4 Takeaways From TheGrill 2016: DVDs and VR Headsets Are Out but China Is Everywhere

My head always explodes after TheGrill — here’s what learned

TheGrill, TheWrap’s annual conference about convergence in entertainment and technology, wrapped Tuesday. And after two days of hearing from the smartest people in the entertainment industry and the most disruptive people in digital media, here are my most pressing takeaways:

1. DVDs are down again? What it means for movie windows

After being in double-digit freefall in the earlier part of the 21st century, the downslide is back. According to Sony CEO Michael Lynton, DVD sales are down in double digits in the past six months.

Once upon a time in the 1990s, DVDS and the home entertainment divisions of Hollywood studios floated the business on an ocean of cash. Streaming deeply cut into that revenue stream, but even so physical discs have remained a critical part of the financial model that underpins movies (mainly) but also television.

In his keynote with me, Lynton revealed that he is willing to reconsider the question of windows — meaning when movies become available to platforms other than theaters — as part of figuring out how to make up that shortfall. Watch this part of his keynote here.

 

2. The days of virtual reality headsets are numbered

Ted Schilowitz, the “futurist” at 20th Century Fox (who clearly has the coolest job in the entire industry), offered his vision of how virtual reality is set to become a mass form of entertainment in the coming years.

First, those headsets are gonna go. Schilowitz said that the clunky apparatuses that allow you to be immersed in a fictional reality in every direction will be like the VHS cassette tapes and decks of the past.

In just a few years, he said, public spaces will be embedded with digital sensors that will be able to project virtual images and experiences into view without having to put on goggles.

As a corollary, Nonny de la Pena, another cutting edge VR thinker and producer, argued that 80 million people have Playstations and will drive the first mass audience for VR. But I like Ted’s vision best – maybe we’ll get a demo of that next year!

VR Demo at TheGrill Media Conference
3. China, China, China – did we mention China?

China hung like a distant mother ship over many of the conversations at TheGrill, even those that were not formally about the global or Asian market. It’s clear that the rising market of 1 billion consumers could mean the difference between growth or stagnation for the U.S.-based entertainment industry.

But increasingly, China looms in the discussion as an owner as well. I asked Lynton whether Sony could be a target for Dalian Wanda, the Chinese behemoth that has already bought AMC Theaters, Legendary Entertainment and apparently is bidding on Dick Clark Productions. He said that the Sony parent company won’t sell the entertainment assets, but that’s clearly not the last word in that conversation.

Usually it depends on the size of the check. Similarly, WeChat has made its massive presence felt among the social players here – and has transformed movie ticketing in its partnership with WeYing Technology.

WILL PALMER CO-FOUNDER & CEO MOVIO, LUKE XIANG VICE PRESIDENT BEIJING WEYING TECHNOLOGY

Getty Images

We also haven’t started talking about how the American public, or government, will feel about China owning so many key pieces of our popular culture machine.

From our coverage:

“While online ticketing and the box office in China is increasing dramatically — (WeYing VP Luke) Xiang said that last year’s box office was close to $7 billion with 700 million tickets sold in the first half of 2016 already, up from $200 million in 2004 — Xiang added that they are “still looking for ways to pull more and more audiences to come to the cinema rather than waiting for DVD or online, while forming a habit.”

4. Streaming is doing better thanks to mobile — but YouTube is in the music industry’s crosshairs

Veteran music manager Irving Azoff made it very clear during his presentation at TheGrill that he is taking his fight over music royalties on YouTube to the mat. Streaming revenue is finally bringing the music industry back to a healthy place, after years of cost-cutting, layoffs and the closure of entire companies.

Paid subscription streaming services Spotify, Apple Music and Tidal are reaching enough mass adoption to start to replace revenue that had long been lost to models based on owning music, either albums, tapes, CDs or downloads.

Irving Azoff at TheGrill Media Conference

But Azoff has rallied the usually fractious music industry to keep the pressure on YouTube to pay artists higher royalties. Meaning the ad-supported part of the streaming music industry remains a problem. Azoff cited a fairly stunning statistic: While band One Direction had 6 billion streams in 2016, 18 percent of them on YouTube, only 2 percent of their streaming revenue came from the Google-owned platform.

That argument is going to get more contentious before it goes away.