"Inside EMA"

EMA will again host its Independent Product Market this year, on July 14 and 15 at the Newport Beach Hyatt Regency Resort in Newport Beach, California.

EMA's Independent Product Market provides an opportunity for top indie suppliers of home entertainment to meet with their key customers over a two day period, saving significantly on nationwide travel. The pre-scheduled meeting format guarantees meetings between all participating attendees.

Due to its popularity and productivity last year, this years event will be expanded to accommodate as many as fifteen suppliers and fifteen retailers and distribution companies. In addition, this year EMA will launch a three-day business event for key retail buyers and the major studios and other suppliers of entertainment content for DVD and digital distribution.

This event, the Entertainment 2010 Summit, or E-10, will take place on June 8-10 at the Fairmont Miramar Hotel & Bungalows in Santa Monica, CA.

E-10 provides a concentrated opportunity for multiple studios and retailers to meet in a comfortable, time-efficient and cost-saving setting. This gathering will help to reinforce the strength, purpose, and common goals of all those involved in home entertainment. Sponsorship opportunities are available for both events. For further information, please contact Carrie Dieterich at 818.385.1500 x227 or by email at cdieterich@entmerch.org.

EMA's Advocacy Adapts to Changing Times

The home entertainment industry found itself facing new regulatory and legislative issues in 2009, and EMA's advocacy program adapted its focus to address those issues while continuing its traditional support and protection of the sale and rental of videos and video games.

For the first time, the industry found its products potentially subjected to significant health and safety testing, following the enactment of the federal Consumer Product Safety Improvement Act (CPSIA) in 2008. This federal law limits the lead content in "children's products," lead paint, coatings, or ink in "toys and other articles intended for use by children," and phthalates in "children's toys." It requires testing of covered products to ensure compliance with the limits, and it prohibits the sale, importation, or distribution in commerce in the U.S. of covered items not in compliance with the limits.

According to guidance issued by the staff of the Consumer Products Safety Commission, some DVDs, Blu-ray Discs, and video games may fall under these restrictions.

EMA established itself as a clearinghouse on the requirements of the CPSIA as they potentially apply to home video and video game products, creating product-specific FAQs on the law and hosting a webinar on the requirements for members. The Association also filed formal comments with the Consumer Products Safety Commission, arguing that some of the law's provisions do not apply to DVDs, Blu-ray Discs, and video games.

As "buy/sell/trade" of DVDs and video games has become an increasingly important market segment, EMA has increased its advocacy to ensure a proper balance between allowing this segment to thrive and providing law enforcement the tools that it needs to deny thieves the opportunity to sell stolen goods. For example, last year a Massachusetts bill would have required secondhand DVD and video game retailers to produce and retain photographs of individuals from whom the retailer purchases secondhand goods. EMA worked to have the bill rewritten to eliminate this burdensome requirement.

While expanding its advocacy focus to new areas, EMA continued its historical support and protection of the First Amendment and "first sale" rights of video and video game retailers.

In 2009, EMA once again found itself having to fend off government attempts to restrict the content of videos and video games that retailers can sell and rent. The Association won a major victory when a federal appeals court ruled in favor of EMA in its challenge to a California law that attempted to restrict sales and rentals of video games to minors based on animated depictions of violence in the games. (The state of California subsequently asked the U.S. Supreme Court to review the ruling, and that request is pending.) EMA also successfully fought proposals in Louisiana and Utah to penalize retailers under "deceptive trade practices" laws when there is a lapse in a retailer's voluntary enforcement of the motion picture and video game ratings.

The "first sale" provision of U.S. copyright law provides the legal basis for video and video game retailing, and retention of the first sale provided an initial organizing impetus for video retailers. EMA continued its zealous advocacy on behalf of the first sale provision in 2009 by filing legal briefs arguing against attempts to narrow the first sale provision's guarantee of the right to resell and rent video games.

Bo Andersen, EMA President & CEO, noted, "EMA and its predecessor organizations have a practically unblemished 28-year history of success of protecting the industry from inappropriate government regulation. As issues change, EMA realigns its priorities, but we will always retain our core commitment to supporting and protecting the sale and rental of home entertainment products."

Game Retailers and Publishers Discuss Growth Opportunities

EMA's Game Retailing Council, chaired by Troy Peterson of Target Stores, met with representatives of Activision, Lucas Arts, Microsoft, Nintendo, THQ, and Warner Interactive in Scottsdale on March 15 to discuss a variety of industry issues.

Council members participating included Adam Goetsch of Amazon, Rod Murray of Blockbuster, Mike Gimlett of Gamefly, Bob McKenzie of Gamestop, David Thompson of Hastings, Mike Davis of Ingram Entertainment, Rob MacNaughton of Movie Gallery, Bill Lee of Toys R Us and Susan Chronister of Walmart.

The Council gained overall agreement by publishers to provide quarterly forecasts for year-over-year growth to be aggregated by EMA and published to EMA retail members to support their internal projections and forecasts.

There was general continued interest in exploring opportunities for more consumer-friendly retail merchandising (that is, getting games out from locked glass cases) including benefit denial technologies. EMA was encouraged to continue to explore opportunities and to review these options from the perspectives of consumer-impact, economics and technology. (See Project Lazarus article below.)

As more and more video games are being released with "street dates", compliance management has become problematic. EMA was asked to develop a program to log substantiated street date violations and to communicate a list of habitual violators to publishers and distributors.

Reducing in-store out-of-stocks represents an enormous opportunity to grow sales. Activision's Steve Brown reviewed a proposal from EMA's Video Game Publishers Operations Committee for its "Last 100 Feet" project to identify opportunities for industry-wide supply chain improvements and study related consumer behavior .

Other topics discussed included opportunities for retailers to promote and profit from the growth of digital game distribution and EMA's GamePlan Summit scheduled for September 2010 (see Page 4).

EMA's Game Retailing Council meets quarterly.

EMA's Digital Council Updates Objectives

The Digital Council of EMA met in Las Vegas on January 8 to review its progress and update its objectives.

Following the announcement of the beta release of its Metadata Structure (see below) and a presentation by Rentrak's Chris Roberts of Digital Downloading Trends and Insights, and open discussion among participants, the following key objectives were identified:

Encouraging adoption of the EMA Metadata Structure.
Developing or supporting a standard for the reporting of transactional data.
Developing or supporting a centralized database for metadata related to audio-visual content.
Publishing and maintaining a centralized web-based repository of research and data related to digital audio-visual distribution.
Encouraging adoption of a universal item indexing system.
Maintaining, updating, and marketing the availability of EMA's Glossary of Terminology for the Digital AV industry.

Task oriented work groups are being established now. The Council will meet next in the summer of 2010 in Los Angeles.

Project Lazarus (Benefit Denial) Update

EMA continues to monitor and explore opportunities for more consumer friendly merchandising of entertainment media and for reducing inventory shrinkage.

Prototypes have recently been presented by both the Aequtas and ProTeqt solution providers, demonstrating proof-of-concept.

Additional solutions are being examined as well, including serialization, disc-based authorization, and alternative packaging. EMA's Loss Prevention Committee members will view presentations by providers of each of six concepts in April, and will review them against EMA's Threshold Requirements document. The results of this evaluation will be available to EMA members and will be the stimulus for a broader, cross-discipline, cross-supply chain discussion to determine the appropriate next steps.

The costs of each of these alternatives clearly need to be better understood, and weighed against the potential benefits (as identified in EMA's Benefits Analysis, conducted by CapGemini).

Speed-to-market is also a significant consideration at this point in the lifecycle of DVDs and other optical media.

With media sales trending downward, and with retail inventory shrink running around 2% of sales, deploying benefit denial technology should jolt new life into packaged media—adding both new merchandising opportunities and potentially new channels of retail distribution. At the same time, inventory shrink (including employee theft) could be nearly eliminated.

For more information about Project Lazarus, please contact Mark Fisher at mfisher@entmerch.org

June is Entertainment Ratings & Labeling Awareness Month

Entertainment Ratings & Labeling Awareness Month serves as an annual reminder for EMA's retail members to review your ratings and labeling education and enforcement policies, reemphasize those policies to your employees, and educate your customers about the movie and video game ratings and music labeling systems and store policies.

Entertainment Ratings & Labeling Awareness Month aims to increase awareness and use of the music labeling and motion picture and video game rating systems by our parent partners. Any retailers needing movie or video game ratings materials please contact Grace Lee at glee@entmerch.org or 818-385-1500, ext. 244.

EMA Releases Metatada Standard for Digital AV Content

The Digital Council of the EMA recently released the beta version of its metadata schema for digital audio-visual content distribution.

Up until now, content providers have been providing, and retailers have been requesting, title and version information about digital video content in a variety of different ways and formats. EMA's Digital Council saw a need to promote uniformity in how this information is communicated in order to improve supply chain efficiencies, enhance the accuracy of the information, and grow sales and profits in the sector.

The EMA Standardized Metadata Schema uses a common structure as well as common rules and definitions to support the business-to-business communication of metadata related to audio-visual content delivered via the Internet and downloaded from kiosks. The schema has rules and definitions for file formats and encoding specifications, as well as running times, credits, ratings, and scores of other data points. It has been designed to be compatible with other industry standards for descriptive and archival data.

This EMA Schema and its documentation are available at www.entmerch.org/metadata. No license is needed to use the schema. The schema continues to be a work in progress, and EMA's Digital Council will refine and revise it as needed.

Video Game Supply Chain Awards Presented at GameSupply

GameStop, Technicolor, and Walmart were recently recognized with awards for excellence in the video game supply chain.

EMA's Video Game Supply Chain Awards recognize content providers, distributors, manufacturers, and retailers that have significantly contributed to improve and increase the development of the supply chain process. Award winners were selected by members of EMA's Video Game Retailing Council and the Retailer/Distributor and Publisher Operations Committees.

We congratulate the following recipients.

Supply Chain Efficiency (Tie) - Recognizes outstanding supply chain practices resulting in reducing costs, providing excellent customer service, and overall support:

GameStop: According to the selection committee, "GameStop has proven to be advanced in terms of understanding new release models and ordering to hit target dates for ad support and brings flexibility and creative approaches to supply chain challenges."
Technicolor: "Technicolor's new automation, TMS transportation services, outstanding customers service and support, and shortened lead times were cited by the selection committee as models of supply chain efficiency."

Green Supply Chain Leadership - Recognizes a company that has made a significant contribution in developing and implementing "green" environmentally conscious practices within the supply chain process:

Walmart: The selection committee found "Walmart sets the bar for environmental responsibility in the video game industry, while recognizing financial constraints impacting the supply chain, and in doing so has developed and communicated clearly stated and achievable goals and actively encouraged buy-in from its suppliers."

Video Game Tracking and Forecasting Charts Available Now

EMA recently began posting OTX's GamePlan Tracking Charts available on its website at http://www.entmerch.org/video_game_tracking_charts.html.

These charts are a result of surveys of 1,000 U.S. gamers and game buyers each week including hardcore gamers, casual gamers and everyone in between. The tracking study tracks up to 600 game SKUs at any given time, including all major console, handheld, PC, and iPhone titles.

The first chart ("Upcoming Titles") projects an index of purchase intent for not-yet-released games based on a variety of factors including the number of times a title is added to GameFly's rental queue. This could be a valuable tool for projecting initial orders of a game title.

The second chart ("Released Titles") projects an index of purchase intent for existing titles, perhaps assisting in ensuring in-store stock levels are sufficient to meet demand.

OTX is a global consumer research and consulting firm and a leading provider of online-based research. More information on OTX is available at www.otxreseach.com.

These charts complement the "Top Ten" charts provided by Rentrak weekly, also available on EMA's website. The Rentrak charts have been recently revised to include the prior week's top ten games sold, top ten games rented, and top ten advertised games. Rentrak's Retail Essentials is the reliable resource of retail movie and video game sales and rental data. More information on Rentrak's Retail Essentials is available at http://retail.rentrak.com/marketing.index.html.

EMA's GamePlan Summit Premiers in September 2010 - Key Retailers and Publishers Committed

EMA will host its premiere industry-only event for leading video game retailers and publishers in the fall of 2010. This conference, called GamePlan Summit, is designed to compress the months-long sales tour into two and one-half days of consolidated retailer-supplier meetings in one convenient location.

The GamePlan Summit will be held on September 21-23, 2010 at the Hyatt Regency Hotel in Chicago, IL.

While excellent events exist for video game consumers, developers, and the media, there is no event that brings together the leading video game retailers and publishers for strategically focused business-to-business meetings. GamePlan Summit will fill that void, bringing the major players under one roof so attendees can conduct business meetings efficiently and build meaningful partnerships for the future.

Josh Rowe, Senior Buyer/Video Games, Transworld Entertainment, stated, "The GamePlan Summit is the right event held at the right time. It will give us an opportunity to share our 2011 corporate goals and strategies with the publishers and vendors as well as to learn their plans for the future. Working together, we will assure a strong game industry for the future. EMA's GamePlan Summit will give us the opportunity to continue that important conversation."

Troy Peterson, Senior Buyer/Interactive Entertainment, Target Corporation and Chair of EMA's Game Retailing Council, declared, "Industry retailers are rallying around the need for a strategic planning session with our publisher partners, and we anticipate all of them will be at this fall event along with every major publisher. Key retail members of the EMA Game Retailing Council have clearly stated that they want this type of event, and the Council has worked closely with EMA staff to develop this event to meet the needs of its members."

EMA Welcomes New Members

Retail Member

Fairchance Pharmacy, Fairchance, PA

Associate Members

BDA, Woodinville, WA

Gaiam, New York, NY

MPI Media Group, Orland Park, IL

Anchor Bay Entertainment, Beverly Hills, CA

Distributor Member

Questar, Chicago, IL

International Member

World Deals, Andheri, Mumbai

Individual Membership

Randy Stigall, UPM Raflatac, Hebron, KY