Universal and Warner Bros. announced on Wednesday that they are entering a joint venture on sales, marketing and distribution of physical home media in North America.
The North American venture will include leadership from both Universal and Warner Bros. and be run by industry veteran Eddie Cunningham. It is expected to be operation in Q1 2021 and will be responsible for Blu-ray, DVD and 4K UHD distribution for up to 10 years. Separately, Universal will handle distribution for WB’s physical media in Germany, Austria, Switzerland and Japan starting in Q3 of 2020 while WB will do the same for Universal’s physical media in the U.K., Italy, Belgium, the Netherlands and Luxembourg.
Under the proposed structure, the studios will continue to operate their digital distribution businesses independently and retain content and consumer marketing for both physical and digital.
The announcement comes amid an ongoing transition in home entertainment from physical media to streaming. According to a report released Tuesday by Digital Entertainment Group, spending in the U.S. on home entertainment in 2019 reached a record $25.2 billion, up 8.4% year over year. However, while physical media sales still make up a good amount of that total at $3.29 billion, that is down 18% year over year while physical media’s total footprint, including rentals, only rises to about $5 billion. Conversely, streaming made up 63% of the home entertainment market.
“As the home entertainment landscape evolves, we are continuously working to deliver the best entertainment range and value to our fans,” read a statement from Sanders, President ofWorldwide Theatrical Distribution & Home Entertainment and EVP of International Business Operations for Warner Bros.
“The physical business is still an important and active category for the industry. This proposed joint venture with Universal gives us the best opportunity to foster innovation in this business, optimize the physical offering and extend the lifespan of the format for our fans and consumers.”
“With market conditions and consumer viewing behaviors continuing to evolve, we wanted a partner who shares in our commitment to deliver the best consumer proposition going forward,” said Peter Levinsohn, President and Chief Distribution Officer, Universal Filmed Entertainment Group. “This proposed JV presents a significant opportunity to continue to work with our retail partners to ensure the format’s strength and sustainability for years to come.”
On the appointment of Eddie Cunningham, Levinsohn said, “For more than two decades Eddie has been an expert in understanding the evolution of the physical home entertainment landscape. He’s been a dynamic leader in shepherding business innovation and operational effectiveness.”