DVDs aren't the only game in town anymore

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DVD sales might be slowing, but studios and independent suppliers are accelerating their pursuit of content. The driver: The widening of distribution channels that bring entertainment into the home -- or now, the car, the iPod and the cell phone.

It's not just DVD anymore -- or even packaged media. Digital delivery is here, and while delivery models are still in the experimental stage, everyone sees big bucks ahead. Hence, the push into the fast lane for acquiring content, both for current and future use.

"While the distribution pipelines are in a state of flux, the constant remains that there's money to be made selling content," says industry analyst Tom Adams, president of Adams Media Research. "And the now fairly mature DVD pipeline is going to make a great base for sales while new pipelines develop."

Virtually all the big studios have launched direct-to-video initiatives or entire divisions, intent on milking more dollars out of theatrical hits by producing and distributing low-budget sequels. Then there's Genius Products, which since December 2005 has cut about 16 distribution deals. Among its key content suppliers are Classic Media, Discovery Kids, ESPN and Sesame Workshop. In little more than a year, the company -- now 70% owned by the Weinstein Co. -- has seen its market share climb past 1%, putting it next in line behind Lionsgate and the six majors.

Vivendi Visual Entertainment, an outgrowth of Universal Music Group Distribution, also is bulking up through distribution deals. In the last two years, the company has become a confederation of 15 labels such as Bodywisdom Media, Codeblack Entertainment, First Independent Pictures, Palm Pictures, Shout! Factory and Xenon Pictures.

Most indies see growth in niche markets, underserved by the studios and potentially more lucrative than ever once the digital pipeline bursts open. VVE, for example, has a particularly strong presence in the urban and comedy markets. Starz Home Entertainment continues to exploit the niche fitness, anime and horror markets, while Magnolia Home Entertainment recently enjoyed huge mainstream success with its Oscar-nominated documentaries "Enron: The Smartest Guys in the Room" (2005) and "Jesus Camp" (2006).

Image Entertainment already has taken a big step into the looming digital marketplace through its subsidiary, Egami Media, which is aggressively seeking partnerships with retailers who digitally rent or sell programming. "We are actively working to exploit our entire digital video catalog of more than 1,500 programs," says John Powers, vp of marketing, feature films, for Image, which has a wealth of comedy, music concerts, horror and urban programming and exclusively distributes for the Criterion Collection. The company recently inked distribution partnerships with the Discovery Channel and Sci Fi Channel networks.

Where possible, Image is seeking to leverage the digital business against packaged goods, Powers says. "Retailers like Amazon, who support both, are making that effort easier," he says.

Image isn't the only one creating a synergistic relationship between the retail and digital worlds. Starz is using movie-download sites, particularly its video-on-demand service Vongo, to capture customers online, give them a great online experience with Starz titles and then direct them to retail for titles not available on digital, according to president Bill Clark. Incentives found at retail outlets will drive consumers back online, he says.

BBC's content, which can be downloaded on such sites as Amazon.com's Unbox service, Akimbo and Movielink, is more upscale niche product that includes documentaries, comedies and dramas. The company's sci-fi and comedy has been doing particularly well in video-on-demand and online streaming, says Beth Clearfield, vp of program management and digital media, BBC Worldwide Americas.

The company also has seen recent success in the high-definition arena with its "Planet Earth" series, which has been a consistently top-selling high-definition title on Nielsen VideoScan's charts for at least the past month. "We're not trying to please 100 million people. We're trying to please someone looking for something different," says Burton Cromer, vp of consumer products for BBC Worldwide Americas.



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