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WB Sets Day-and-Date

3/15/2010 12:28 PM Eastern

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.

September