Fireside chats, rock star moments, and consumer panels were the highlights of this year’s PEVE conference, and D2D reports on some of the many topics covered at the event.
Every conference has its rock star moment, and this year’s PEVE was no exception. Danny Kaye, keynote speaker on the first day, took to the stage to the rousing strains of Led Zeppelin’s Whole Lotta Love, which brought goofy smiles to just about everyone (at least everyone of a certain age) in the audience. Kaye, the EVP Global Research & Technology Strategy, Twentieth Century Fox, showed a video clip of some of Hollywood’s latest and greatest movie moments and declared, “It’s this kind of content that compels consumers to buy.”
There was a serious message to Kaye’s presentation: the vast and rapid changes of the video delivery landscape and the need for the industry to ensure that the consumer is not left confused. “There is a consumer perception that technology is moving too fast,” he said, “That’s our fault, and we have to do a better job of framing what the changes are.” Kaye presented a number of slides and statistics to highlight the changes, and how the content community should keep up.
In a ‘Then and Now’ video viewing slide (“I have to update this regularly”), Netflix subscribers went from 2.4 million to 24.4 million between 2004 and 2011; in the same time period YouTube went from nothing to 5 billion views per day globally, Facebook went from 1 million to 800 million users, and Twitter went from nothing to over 200 million registered users globally. The technology has moved no less rapidly, including tablets going from nothing to over 55 million users globally, Blu-ray players coming out of nowhere to being in over 34 million households, smartphones at nearly 100 million global owners, and HDTVs now in 80 million households from 5 million in 2004.
“At Fox we do a ton of consumer research,” he said. “We don’t always like what we hear but we have to listen and adjust our business models accordingly.”
There was good news: overall home entertainment spending was up in Q4 last year from the first time in a while and Kaye expected it to be up in Q1 of this year as well. “That goes for physical too, not just overall,” he pointed out, “and the Blu-ray format has been a success, despite what pundits say. Blu-ray growth shows that consumers are convinced that this is the format and they can start to convert their DVDs.”
One clear message, he added, is: “When you add in alternative ways of viewing home entertainment, it is very consistent over time. Once the economic crisis is over we can rebuild sell-through.” Ownership has its advantages, which include more content and more rights; however, Kaye added, and even by 2015 digital sell-through will account for only 12% of video, though the story is very different for games, music, and books, which will all see digital take over 50% of sell-through.
Still, Kaye concluded, “The ultimate goal is to make all aspects of the digital experience work as well as a DVD,” which means offering quality, collectibility, safety of ownership, and the ability to watch content again and again. “What we have done in physical we should do in digital; second screen, 3D, more digital rights... that’s what consumers want and we need to offer that.”
That provided a smooth segue into UltraViolet and Project Phenix, both initiatives that, said Kaye, the studio community will be working on to enable digital to work. (After his presentation Kaye was asked by conference chairman Ben Keen of IHS Screen Digest if there would be UV-enabled Fox content this year. “As soon as we think it works as it should,” Kaye replied, but Fox considers it still to be a work in progress, albeit a serious one.)
Overall, Kaye concluded, “The future is very bright.”
Another rock star moment was Richard Bullwinkle of Rovi, who captured the audience’s imagination when he introduced, among other topics, the notion of viewing (in)fidelity and told his own story, along these lines: “My wife is a big Mad Men fan. I don’t like it that much, but I love sitting next to my wife, so I watch it with her. I got a call at 4am today (thanks, honey, remember the time zone next time) to say Mad Men was about to start and she was thinking of watching it. Well, no way! That’s like cheating. We watch it together, she can’t watch it without me, even thought I don’t really like the program.”
It turns out that 88% of people think it is cheating to watch “couple’s content” without their partner. Bullwinkle’s overall presentation dealt with the Rovi consumer research into viewing habits; highlights included the fact that the proliferation of personal devices in the home creates a complex position of managing devices and there are certain expectations – 96% of people think that the evolution of the television set means not improvement but bringing the ‘bad’ of computers to TVs.
A staggering 92% of people surveyed have devices in their home with unrealized potential because they can’t figure out how to make them work. The future is here, Bullwinkle announced, showing a slide with the aforementioned proliferation of viewing devices. “Just bring the digital duct tape.”
People have split personas – 97% manage three types of content across all devices, he stated, content they watch alone, content they watch with a spouse or child, and content the whole family watches. Time-shifting threw out some interesting facts: for instance, 41% of people own a DVR but 81% still watch TV ‘live’. Catch up TV means that 72% of people have picked up a series new to them. People also select content based on the time available: on weekdays people will bypass a movie to watch a 30-minute episode of something – but then they will end up watching two or three more episodes, or about the same amount of time as a movie.
“Sport is king,” Bullwinkle declared. “There is very little content which will attract three generations around a TV but with sport you can do just that. About 91% of people organize their viewing time around sporting events.” Other interesting facts: people still experience “DVR guilt” when they can’t watch everything they’ve recorded but can’t bring themselves to delete anything; they are also reluctant to navigate through VOD; even if content is free they are concerned about getting charged.
Content is many things, Bullwinkle concluded, and it is dependent on the split persona: what people want to watch depends on where they are, who they are with and what they are watching on. Content is an event, like the sports example, where people plan, invite others and watch together (though this viewing model is less frequent). It is an escape: “What you are watching is not as important as just relaxing and not having to think.” It is a commodity (“There is throwaway content that people watch right now for half an hour or so.”)
Size is everything: “Some things will never be shared on a big screen. The bigger the screen the less personal informations shared – 95% of teenagers said they would not feel comfortable with using Facebook on TV.”
Where content is enjoyed says a lot about intent, Bullwinkle concluded: “The living room is to share content, while the bedroom is for private ‘me time’ content watching. The kitchen is for multi-tasking and watching while you accomplish other tasks, making the TV effectively a radio.”
KEEPING CONSUMERS HAPPY
The show had officially opened with Keen taking the audience on a little time travel tour of the past 20 years in terms of the world at large, PEVE, and the video home entertainment industry, all of which highlighted the appropriateness of this year’s PEVE theme: ‘Solid business advice for a complicated future’.
After thanking the sponsors (Sony DADC, DEG Europe, AGI Shorewood, MPO, KIT Digital, Rovi, Dubbs/Eyeframe, and Akamai), Keen introduced the first of two consumer panels. “These have been a highlight of the conferences,” he said, “and IHS Screen Digest can take credit for pioneering the approach of putting the consumer up front. The panels have been such an important part that they have now been brought to the beginning of each day.”
The two consumer panels were indeed highlights of the event; both were moderated by Jason Kramer of Vital Findings and Nicola Pearcey of the DEGE, both of them approached home entertainment from slightly different perspectives, and both of them provoked about the liveliest discussions of all the sessions. Oh, yes, and at some point both tackled the issue of UltraViolet.
Day one’s panel was about how people engage with entertainment both in and out of the home, and how technology developments are impacting how consumers consume content. The panel all had different ways of watching video: streaming, renting and then buying, the cinema and then disc, and all agreed that it could sometimes depend on cost and where they were. When Pearcey asked if anyone had heard of digital copy, the responses were varied but, surprisingly, given the range of viewing habits, only two people thought they knew what it was: “I think I know what it is and downloaded it once but it is still sitting on my iPod,” said one panellist, “but I prefer to rent the disc. I still need to see something physical; if I can’t see it, it doesn’t exist.”
When the concept was explained more fully, many of the other panellists conceded that they may have bought discs with a digital copy but would have assumed the paper with the code on it was just an insert and would have thrown it out.
What did seem apparent was that most people still bought discs at some point and when Kramer queried, “What would you think about having a digital copy of the disc’s content when you buy it,” the general consensus was that it would be a good idea but not if it was just on a “random bit of paper”. The concept of double and triple play was also a new one and again, when it was explained, panellists were cautiously in favour of it though, as one said, “I don’t see the point of two discs but a digital copy, yes, that sounds good.”
Blu-ray took a bit of a beating: only one panellist had a Blu-ray player; another said that DVD quality was good enough for him, while a third said that she thought the discs were too expensive. DVDs were cheap enough to still be desirable as an impulse buy, though newer releases on disc were also considered good for gifting.
UltraViolet also took a slight pounding when it was first brought up, as only one person had “sort of” heard of it. Most panellists were uncertain about the cloud, and those who knew anything about it assumed it was an “Apple thing”. When it was described in more detail to them and Kramer asked what it would take to get them to use it, price was an important consideration and few thought they should be expected to pay a premium for UV-enabled disc.
Surprisingly, after all that, when asked, “In three years how will you be watching video at home?” virtually everyone thought they would be watching at least some content on discs. In a foreshadowing of Danny Kaye’s remarks later that day, one panellist remarked, “Probably something that’s not out there yet. The industry moves so fast it’s really hard to keep up. Blu-ray is all very well but devices are out of date so soon. Eventually you have to live with the idea that you have to cap it and can’t always have the latest technology.” But people will still have discs, he agreed.
The second consumer panel took a slightly different tack, examining people’s view of the value of different types of home entertainment, and how much they are prepared to pay for various options. While all but two people had bought DVDs in the previous six months, there appeared to be a disconnect when it came to what the discs were worth, with a few panellists perceiving them to be priced at £12-£15 and hence “not value for money”. If they were priced at about £8, everyone agreed that was good value and they would probably buy more DVDs. When it came to Blu-ray, the perception was that discs cost around £20 but that they would be good value at slightly less.
Three people on the panel had heard about digital copy, and two of them used it. “It would be useful,” a non-user said, “like getting a free download when you buy a vinyl album.” Again, there was a little confusion about digital copies as opposed to the cloud, with any awareness of the cloud being largely limited to the Apple aspect of it. Interestingly, even those who didn’t really buy many discs thought that it was a safer option for ensuring the security and longevity of content. The cloud would be all very well as a backup, but overall discs came off better: “online you can drown in choice”, “you take better care of discs”’ and “you feel more committed to physical especially if it’s something you really love” were among the comments.
And summing it all up was a comment eerily like that in the earlier panel: “Technology needs to improve to the level where we can understand it. Things should be improved rather than just changed.”
HOME FIRES BURNING
Another trademark feature of the PEVE conferences is the ‘fireside chats’ where IHS Screen Digest analysts sit in comfy armchairs and chat cosily to key industry executives. There can be an edge to some of the cosy chats, however, as Richard Cooper of IHS Screen Digest proved with an early question put to Chris Reiser of Sony DADC. “When the London facility was burned down in the riots, that provided a great opportunity to wash your hands of physical media and walk away with a huge insurance payment,” Cooper pointed out. “Why didn’t you?”
First of all, Reiser said, while not an event to be wished for, it was concrete evidence of how good the company’s disaster recovery plan was. “It also showed the industry standing together,” he said, referencing the fact that companies normally competitors, such as Cinram, helped to get Sony DADC’s distribution back on track almost immediately. “Nowadays we need to co-operate more; in extreme cases the industry should hang together.” In addition, he pointed out, the UK is a major cornerstone of business for Sony DADC. “We need to have a presence and provide the services. Leaving the UK would have been the wrong message, even though it was a major undertaking just to get back to where we were.”
Matt Brown of Sony Pictures Home Entertainment, introduced as “just about the nicest guy in the industry”, hunkered down for a chat with Ben Keen after the second consumer panel, making the first questions from Keen an obvious one: had the panel provided any surprises? “First of all, we like to get the consumer perspective,” Brown said. “The biggest learning is that we take too much for granted. We need to tell people more – if you buy a car you are told about all the features. We need to do that with our products.”
Given the fact that younger people particularly are less interested in discs, and that people consume movies now in a number of ways and on a number of devices, Brown pointed out, “As content providers we have to provide content when and how consumers want it at a reasonable price.”
Has the industry moved fast enough? Keen wondered, or is it too late? “Some of the industry has been slow to change but the horse hasn’t bolted,” Brown stressed. “The consumer loves entertainment. Ultimately the consumer counts and we have to provide what they want. It was exciting to hear that people recognize Blu-ray is the best quality and sound. We are still selling a lot of physical product, and we still value bricks and mortar.”
On the topic of piracy (“What about the value of content? It’s always hard to compete with free.”) Brown had very strong views. “Piracy drives me insane,” he declared. It doesn’t just hurt studios and actors, Brown stressed: Truck drivers lose money and jobs because content is stolen. There is still a lot of physical piracy as well as pirate download sites so it needs to be fought on all fronts. We need to be aggressive about it.”
Another fireside chat wasn’t quite what it should been: a discussion that could have proved very interesting – on the topic of the synergy between the theatrical sector and downstream content delivery – lost one of two interviewees, Rob Arthur of the Apollo Cinemas group, so the theatres weren’t heard from. Matt Smith, Head of Distribution at Lionsgate, had to answer for both the theatrical and the home entertainment sectors.
Like others over the course of the two days, Smith pointed to The Hunger Games as a record-breaking theatrical release: “The appetite for film is still there and home entertainment is the bulk of a title’s revenue so we want to see a theatrical success translated to home.” There are emerging markets, such as VOD and EST, he added, “But we don’t see DVD as being obsolete. Adults still want film and they are less likely to download.”
Another feature of the PEVE conferences: punches aren’t pulled, as Keen demonstrated by pointing out a comment often heard: the systems of theatrical windows is obsolete and a detriment to everything else. Shame that Rob Arthur wasn’t there to comment, but Smith did agree: “The windows model is not obsolete but it needs looking at and needs to be more flexible.” He pointed to examples of exhibitors pulling movies because of studios allowing home access too early, Alice in Wonderland being one of the most publicized examples when Odeon theatres in some European countries refused to show it because Disney reduced the window on it.
“Hard and fast windows need to be more flexible,” he said, adding that strict windows hands content “to pirates on a plate. Illegal downloads start as soon as a title is out of the cinema and then slow when the DVD comes out.”
While it is good to have a window of exclusivity for major titles, given that the top 20 titles account for 50% of the box office, said Smith, “Exhibitors think their only USP is the exclusive window but people still enjoy the experience. Exhibitors need to engage with other forms and join the party.” For instance, having exhibitors sell EST and VOD themselves and make money from it as well as the content owners. “Some titles are better in the cinema first, but windows should be shortened. It could positively impact piracy figures as people choose how and when to watch something.”