May/June 2008
- Sony Pictures’ Blu-ray Disc Strategy
Interview with Sony's David Bishop - 'Green' Packaging
Featured in the May/June 2008 Mediaware ...
Sony Pictures’ Blu-ray Disc Strategy
Interview with David Bishop
Worldwide President
Sony Pictures Home Entertainment
By Thomas K. Arnold
David Bishop, Worldwide President, Sony Pictures Home Entertainment |
As worldwide president of Sony Pictures Home Entertainment, David Bishop is now poised to become the poster boy for the high-definition optical disc format that his division’s parent company developed. And Bishop certainly has his work cut out for him: While Blu-ray Disc has vanquished its rival, it now faces an even bigger battle: swaying consumers to transition from their beloved DVD to a new and improved optical disc format instead of either sticking with the old or opting to bring movies into their homes electronically, either by downloading them over the Internet or piping them to their TVs via cable or satellite video-on-demand services.
Veteran home entertainment journalist Thomas K. Arnold, publisher and editorial director of Home Media Magazine and home entertainment editor of The Hollywood Reporter, recently sat down with Bishop to discuss the Hollywood studios’ strategy in making Blu-ray the dominant way to watch movies in the home, protecting and even enhancing their packaged-media revenue stream in the face of increasing electronic competition.
Nor are the studios alone: It’s a battle for consumer eyeballs that a wide spectrum of other industries have a vested interest in winning, from retailers like Wal-Mart and Target that have traditionally used home video to drive traffic into their stores, to ancillary service providers like replicators and authoring houses that depend on the continued well-being of packaged media for their own survival.
Well, the format war is finally over, and after nearly two years HD DVD is out and Blu-ray is poised to become the successor technology to DVD. But is it really time to break out the champagne, or is there an even bigger challenge up ahead?
I’ve been counseling everyone, both internally and externally, that winning the format war was just the first step. Within our own industry, we all celebrated, but we didn’t see a lot of consumer parades because most consumers weren’t really cognizant that there even was a format war. So now we have to sell them on the benefits of Blu-ray, selling the fact that you get six times the picture quality of standard DVD and that we are only scratching the surface as it relates to interactivity, which I think will be an increasingly important component of the format, going forward.
How, exactly, are you going to do that? How are you going to get consumers as excited about Blu-ray as we are, internally?
Our marketing efforts will be focused on showing consumers the difference between DVD and Blu-ray, with a heavy emphasis on retail. There will be some institutional advertising by the Blu-ray Disc Association, and you’ll also see studios place a bigger emphasis on Blu-ray Disc in their own marketing, advertising and promotional materials. But it’s really at retail where we have the best opportunity to show the difference to consumers and make a statement that this is the next great step forward for packaged media. Just this week, Yahoo listed Blu-ray Disc players as the number one search result for most popular electronics.
Is the fourth quarter going to be ground zero in the battle to sway consumers over to Blu-ray?
Things will definitely reach a crescendo in the fourth quarter, but the tide is turning even now. Even before Toshiba threw in the towel, in the month of January we sold more Blu-ray software to consumers than we did in the first six months of last year. Relative to DVD it’s still a small percentage of the business, but the growth rate clearly is dramatic.
Where do you project we’ll finish the year at, both in terms of hardware and software?
Understanding and Solution’s 2008 projections call for consumers to buy 2.5 million standalone Blu-ray Disc players, 4 million PS3s and another 800,000 PCs equipped with Blu-ray Disc drives. On the software end, they are projecting 45 million units and $1.2 billion in retail revenue, which is up from about $300 million in 2007.
What’s driving this growth rate?
First and foremost, retailers are really getting behind the format and making a big statement. We’re seeing a lot more space at retail that’s being dedicated to Blu-ray — you see it at Wal-Mart, you see it at Best Buy, you see it at Target and Blockbuster and all over the place, really. And the good news is that’s not cannibalizing existing space devoted to DVD — it’s incremental space in stores around Blu-ray, in the form of dedicated displays as well as highlighting the PS3’s Blu-ray movie playback ability. We’re really hitting hard with our marketing message.
It’s been said that a new format’s success depends largely on available content. Software is the driver. What are your plans at Sony, and what can we expect from the other studios, now that everyone—all six majors—are on board?
We’re planning to release at least 100 Blu-ray titles this year, key titles day and date with DVD as well as catalog titles. And from the other studios, combined, we’re likely looking at another 400 additional titles.
Does the fact that the Blu-ray Disc technology continues to evolve pose any impediment to growth? HD DVD, after all, came to market with final specs in place, including interactivity. Blu-ray, on the other hand, is still ramping up, with most players currently for sale either Profile 1 or Profile 1.1. Final spec, or 2.0, players, with both picture-in-picture and Web connectivity, or BD-Live, are still on the drawing boards.
I see it as a good thing that Blu-ray will continue to evolve. If you look back at DVD, we saw much the same thing—there were no progressive-scan players, and many of the early discs needed to be flipped over and had little in the way of special features and extras. You can almost make the same argument with any home electronics, whether it’s a PC or a TV — they continue to improve. But with Blu-ray, the main thing is the picture, true 1080p high-definition, which is what the format is all about.
A significantly better picture is what may sway consumers today to turn to Blu-ray, but what’s going to hold their interest down the road?
BD-Live really will be the earmark for 2008. Right now we’re at the Pong stage, if you want to draw a parallel with the video game industry. But the interactivity of Blu-ray will continue to improve over time, and it’s going to add a whole new dynamic to our business. With BD-Live, we can really extend our relationship to consumers by offering live content and really connecting fans to their movies. People will be able to interact with each other as they watch the same movie, and we also can continue to update their experience around the disc by adding additional trailers of new theatrical films, by adding more value-added content, and by adding new games and interactive features. For example, let’s say you’re watching Angels and Demons and you want to understand exactly where a particular scene was shot, what the street location is, what some of the shops and points of interest are. With BD-Live, you’ll be able to do that, so you can really immerse yourself in that experience and go beyond the movie.
When Toshiba dropped out and in essence handed victory to Blu-ray, we saw a lot of articles in the mainstream press, quoting analysts who downplayed Blu-ray’s victory. In their opinion, it really doesn’t matter—packaged media is doomed and before long everyone will be downloading their movies or getting them on-demand from their cable or satellite service. As backup, they cited what happened in the music industry, and predicted home entertainment would follow the same path.
We’ve heard those comments too, but I don’t see that happening. The music industry and the movie industry are completely different. The music industry had two things that really made downloading take off, at the expense of the CD: For one, the music industry was built on buying a disc or 12 or 15 songs, and the consumer maybe wanted only one or two of them. The Internet gave them the ability to buy a fraction of that, a single song, that they wanted, and that changed the economics of the business. Consumers have never bought movies the same way; you don’t buy a scene or two, you buy the whole movie. Secondly, music is something you put on in the background, maybe while you sit at your computer and search the Web, or you do homework. Movies are much more immersive. People have invested a lot of money into home theaters and high-definition TVs, so they’re going to want the best possible quality—and at this point, at least, you simply can’t get that from the Internet, neither efficiently nor economically.
Is it merely a matter of time, then, or do you see packaged media holding its own alongside digital downloading and video-on-demand?
I do think the market will become more fragmented, but ultimately I believe the home entertainment pie will continue to grow as both segments gain in popularity. Will there be digital options? Yes. Will people get more comfortable with video-on-demand? Yes. But Blu-ray Disc is just flat-out the best experience the consumer can have, and that bodes well for the format enjoying a long and successful life.
It’s been said that the home entertainment industry has one other thing going for it—the ability to deliver a digital copy on the actual disc, so the consumer can get a digital movie for the iPod or laptop not just over the Internet or through cable or satellite, but also on the physical disc, which will remain the format of choice for home viewing on the living room HDTV.
Managed copy certainly is part of our plans, going forward. We demonstrated that at CES, that you can take a Blu-ray Disc and put it in your PS3 and then make a copy for your PSP. And you’ll also be able to do that for your laptop and potentially for other portable hand-held devices as well. Actually, with digital copies we’re seeing a lot more activity on standard DVD than Blu-ray, simply because the installed base of existing PCs with a DVD drive greatly outnumbers the installed base of Blu-ray PCs. But with time, that will change, as well.
What does the success of Blu-ray mean for authoring houses, replicators and other service providers that depend on packaged media for their livelihood?
We’re actually going to be doing the majority of our titles Java-based, and eventually all of them will be Java-based, which enables you to do timelines, bookmarking, all that sort of stuff. And it’s safe to say this is very good for all authoring centers because it’s an additional service they can provide. Standard DVD is very important, but now they’re going to have the additional benefit of authoring and duplicating BD discs. Just as in the early days of DVD you’re going to see the studios going back to their libraries and upgrading to Blu-ray, across the board. And that’s really going to be good for the whole business.
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