Top Retailers Brick and Mortar Roundup Streaming
Brick-and-mortar sales and rentals of DVDs and Blu-ray Discs over the past year continued to wane as digital accelerated. A lack of new content hampered disc sales and rentals during the pandemic and continues to affect the business. On top of that, in 2021, the business experienced the same supply chain hiccups that the entire retail industry suffered. It’s a huge problem, Bill Hunt, editor of The Digital Bits website, said in October of last year. Almost every title is getting delayed, and those that aren’t are hard to find on street date.
Eddie Cunningham, head of Studio Distribution Services (SDS), a joint venture between Universal Pictures Home Entertainment and Warner Bros. Home Entertainment to distribute DVDs, Blu-ray Discs and 4K Ultra HDs in North America, saw the problems firsthand, but he says the delivery of discs to retail is back on track.
I am delighted to say that the supply chain at SDS, and I believe across the wider industry, has returned to its historical very high levels of service and availability on the retail shelves, he says. We really have all been back to our best since the start of the year. We worked very hard during the pandemic, with all the related supply chain challenges across the world, to ensure that we came out of the turbulence as quickly as possible and stronger than ever in supply chain.
While it is always disappointing to lose any shelf space, I am delighted to be able to say that all our retail customers remain very committed to, and engaged in, the physical category, Cunningham says. There has inevitably been some reduction in shelf space, but these small movements are generally in line with what you would expect in a category that is under some pressure. Our job as distributors is to work closely with each and every retail partner to ensure that every inch of their retail space is as productive as possible. We need to make it work well for both the retailer and for their shoppers.
Taking advantage of the impact of physical merchandising was key in the past year at SDS, Cunningham says. Leveraging the strong film content across Warner and Universal, we’ve been able to create combined larger and more impactful retail space statements, including unique and creative line looks that drive collectability — our hugely successful Halloween ‘glow in the dark’ packaging would be a good example, he says. On the rental side, Redbox continues to rent discs at its thousands of kiosks while expanding into digital delivery. Facing headwinds from the slowdown of new releases during the pandemic, which resulted in packaged-media rental revenue falling 57% compared with 2020, the company in May announced it would be acquired by Chicken Soup for the Soul Entertainment. Redbox remains the final physical rental outlet standing, as the last video rental store chain, Family Video, shut its doors in 2020.
Clearly, the rental market has been under pressure for many years, but I am delighted to say that Redbox continues to do an amazing job at placing physical rental in some 38,000 high-traffic locations around the country, satisfying millions of consumers every month, Cunningham says. There is a good business here for many years to come.
Despite the growth of digital, Cunningham notes that the physical disc business is still vibrant. There is still a huge proportion of consumers who want to own content (rather than just rent it or only stream it) and who have not, and probably now never will, move to purchasing digitally, he says. Something like 30% of them remain exclusively packaged-media consumers. Then, there are more who buy physical content as well as transacting digitally.
Our research tells us that they appreciate the quality of the physical disc, not only on the high-definition formats of 4K UHD and Blu-ray, but also even on DVD. Many are movie or TV series collectors and much prefer the physical packaging and collectability of the discs.
There is also a huge gifting opportunity with many consumers much preferring to give a physical disc and package, rather than a digital code on its own. And, last but not least, packaged media lends itself much more to impulse purchasing while in a retail store. This is obviously much harder to achieve or replicate online. We introduce a lot of in-store theater and creative displays — recent examples would be the big corrugate displays on Dune and Sing 2. Another major attraction on discs is all the bonus materials that can often be found included.
Indeed, consumers like the extras and superior audio and video, especially on 4K Ultra HD, that can be found on discs. I now purchase maybe 10 discs a year, all 4K UHD, says the Home Theater Forum’s Gregorich. I like additional features, documentaries, commentaries, extended versions, etc.
I still buy an occasional first-run or favorite catalog release on 4K when I prefer to have that superior picture and audio presentation, adds Ron Epstein, also of the Home Theater Forum. 4K UHD is the highest-quality viewing experience for the home theater, notes Cunningham. The collector community is strong and vocal about what they like and what they want, too. They are quick to share online their collections and reviews of 4K transfers. These collectors want to own the best-quality content. Across the top three new releases this year through April, 4K UHD represented 30% of total consumer spend.
A Sure Retail For Streaming Roundup 2022
Celebrate the retailers who are engaged in the business of distributing home entertainment product on a transactional basis, not via subscription services. These are the top third-party operators where consumers go to buy or rent movies, TV shows and other filmed content, either digitally or physically on DVD, Blu-ray Disc or 4K Ultra HD Blu-ray. These transactional players span several categories, from brick-and-mortar and e-commerce retailers that sell physical discs to digital retailers on both the broadband and cable side that sell and rent movies and other filmed content digitally.
Some retailers are hybrids. Amazon sells discs but also sells and rents content digitally. Redbox rents DVDs and Blu-ray Discs through a network of kiosks while also offering consumers the chance to buy or rent movies digitally through its Redbox On Demand internet service (in addition to its streaming service). And Walmart, Best Buy and Target, in addition to their dominant footprint in physical disc sales, also sell discs via their growing e-commerce websites.
Consumers seem to like this buffet of a la carte options. I remain an ‘and,’ not an ‘or’ consumer, says Sam Posten of Aberdeen, Md. For action films, I generally demand highest-quality 4K UHD physical media with True HD-based Dolby Atmos and the director-approved, highest bit depth HDR-based pixels. I supplement that with a lot of digital streams from Netflix, HBO and Disney+, plus 4K HDR digital purchases from iTunes and Vudu. Sticking to one over the other seems a recipe for pain and disappointment.
Consumers have engaged with and embraced many home entertainment options over the last two years, says Jason Spivak, EVP of distribution for North America television and home entertainment at Sony Pictures Entertainment. We’ve seen continued robust growth in [digital sellthrough] — encompassing both new releases, such as Ghostbusters: Afterlife, Venom: Let There Be Carnage and Spider-Man: No Way Home, and a sustained uplift on our catalog. We have also been very pleased with the resilience of the physical market.
Several factors continue to drive consumer engagement in transactional offerings, says Universal Pictures Home Entertainment president Michael Bonner. Whether it’s access, utility, format or any number of other reasons, the transactional business remains strong. New releases are being monetized in different ways by studios, but for titles releasing early or on an exclusive basis, we’re seeing historically high engagement levels in home entertainment.
Transactional home entertainment, both digital and physical, continues to provide several unique propositions for the consumer that allow it to thrive alongside theatrical, streaming and licensing, says Paramount Home Entertainment president Bob Buchi. Consumers around the world are attracted by the earlier-than-ever access, the insightful bonus content, the highest quality of presentation, the a-la-carte flexibility, and the totality of selection at a given retailer. While the landscape has and will continue to evolve, Paramount is committed to the home entertainment business and motivated by the consumer interest and the dedicated support and partnership of retailers worldwide.
Purchasing on digital or disc is akin to taking a photo of your favorite vacation destination, or buying the cap or jersey of your favorite sporting team. It’s about cherishing content you hold dear, want to recall, rewatch and display proudly, adds Craig White, EVP of worldwide distribution for home entertainment at Paramount. Such simple pleasures, sentiments and engagement is true for filmed entertainment as well, and will always resonate. While the transactional marketplace continues to remain an important home entertainment sector, consumer spending in the sector declined in 2021 as streaming accelerated, according to data from DEG: The Digital Entertainment Group. DVD and Blu-ray Disc sales were down 19.5% to an estimated $1.97 billion, from $2.45 billion in 2020. Disc rentals fell 21.2% to $822.7 million, from $1.04 billion the prior year. Digital transactional sales were off 19.2% to an estimated $2.42 billion, from nearly $3 billion in 2020, while digital transactional rentals slipped 23.8% to $1.77 billion, from $2.32 billion the year before.
Things picked up in the first quarter of 2022 as new releases accelerated and the DEG began including premium digital spending in its numbers. Digital purchases of theatrical movie titles increased 17.3%, fueled by renewed box office activity, the DEG reported. Total digital sales of movies, TV shows and other filmed content rose 6.7% to $643.6 million, though digital rental spending still fell nearly 11% to $501 million. Consumer spending on disc purchases in the first quarter of 2022 fell nearly 19% to an estimated $388.5 million, while disc rentals were down nearly 17% to $196.1 million.
The quick appearance of first-run movies on streaming services has taken a toll on transactional spending for some consumers.
I find that being subscribed to streaming services has really curtailed my purchases, says Adam Gregorich, editor at the Home Theater Forum, a website for enthusiasts. Onward was the last animated Disney title I purchased (including Marvel) because movies are fairly quickly available on Disney+. I was about to preorder Sonic 2, but noticed it’s already on Paramount+. These changing windows and release patterns have impacted the transactional business in varied ways, says Pedro Gutierrez, business and marketing category lead for entertainment, consumer applications and advertising at Microsoft, which has the transactional service Microsoft Movies & TV.
The digital transactional business has been, in a word, different, he says. Studios took different paths to releasing content from simultaneously releasing in theaters and on streaming to shortened theatrical windows or maintaining a traditional digital release cycle. At Microsoft, we focused on providing consumers with all the choices to acquiring their desired content, whether as a transaction or on a streaming service, and ensuring our studio partners maximize the opportunities for their titles’ success.