Home Entertainment Media: Where Do We Go From Here?

Welcome back! Glad to have you visiting again.

We went silent there for a couple months while Giant Interactive went through a growth spurt, but now we’re settling into a steady rhythm and ready to pick up where we left off.

But where, indeed, did we leave off?

These are proving to be interesting times. The entertainment industry continues to undergo significant shifts, particularly in distribution, consumption and marketing. While consumer spending levels have finally taken a turn for the better, and ended 2012 improved from a year ago, certain segments of the business are still struggling to adapt to the new economic realities.

Home Media Magazine's Weekly Disc Sales Revenue Chart

Home Media Magazine’s Weekly Disc Sales Revenue Chart

My favorite standard reference for the health of the DVD/Blu-ray business, the Home Media Magazine weekly Total Disc Sales Revenue chart, shows that the Blu-ray business continues to grow, while on the flip side of the coin, the DVD business continues to take a beating. Consumers just aren’t buying discs as a method of content enjoyment as the way they once did.

Yet while the disc business is mixed, digital downloads and VOD continue to grow.

“People do still purchase and rent physical DVDs and Blu-ray Discs, but streaming services such as Netflix and Hulu continue to gain traction as a convenient alternative, accessible through a variety of devices,” noted a recent report from Nielsen. “32% more of consumers surveyed said they preferred streaming a rental movie in the past six months of 2012 compared with 2011, while 29% more opted for transactional VOD for TV shows. According to Nielsen, 12% more preferred using Netflix to watch movies, while 24% upped use of a subscription video-on-demand service to watch TV programs.”

Engaging a focus group of four – my wife, my two children and myself —  I note that between Netflix, Hulu, FlixFling and Amazon, my household is now much more likely to be streaming our entertainment than we were just twelve months ago. Between these services, which are aggressively seeking to acquire more, different and exclusive content (as reported here and here), there’s plenty to occupy my leisure time.

This shift in consumer habits is problematic to companies at every stage of the home entertainment life cycle. Content providers, technology partners (like Giant) and other players in the entertainment pipeline are all trying to adapt to a different marketplace than that which existed just 5 years ago, changing business plans, making strategic moves, acquiring new talent and expertise…

At a recent salon hosted by the Entertainment Merchant’s Association in New York, we listened and contributed to a fluid and candid conversation about how to navigate these new waters.

There don’t seem to be easy answers. Thinking ‘out of the box’ appears to be the order of the day. For example, a representative from Cinedigm noted that they’d begun a promotional partnership with BitTorrent. While BitTorrent is perhaps better known for illegal fire sharing, the folks at Cinedigm see an opportunity there to connect with a different audience than they’ve traditionally engaged (perhaps along with the chance to foil some of that same illicit file sharing). Studios are exploring how to incorporate mobile devices into their distribution strategies, providing added value to fans everywhere. At Giant, we’ve made a strategic move into digital marketing with the addition of the Backward Heroes team and ramped up our capabilities to service digital and VOD platforms, welcoming Nima Ourmazdi, our new Director of Digital Platform Initiatives.

As the entertainment marketplace continues to evolve, you can bet that, as they say, there’ll be no constant but change. Yet in our experience, this needn’t be all bad. The changing mediascape has brought the ‘old’ Giant Interactive together with a talented group who are savvy in many of these emerging areas.  Our new, larger team is better for the change, more capable and more experienced. I’m willing to bet that the industry as a whole will be better for these changes too.

Check back. We’ll be exploring the events, trends and innovations that are of interest to us and our business. We hope you’ll join us for the ride.