The decline of the DVD Cheryl Binning
Industry Centre > Blogs > Articles > The decline of the DVD | Cheryl Binning
Posted by Cheryl Binning
on Tuesday, April 14, 2009.
Categories: Articles
Cheryl Binning looks at the decline of the beloved DVD. Despite
reports that sales are crushing digital distribution, DVD sales are
still sliding.
Do you still go to the video store, wishing you’d arrived an hour earlier because all the good movies are already gone?
Or do you find yourself watching On Demand movies on cable or ordering from Zip.ca or iTunes?
Perhaps you're one of those 'bad' people who guiltily watch movies downloaded from BitTorrent?
Maybe you’ve even realized just how easy it is to get around the geo-blocking to stream movies from U.S. services like Hulu?
It’s clear there’s a big change happening in the way North Americans watch movies at home, and that the DVD is the loser. As are the companies that built their business model around them.
Case in point: U.S.-based Blockbuster (which reported a net loss of over $370 million for 2008) recently stated in a U.S. Securities and Exchange Committee filing that it may close all of its 7,400 retail locations globally.
No doubt, the company is facing increasing competition from services that do not have storefronts (and the resulting larger overhead costs), such as Netflix and Zip.ca, which mail rental DVDs right to your home, or stream them over the Internet to your computer.
People are also changing their habits when it comes to buying DVDs.
According to Nielsen, sales of new DVD titles fell more than 20% in the last quarter of 2008 and figures compiled by Digital Entertainment Group show that shipments to retailers in the U.S and Canada fell 32% in the same period - the biggest decline recorded since the birth of the format.
This isn’t just bad news for DVD retailers but also for Hollywood studios as DVD sales typically represent more than half the total profits generated on a film.
Some in the home video industry blame the economy for the drop in DVD purchases. Others suggest that people are holding back on buying movies until there is a clear shift to the newer Blu-ray format and the players become less expensive.
For example, an American report titled The State of Home Video by SNL Kagan anticipates that by sales of Blu-ray discs will reach US$3.53 billion by 2011.
But with so many movies available for download through various online services, perhaps consumers will no longer feel the need to collect as many movies – whether DVD or Blu-ray?
After all, it hasn’t taken people long to toss away their CD collection in favour of their MP3 player, so it’s not a far leap to suggest that they view their video shelf the same way.
I can’t remember the last time I bought a CD. Why bother going to a music store when iTunes is a click away?
So perhaps the majority of people will choose to rent movies online rather than have a pile of discs they haven’t watched in years collect dust in a corner of their living room?
The freeloading BitTorrent users prove that people love the ability to download movies. Luckily, BitTorrent is complicated enough that many people can’t be bothered to steal movies that way.
But it if were easy enough, there’s no doubt more people would be doing it. And in the coming years, technology may make stealing movies online easier.
So the logical next step seems to be launching services that make movie downloading easy and that charge a small fee shared by the service and the distributor and/or filmmaker.
As the music industry learned the hard way, you can’t fight the technology; you have to find a way to monetize it at a price consumers are willing to pay.
AppleTV is one device that’s following that model. It allows viewers to download movies, and watch them on HDTVs, for around $5 a movie.
The big problem right now is that the AppleTV receivers start at $249 in Canada which might explain why more people don’t have them. And they're still rather new so the technology may not be common knowledge with the average consumer.
But as these devices drop in price over the next few years, they'll pop up in more and more households. And why would someone with an AppleTV bother to buy a Blu-ray disc of a movie, except perhaps in the case of a few of their all-time favorites?
You don’t need a crystal ball to see that for distributors, studios and independent producers alike, future profits will be downloaded.
Blockbuster clearly sees that the only way to grow their business is online. The company is in the midst of transitioning into the fast-growing internet video on demand (VOD) business, and has made a deal to transmit movies and TV shows to TiVo digital video recorders.
Kevin Lewis, Blockbuster's senior vice president for digital, told USA Today recently that the company also plans to offer Blockbuster ONDEMAND to internet-connected Blu-ray players, TVs, mobile phones and portable entertainment products. The story also pointed out Blockbuster shares have fallen about 80% over the last 12 months, as consumer interest in DVDs has flagged.
Canadian retailer Rogers Plus insists that the sale of DVD and Blu-ray movies is healthy in our country, although they also admit that the online rental component is becoming more important.
“It's not a secret that streaming options for movies will continue to grow,” says Harold Simons, Manager, Communications for Rogers Plus.
But for now Rogers Plus is keeping all its movie rental options open.
“The home entertainment industry is worth about $2 billion in Canada and Rogers is committed to providing customers choice on how they want to access this content,” says Simons. “Whether through movie rentals from a bricks and mortar store, on demand services through Rogers Cable or through the Internet, our goal is to provide Canadian consumers with choice.”
In March Rogers announced plans to create its own Hulu-like service that will allow Rogers cable subscribers to watch popular TV programs at no extra charge. So an online movie rental service from Rogers or another company in Canada can’t be far behind.
What does all this mean for Canadian filmmakers?
At the end of the day it could be very good news.
Right now when people hear about your movie on eTalk or ET Canada, or read a review in a newspaper or blog, they have to find that one theatre in their city where it’s in limited release, or remind themselves to find the film later in the video store, where it may be hard to locate amidst the Hollywood studio releases and their glitzy marketing displays.
But if your film is available for rental on a low-cost, easy-to-download Canadian service, when someone hears about your film via an email blast or online review, they can tag it right away for download from their desktop computer or mobile phone – before they get distracted by something else and forget about it.
The service - or the movie watcher themselves - might post a link on their Facebook wall to let others know they are renting this movie. This free word-of-mouth advertising among friends who likely share the same sensibility is great publicity for a film. And will likely lead to more downloads.
The downloading service could even do suggestion selling as they do on Amazon where the “people who liked this, also bought that” tool has helped obscure books find big audiences.
So everybody wins. Provided filmmakers don’t give away their streaming and download rights for free!
Photo credits: (1) Mr Tea on Flickr under Creative Commons License
Related links
- Movie Marketing Madness has a regular feature on its website providing the latest news about movie distribution across all platforms. Definitely worth bookmarking.
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Views expressed here are the views of the author and do not necessarily reflect the views of the National Screen Institute - Canada (NSI).
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The views expressed here are the views of the author and do not necessarily reflect the views of the National Screen Institute - Canada (NSI).