WB Sets Day-and-Date

Digital Distribution Chief Expounds on Studio’s VOD Strategy

By MCN Staff -- Multichannel News, 3/15/2010 12:27:56 PM

Warner Bros. digital distribution president Thomas Gewecke oversees the distribution of the company’s movie, television and video-gaming properties within the wireless, online, transactional video-on-demand/ pay-per-view and electronic sell-through sectors. He spoke with Multichannel News programming editor R. Thomas Umstead about the company’s digital media strategy, from offering theatrical movies dayand- date with home video to its participation in the Digital Entertainment Content Ecosystem (DECE) effort to standardize digital media content to allow consumers to watch purchased content in any format.

MCN: Warner Bros. has been an industry leader in premiering on-demand movie titles day-and-date with their home-video release. Why has the company been so experimental with content windows?

Thomas Gewecke: We are the first studio in the world to begin making our movies available dayand- date with DVD releases and we’ve expanded that practice to 15 countries around the world for at least some of our titles. It’s been a very successful way of expanding the business.

We believe that VOD in general is a very strong offering for the consumer in a marketplace that has grown very robustly in the past four or five years — double-digit growth almost ever year — and we see that continuing. In general, we think that consumers are finding the VOD environment to be a very satisfying in-home experience for rental of movies. We’re focused on encouraging that and trying to make the VOD product more attractive, and that was one of the reasons why we wanted to make the windows shorter and launch day-and-date and one of the reasons why we pioneered the 48-hour viewing window. Also, increasingly, more and more of our movies are being consumed on the VOD platform in HD.

In general, windows serve a very important function in the marketplace in that they are a great way of allowing the consumer to choose when and how they want to watch a movie, and they allow all of our partners to make content available on different dates, and generally at different prices, in order to satisfy all the different customer buying segments out there.

We see that there are consumers who look to get a movie earlier and there are those who are OK with getting it later. We think it’s very important we serve all of those customer segments. Generally speaking, we think it’s really important to have business models that are focused around allowing the consumers to choose what they want to do — that is where digital technology is taking us, and we try very hard to have a lot of choice in our lineup for the consumers to elect the viewing experience they want.

MCN: With regard to offering movies day-and-date with their home-video release, have you seen a degradation of sales on the DVD side because of your strategy?

TG: No. Actually, in all the testing we’ve done, we’ve seen the opposite: We’ve seen DVD sales go up when we do day-and-date. That’s because we’re taking two marketing budgets and two levels of customer exposure that were previously separated and compressing [them] together to create one unified marketing strategy that is actually getting us more awareness in the marketplace during the critical initial period of sales for both the DVD product and the VOD product. We’ve actually seen total revenues increase and we’ve seen an improvement in both VOD and DVD sales. It’s a good example of getting better results in the marketplace by doing something that consumers want because it delivers more value and benefit. One benefit of our structure is a closely integrated operation across home video, digital and games.

MCN: Has that integration made your job easier or harder in assessing the best opportunities to offer Warner Bros. content?

TG: It’s made it very exciting and interesting. One of the things that I love about this job is that there’s something new every day, and part of our responsibility is to adapt to changing technology.

We try to go out there and understand what our customers are getting in their homes. Three years ago, nobody had a connected television. But now more and more households have a television that’s connected to the Internet directly itself or they have a Blu-ray player, game console or other device that’s connected to the Internet. Their experience of viewing video on the TV is becoming an Internet-connected one, and that’s just one example of a big technology change that’s occurring in people’s living rooms quite rapidly.

It’s a pretty fundamental change and it means that we can do things like make movies available directly to order from the TV, which we are doing with more and more partners, and we can wrap all sorts of interactive content around the delivery of a physical disc, which we are doing with Blu-ray Live.

MCN: Looking at Warner Bros.’ whole digital-distribution landscape, you have made some recent changes along the way, including extending the window for Netflix to receive recently released Warner Bros. titles to 28 days.

TG: I won’t comment on the [DVD distribution] side of that content, but on the digital side we’ve had a long-standing relationship with Netflix, which is really focused on catalog content. [According to Warner Bros. executives, 70% of Netflix rentals are catalog titles.] Netflix is a good partner of ours and we think that the extension of that partnership makes sense for us.

We think that the announcement we made in January makes it an even stronger proposition for consumers who are looking at the VOD platform for rental.

MCN: What are some of the challenges going forward for the VOD business, particularly from up-and-coming competitors like Redbox?

TG: Without commenting on any company in particular, we really have a very bullish view of VOD — it’s a market that is projected to keep growing, and we think that there is going to be continued innovation. Every year there are more households that are VOD-enabled, and they’re being offered more movies, better sophisticated interfaces, and better experience overall. We’re very focused on extending, adding and growing that marketplace and we’re optimistic about that.

MCN: Do you foresee an opportunity for Warner Bros. to premiere a VOD movie in advance of it hitting video
shelves?

TG: We have no plans for that right now. We’re always looking at how the marketplace is evolving, and I think we will continue to explore opportunities and have an open mind to always look at what’s possible.

MCN: Talk to me about the DECE “digital locker” effort and where you see that headed going forward.

TG: We’re a founding member of DECE and we think interoperability is very important — we think the consumer needs to be able to purchase or rent a move and not be concerned whether they have the right device or the right technology to be able to play it back whenever they want. One of the key objectives of DECE is to put in place the technology infrastructure and the clearinghouse that would allow that promise to be fulfilled. We think it’s very important to the continued growth of the marketplace. There are obviously technology steps that need to be taken, and there are business rules that need to be finalized, and there’s an active process to make that happen, but we’re very optimistic.