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Warren Lieberfarb: The History of DVD and Cable Networks Highlights the Tremendous Value of Classic Films

The ‘architect of the DVD’ provides a unique insight into the evolution of digital media

Warren Lieberfarb is universally recognised as the “architect of the DVD” and in 1999 received a special Emmy Award from the Academy of Television Arts and Sciences in recognition of his unique role.

From 1982 to 2002, he served as head of Warner Home Video and over this period, generated 22% compound annual growth, boosting revenues from $73 million in 1982 to $4.0 billion in 2002.

During his tenure at WHV he drove acquisition of key libraries including those of Saul Zaentz and Chaplin. He also curated the multi-studio collections of Oliver Stone and Stanley Kubrick, and executed the pre-production acquisition of Louis Malle’s Cesar-winning classic “Au Revoir les enfants”, which became the first successful direct-to-sale home video release in France.

Alongside these activities, he drove the industry partnership for online movie distribution that in 2002 became Movielink, the first company in the world to offer legally downloadable films from major studios.

Since 2003, he has served as chairman and CEO of Warren N. Lieberfarb & Associates LLC, a consulting and investment firm specializing in entertainment, media, technology and content distribution.

WNLA has advised Microsoft to formulate strategies for video content distribution via the Windows Media Platform, and Toshiba on industry adoption of HD-DVD.

Clients also include Comcast, Samsung, Walt Disney Co., Disney, Cisco, Intel, Best Buy, the Jerry Perenchio Organization, Samsung, National Geographic Ventures, The Weinstein Co., Deluxe Media Services, Sonic Solutions, Thomson-Technicolor, Discovery Communications, Digital Theater Systems, Inc., EMI, Fulcrum Global Partners and Columbia House (Blackstone.)

On Wednesday, Lieberfarb will present a master class at the Lumiere Festival to discuss these issues, and has agreed to be interviewed by Variety, offering a sneak preview of the themes he will address.

With the benefit of hindsight, how important was the “DVD revolution” for cinema, especially for classic films?

DVD ushered in a hugely important marketplace change, both financially and artistically, for filmmakers and film lovers: Consumers began to “buy movies” rather than “rent videos.” Digitization of their assets offered studio and content provider libraries huge opportunity to monetize and upgrade their holdings while hopefully broadening audience interests in classic movies. Sales of classic films exploded for a short time. That both opened up financing for all production, and in remainding studios there was a market for films of enduring quality, encouraged them to back more than just surefire formula films.

But rather than a “revolution,” DVD was a way-station in the ongoing evolution of entertainment delivery that in the final analysis didn’t serve the interests of classic film to the extent it could have.

Mass acceptance of classics on DVD was underpowered at brick-and-mortar retail due to low or no merchandising support. Another contributing factor is the lack of cinema literacy education at the elementary and high school level that could nurture a tradition in film-oriented collectors to champion the category at retail. That left Amazon to step in and become the top retailer for classic movies – similar to the way it started with books!

If you look at the 100 top-selling DVDs and Blu-rays over the past 10 years, only 6.9-million units sold or 2.3% reflect product that’s not new-theatrical-release. In 2013, only 22.4% (28-million out of 123-million units) of Blu-rays sold were of movies more than a year old. The competition for audiences’ attention is fiercer than ever.

Every “revolution” involves “evolution,” and DVD is an evolutionary step on an ongoing timeline.

When the first DVDs were launched, you predicted a great future for them. Now that demand for DVDs has significantly eroded, how do you view this development, especially from the perspective of classic films?

Any technology is interim, so the digitization of film content introduced with DVD’s March 1997 debut was an inevitable precursor of more viewing versatility to follow. Advances in compression, faster bandwidth, higher capacity and lower-cost storage both locally and in the cloud: All would point to a limited life for any physical format.

Regrettably, the shortened life expectancy of both DVD and Blu-ray purchase and collecting model was driven by the advent of low-cost disc rentals via vending machines and subscription discs by mail. Add to that a corresponding failure by studios to lower prices and engage in both broader distribution and more targeted marketing.

Physical media erosion is a natural consequence of online media’s growth, but this erosion could have been postponed had there been a greater recognition of price elasticity, development of specialized retail distribution and targeted marketing essential to compete and drive consumer purchase in a Netflix/Redbox world.

Clearly, any reduction in film revenue is bad news and reductions have been across the board since 2004. It has impacted not just the companies with extensive libraries of classic, but through their resultant caution about funding new productions, those filmmakers looking to make quality films that may take time to find their audience.

Is the DVD medium still the main basis for consumption of classic films?

Disc sales are still the largest source of revenue for films and TV shows of all types, by several magnitudes. For example, in the U.S., physical retail spending was $7.5bn last year, physical rentals were $4.3bn, while electronic rentals (both on pay TV and the Internet) were $2bn and electronic purchases generated $1.3bn. But very little spending on physical and electronic rentals, and at least so far on electronic purchases, goes to classic films. People want to own their favorite classics and so far that has meant disc collecting.

It’s likely that television and streaming of classic films will supplant disc media. We might anticipate that in the wake of viewing options offered through such venues as Smart TVs, Roku Boxes, iTunes, Apple TV, Turner Classic Movies on Demand and Warner Archive Instant, more speciality streaming services targeting classic film lovers will be launched.

Can video on demand replicate the advantages offered by DVD, and can VOD offer additional benefits, especially in terms of reaching a broader worldwide audience?

Electronic delivery is the clearly the industry’s hope for getting revenue back on a growth track, for two reasons: Interest in disc ownership is narrowing to children’s movies and special-effects blockbusters, and the Internet offers essentially unlimited distribution reach and “shelf-space.” But electronic rentals (VOD) miss the collectability factor of classic films. Electronic sell-through (EST), on the other hand, offers that, and the advantage of greater portability than discs.

With the advances in set-top boxes, growth of multiple-language capabilities (such as MyLingo), improved compression and increased bandwidth, filmmaker commentaries, documentaries and all the video extras and interactivity that came out of the DVD’s own evolution can become more conveniently accessible for classic film content, particularly with the removal of gatekeepers. Home theaters can become world theatres for classic film content, just as the world comes to Lyon each year for this wonderful Lumière Festival.

Can you anticipate any of the themes you’ll be addressing in your master class?

Among the topics I’ll address are: 1) The migration from physical to digital media, and EST’s prospects for mass market acceptance; 2) the conflicts that required resolution to bring DVD into existence and the consumer and industry benefits that were derived in so doing; and 3) the introduction and integration of content protection, both technologically and through worldwide legislation.

Do you have any tips for distributors of classic film titles in terms of DVD, VOD and other delivery media?

It’s not time to abandon discs – revenue from physical sales are particularly crucial to distributors of classic films. But the likeliest growth will come from electronic delivery.

There’s a battle being joined by traditional pay TV operators and Internet services, and content owners stand to profit by being the arms dealers to both sides. Both sides will need distributors to convince them that classics merit their attention and support: The history of DVD and the success of cable networks built on the classics are the two key historical proofs of that.

Caretakers of classic movies should seize any opportunity to create specialized over-the-top channels and Internet services catering to growing audiences for timeless content, curated for compelling impact with gatekeepers removed and immediate access.

Indeed, the Lumière Festival and its Classic Film Market can evolve into a global brand synonymous with curated classic films and related material to be made available over-the-top in every country. The artistic and technological components are present here. Viva classic cinema!

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