From the dawn of DVDs to today’s streaming battles, this industry leader has been helping companies manage the revolution in home entertainment.
The home entertainment industry has seen a lot of changes in the last quarter century. It was in 1997 when the first digital video discs (DVDs) and players were offered for sale in a handful of US cities (with a marketing campaign built around newspaper ads and big box store circulars), quickly supplanting VHS tapes as the medium of choice for consumers. The technology would withstand challenges from other physical media like Blu-ray discs but would eventually be dethroned by the multiple streaming services that now dominate the market.
Through it all, Amy Jo Smith C’88 has been helping industry players navigate each twist and turn. As the longtime president and CEO of the trade association Digital Entertainment Group (DEG), Smith is helping content creators, delivery services, and collaborating hardware makers chart a course of mutual survival and success. With research and seminars, DEG supports member companies throughout the supply chain, helping them to grasp what’s working and what’s needed to make their operations more efficient and ultimately profitable on a global scale. DEG also provides weekly viewing stats and produces events like the virtual EnTech Fest (introducing innovative products and services to members) and the Hedy Lamarr Innovation Award. Given annually to a female entertainment tech achiever, the award namechecks the Hollywood star and inventor of the 1940s who conceived the “signal hopping” methodology that enables today’s mobile phone services.
“It’s a transformative time in the entertainment industry both for how content is made available and how consumers view content,” Smith says.
“At DEG we help them to understand what people like and don’t like, [as well as] what they want to watch in single sessions or binge in a marathon; what they want to pay for as a standalone service; what channels they want to bundle; and what content they prefer to see at the theater.”
“Amy is a good campaigner, a great politician, the Madeleine Albright of digital entertainment,” says Warren Lieberfarb W’65, the longtime and now retired CEO of Warner Home Video. Widely credited as the “father of the DVD,” Lieberfarb led the formation of what became the DEG in the days when he was proselytizing about the new technology to an often-skeptical industry. “Amy knows how to bring companies into the fold, resolve differences between factions, get a consensus,” adds Lieberfarb, who now chairs his own consulting and investment firm. “She has that smart, positive, ‘glass-is-half-full’ mentality that people find infectious, trust, and respect.”
A communications major at Penn, Smith also took Wharton courses (“statistics proved especially helpful”), while her Annenberg classes “taught me how to think on a large scale about the power of message and the power of persuasion.” After graduation, she worked on political campaigns in California, which led to a position in the White House communications department during President Bill Clinton’s first term.
Returning to the West Coast, she was hired by Lieberfarb to help launch a new consumer hardware and software medium, DVD. Forward-thinkers at Warners had embraced DVD as a higher quality “sell through” media, but other studios and their retail partners viewed the technology with suspicion or disdain. The naysayers (most notably at Disney) feared DVD would upset their business model built around higher priced, rental-focused VHS-tape cassette packaged media.
Developing this new consortium of DVD supporters “was a lot like running a political campaign,” Smith recalls, trying to get buy-in from multiple constituencies. The goal was to convince content owners to adopt the format, while bringing in consumer electronics makers that were more familiar with the process of introducing a new platform, and “getting retailers like Best Buy and Walmart excited.”
Starting with just 34 Warner Brothers and MGM titles in seven US test markets in March 1997, “we put circulars in Sunday papers touting the first releases,” she says. “I also took trips to Canada and Europe, explaining the benefits of DVD to the media as a higher quality, random access, pure digital ‘CD with pictures.’” The assumption was that they had a two-year window to “make DVD a success or give up on it.”
Within those first two years, DVD became “the fastest-growing new product in consumer electronics history, with two million players sold,” Smith says. And for much of the 2000s, DVD was the tail wagging the Hollywood dog, “responsible for 60 to 70 percent of the profits of the movie divisions at studios,” adds Lieberfarb, with annual sales “in the $18 billion range.” And as time passed and the industry changed, DEG found ways to stay relevant, evolving into a forum where studios and their distribution partners “would denote and develop new opportunities in digital media, find fresh ways to monetize their content,” he says.
New, higher resolution media—like DVD-Audio discs (pitted against Super Audio CDs) and Blu-ray video discs (initially duking it out with the HD-DVD format)—saw limited success as they were introduced into a more crowded, competitive market. And now that digital video and audio media are widely available online in high resolution and even ultra-high-res forms, the streaming revolution has pretty much put the kibosh on all “hard” packaged goods, while dominating cable and satellite TV as well.
Still, DEG has value for its members, Smith says. “We’re looking to uncover even more efficient delivery of content to improve the consumer experience, looking to better ways of reaching and maintaining the audience. Digital purchases of “cloud” stored titles “are doing better than many expected” in this new age of non-fungible tokens (NFTs) and crypto currencies. “Security remains a huge issue, making sure we’re protecting the content,” she adds. “And we’re looking at product localization on a global scale. There’s so much more going on today beyond ‘subs and dubs’ [subscriptions and foreign language dubs] when you’re delivering across borders.”
Market trackers estimate that a staggering $140 billion will be invested in fresh content production this year by the top-ranked streaming services. Netflix, Amazon Prime Video, Disney+, HBO Max, et al., have been doing quite well at attracting COVID-constricted customers with their big-budget flicks and buzzworthy series. But retaining subscribers’ loyalty (and revenue) is quite another matter—and a huge source of stress for industry players. Every year, it’s estimated that 30 percent of all streaming-content subscribers glibly drop and add video services—about 150 million people globally. In the US, the annual “churn” rate is even higher, at 38 percent.
Will every studio and streaming service’s multibillion investment in internet-delivered content pay off? “DEG is focused on finding ways for everyone to navigate the terrain, grow the category, make the experience better for the companies to achieve their goals,” Smith says. “A lot of companies are making significant investments to build up libraries with attractive content to grow and sustain a following. It’s a very aggressive model. Some will fall by the wayside. That’s a reality.”
But she thinks that most of them will make it. “We’re witnessing a sea change in behavior. People like watching stuff at home on their own schedule. They’re now accustomed to getting great, interesting content debuted in the home,” she says. “We’re not going back to pre-pandemic activities at the same level. I think this is a business that’s going to last.”
—Jonathan Takiff C’68