currently in production, or large-scale films (see: The Hobbit) that are attached financially to New Line.

[Grubert]

There is a number of things they can do to give Blu-ray a push:

- Content advantage: kill the 2-disc special-edition DVD. Release the single-disc, barebones DVD and put all bonus content on the BD

- Time advantage: release all new titles on BD 2 weeks before DVD

- Catalog advantage: each time a catalog title is released on BD, pull it from DVD availability. It's not really generating any revenue for the studio, so what do you have to lose?

[tmok2000]

Originally Posted by syncguy

The natural evolution of DVD is blu-ray. Downloads cannot come close to blu-ray with the current Internet and Access infrastructure. A massive injection of capital is needed to make mass-market downloads and streaming to compete with blu-ray. Who would foot the bill for a massive upgrade of the Internet? Will the movie industry do it? I doubt it....

The answer is, of course, the consumers. We paid for the first Internet, and will also pay for the next Internet. It is already in progress. The next generation of Internet is called Internet2. Check it out: http://www.internet2.edu/about/. Like the first Internet, it won't be paid for in its entirety by one company, one industry, or one government. Every time we pay a cable TV, telephone, and cable modem/DSL bill, we are already paying into building and upgrading the Internet. There will be no "official" label of Internet2, because, this time around, it will be more like an upgrade. Look, some cable companies, e.g., Cablevision Optimum Online, are already offering 30Mbps service. Verizon FIOS and AT&T uVerse are also fiber-based networks that deliver integrated network services. Some day, we will be getting Gbps Internet access, which makes HD video streaming and on-demand network services a reality. If we look back at that time, we will be laughing at ourselves why we insist on having physical medium today. Judging by how far we have come in the last 15 years, that some day may be here much sooner than we know.

[WickyWoo]

Downloads, and more VOD will kill rental dead within the next 10 years, outside of the specialty enthusiast shop (like TLA video in Philadelphia)


People wanting to buy will be sheparded to blu

[stockstar1138]

if anybody downloaded Qore to watch, you would all realize real fast that downloading is a total joke. the amount of compression and artifacting was disgusting.

[prerich]

Originally Posted by WickyWoo

Downloads, and more VOD will kill rental dead within the next 10 years, outside of the specialty enthusiast shop (like TLA video in Philadelphia)


People wanting to buy will be sheparded to blu

+1 Agreed.

[stockstar1138]

Toshiba has got to be cringing at this. After spending nearly a billion purchasing a CELL factory and rights, to try to preserve DVD via SuperUp Coversion and all the other work they have done on SuperUp Conversion. To have Warner come in litterly months after they destroyed their HD DVD business, to say that they are distancing themselves from DVD, that has got to hurt big time.

Because if Warner distances themselves from DVD, surely its in the cards for Sony, Disney, and Fox too.

[syncguy]

Originally Posted by tmok2000

The answer is, of course, the consumers. We paid for the first Internet, and will also pay for the next Internet. It is already in progress. The next generation of Internet is called Internet2. Check it out: http://www.internet2.edu/about/. Like the first Internet, it won't be paid for in its entirety by one company, one industry, or one government. Every time we pay a cable TV, telephone, and cable modem/DSL bill, we are already paying into building and upgrading the Internet.

Internet2 seems to be a technology/academic blurb without any sound business case. With out a massive investment, a HD Internet cannot be realised. This is a massive investment which is difficult for cross subsidisation absorb. Simply there is no business case to build a HD Internet unless Content companies come to the party and pay hard cash (and I doubt this would happen). Content companies are trying to have a free ride which will never come true. Consumer will not pay for the capacity unless they see value in it. Value is content. Unless they get free/subsidised content they will not pay for a capacity upgrade.

Hence I say blu-ray-evolution is the future, at least for a foreseeable future. It is very important to get the blu-ray on the right track and tie-up loose ends at this early stage before it get out of control.

[Chevypower]

I assume DD is digital downloads... whats VOD?

[stockstar1138]

Originally Posted by Chevypower

I assume DD is digital downloads... whats VOD?

video on demand.

[Chevypower]

thanks!

[Mouse]

I get that we all pay for the internet upgrades every time we pay a bill but the problem is that most internet providers are changing the way they bill you. So if you are on a 10 MBs/month plan and you use 11 MBs one month then they charge you huge fees just like a cell phone. The problem is very few people really know how many megs or gigs they'll need until they use it. This alone will destroy any hope of Digital Downloads from ever taking off because people won't pay $10 to download a movie then get a bill from their internet provider for another $20 per movie especially when you have poor quailty video and sound as well as no extras like Blu-ray has. No subtitle options. You simple get the movie they choose to show you not what you choose to see. People need to just give up on digital downloads for it's only a gimmick. At least for another 10+ years.

[mrgreed202]

thats stupid who would prefer a download to an actual disc? even if it was hd. I would rather have some sort of physical evidence that i have the movie. plus you dont get the nice movie art and stuff.

all the people wanting downloads are just little hermits that want everything to come to them without them moving a muscle. stop being lazy america!

[WickyWoo]

Toshiba has got to be cringing at this. After spending nearly a billion purchasing a CELL factory and rights, to try to preserve DVD via SuperUp Coversion and all the other work they have done on SuperUp Conversion. To have Warner come in litterly months after they destroyed their HD DVD business, to say that they are distancing themselves from DVD, that has got to hurt big time.

The CELL processor will be very profitable, a HUGE advantage is that it's scalable, so you have your main core, and you can keep adding helper cores to it. the SUC chip I believe has 2 helpers instead of PS3's 7. This lets you put the same chip with essentially snap-on modules into thousands of different devices from a TV all the way up to the servers that IBM is running

While the financial viability of SUC may be in question, the CELL is not

[tmok2000]

Originally Posted by Mouse

I get that we all pay for the internet upgrades every time we pay a bill but the problem is that most internet providers are changing the way they bill you. So if you are on a 10 MBs/month plan and you use 11 MBs one month then they charge you huge fees just like a cell phone. The problem is very few people really know how many megs or gigs they'll need until they use it. This alone will destroy any hope of Digital Downloads from ever taking off because people won't pay $10 to download a movie then get a bill from their internet provider for another $20 per movie especially when you have poor quailty video and sound as well as no extras like Blu-ray has. No subtitle options. You simple get the movie they choose to show you not what you choose to see. People need to just give up on digital downloads for it's only a gimmick. At least for another 10+ years.

Pricing is very tricky. The consumers have been enjoying more or less a tiered flat-rate structure based on the speed of the connection. A couple of companies, namely Comcast and AT&T, are starting to experiment a different pricing scheme which is usage-based -- based on the number of bytes transmitted. Personally, I don't like usage-based pricing (not because I do a lot of P2P downloads). On the surface, usage based pricing seems like a fair deal -- one pays for exactly the amount of use. The potential downside is huge. Usage-based pricing, in general, is a scheme that deters usage. In the short run, it will immediately change all of the users' behavior. People will be doing very little to no video downloading. Even activities that we normally won't think twice doing, e.g., uploading photos to sharing web sites, visiting web pages that have intensive graphics, or downloading those large Windows updates, will now become concerns. Creators of some of those services will inevitably be out of business, because few people are using them. There will be little to no incentive for any new network services and applications that requires large bandwidth, because they don't sell. In the end, the only things that people will feel safe in doing are sending short email messages or other text based applications, such as IM. Then, it makes people wonder why they needed a broadband network to do this in the first place. This kind of pricing scheme is horrible to the development of the Internet. That's also the reason why it didn't work in wireless, and wireless carriers are moving away from it.

I think the reason why the Internet has been so successful is because of its "unlimited use" policy. It fuels usage, which fuels sales, which then fuels creativity. In the end, content (not just movies, but all network services) is still king. We pay to have a broadband connection, but it is really not the connection that we are after. It is the end services, may it be streaming VOD, Internet radio, mySpace, youTube, hulu, and what have you, that we are paying to get. The more such services are available on the Internet, the more that we will rely on our broadband connection. As interesting and desirable services are getting more bandwidth demanding, the more that we will be willing to pay to get a faster connection. That's why I believe that the upgrade of the Internet will be paid for by the consumers, one way or another. Even though the movie studios are not funding the Internet per se, they are the ones that are providing at least one good reason why people pay for their broadband connections in the first place.

[tmok2000]

Originally Posted by mrgreed202

thats stupid who would prefer a download to an actual disc? even if it was hd. I would rather have some sort of physical evidence that i have the movie. plus you dont get the nice movie art and stuff.

all the people wanting downloads are just little hermits that want everything to come to them without them moving a muscle. stop being lazy america!

If you think about it, video on demand (VOD) is also one form of download. Between that and going to Blockbuster to rent a physical disc, VOD is much more convenient. Today, there are still differences between these two -- VOD is not in 1080p and it also does not have high def audio; VOD probably costs more than traditional rental; the VOD catalog is probably smaller. If these differences are eliminated, I bet you most people would prefer VOD over Blockbuster.

I think people who prefer to be holding physical media are just not yet comfortable with the concept yet. In many ways, we have already moved in that direction. Today we routinely do software updates through the Internet -- everyone feels comfortable enough that Windows XP SP3 does not come in a physical CD. The Apple iTunes store is another example. A lot of people feel comfortable having their music only in digital form. So, my assertion is, if everything else (e.g., 1080p, HD audio) is equal, downloadable movies will be popular as well.

[blu2]

Originally Posted by tmok2000

If you think about it, video on demand (VOD) is also one form of download.

Yep. I am suprised how much weight people give to what is usually thought of as "downloads" when Cable and SAT providers already have a set top box in most homes, and the Cable providers will certainly not want to lose market share at the expense of Microsoft/Apple/Netflix/etc. The Cable providers could come up with interesting VOD pricing models that are equivalent to "virtual ownership" as well, e.g. watch once for $8, watch twice for $12, watch unlimited times for $15, etc.

Regardless, there will be some segment of the market who will (a) want the extra quality of blu ray over HD VOD and (b) want to have their own disc to have/hold.