SPHE president says industry is strong

Delivers keynote at digital entertainment conference

David Bishop, worldwide president of Sony Pictures Home Entertainment, delivered a passionate defense of the home entertainment industry on Friday at the Screen Digest PEVE Digital Entertainment 2009 conference in Paris.

"We all know that these are extraordinary times," the executive said in his keynote address. "But even so, our industry remains strong and continues to be a critical revenue stream for our parent companies."

Bishop's remarks came in response to skepticism among analysts and some in the mainstream consumer press about packaged media's long-term viability, given recent advances in download technology.

Bishop noted that home entertainment is still a $50 billion-a-year business, measured in worldwide consumer spending, and claims Blu-ray Disc is indeed fulfilling its promise as the rightful successor to DVD.

While DVD sales slipped 2.4% in unit sales, to 2.26 from 2.31 billion, Blu-ray Disc unit sales rose 316% to 37.4 million from just 9 million in 2007.

"However, despite these positive trends, our industry has been recently criticized by some, and this is creating a perception about our business that differs from reality," Bishop said.

He pointed to a recent Business Week article that maintained consumers are "bypassing DVDs because they have a range of other options, from watching movies and TV shows online to playing video games."

"In reality, the fundamentals of our business are still viable, with the data presented indicating that consumers are still buying packaged media in significant numbers," Bishop said.

He noted that boxoffice revenue has steadily risen over the years--so far this year, the U.S. theatrical tally is up 12% from this same time last year, according to tracking service Box Office Mojo--and he expects home entertainment to benefit from this increase down the road, particularly as more and more households switch to HDTVs.

Bishop cited Screen Digest data that shows HDTV penetration in the United States is approaching 50%, as well as predictions that by the end of this year there will be 78.6 million HDTV-ready households in Western Europe alone.

"As demand for high-definition television continues to grow," Bishop said, " it's driving consumer demand for more HD media--which underscores why our industry is transitioning so quickly from DVD to Blu-ray."

According to a global study conducted last fall by Smith-Geiger on behalf of DEG: The Digital Entertainment Group, more than half of U.S. HDTVowners surveyed watch at least 50% of their shows in high-definition, Bishop said. Nearly 30% of HDTV owners already own a Blu-ray Disc player, and nearly 70% strongly believe that Blu-ray delivers better overall picture and sound than standard DVD.

Bishop also talked up special interactive features unique to Blu-ray, most notably BD Live, which he said will allow studios to develop relationships with consumers in a more intimate way than ever before.

Blu-ray also supports Digital Copy, which he said "elevates the value of physical media by building a bridge to digital world. It represents a quick, convenient way to reach consumers who insist on enjoying their favorite entertainment anytime, on any device, anywhere they go.

"Blu-ray Disc has been specifically designed to serve as an evolving medium," he said.

Studios also are looking at digital delivery as a complement, rather than as a replacement, to packaged media. Options range from streaming video over the Internet directly into television sets and allowing consumers to transfer movies from their computers onto their cell phones.

"In reality," Bishop concluded, "the prospects for home entertainment come down to a single proposition: Our ability to continue to engage end users by providing them the most compelling entertainment experience possible, while offering our retail partners innovative and strategic new business models that will ensure the success of our industry going forward."