Digital-media sales stalled in Q1

Dare

That isn't the right way to interpret it. 2003 was the crossover. If you took a snapshot just before 2003, the VHS number would be higher than DVD, and a snapshot just after 2003 would show DVD higher than VHS. But if you look at the trend, DVD's line ascended sharply starting in 1999, and VHS's line started to dip. By 2003, VHS's line looked like it had a lead weight attached to it, and DVD was a rocketship. You can't put the decision point at 2003. Things were already in motion well before then. It was all too obvious where the consumers were going. Of course stores would give priority to DVD at the late date of 2003. The consumers had decided that VHS was yesterday's news.

I don't know you, maybe you were trying to hold onto VHS a little longer while the consumers were going against you, and you were annoyed by that? You'll have to fill that in.
I do agree with that. I don't know where Nielsen's increases are coming from, when Blu-ray is getting so shafted in retail stores, but I suspect a lot of it is coming from Amazon. The brick-and-mortar retailers, at least the ones around here, don't seem to think Blu-ray is that spectacular to them. I can't speak for Salt Lake City, because I'm not there, and I can't drop into any of the stores there.

I might guess that most people who own Blu-ray are internet savvy, and know about Amazon. Considering that the prices are so high, every dollar you can save by ordering online is worthwhile. I don't think Blu-ray is going to make it with the Wal-mart crowd until prices come down to something reasonable.

I certainly haven't ever bought a Blu-ray at Wal-mart. They're too damn expensive.

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Dare

I think Lee made a good point a while back. If everybody on the planet had a Blu-ray player, but nobody was buying the discs, what good is it? If most people's players were capable of playing SACDs (and yours might be), would the format be any less dead?

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Lee Stewart

Is there some evidence that the economy IS improving? I haven't seen that. Unemployment is still rising, sales are down (Games had it's worst month [May] in years) and companies are still going out of business or making new holes in the belt for belt tightening. The stock market hasn't done anything. Gas is back to $2.70/gallon.

So what is improving?

bicker

That's a good point: I know that our company had a respectable Q1, but Q2 has been abominable, perhaps our worst in recent history. I think, perhaps, the misery index might have dipped a little, as some things that were really bad up-front have moderated, but I don't think things have, on average, gotten bet, yet.

Dare

There's good economic activity in picking the corpses of the recent collapse, but once the picking is done, it's back to the previous bad situation.

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ack_bak

Here is what I have been trying to say (and you seem to be agreeing with me):
- Plans were set in motion from CE's, to retailers, to studios well before 2003 to promote DVD and demote VHS. I remember noticing the shift specifically in 1999. I bought two DVD players the year they were released in the States. One for me, and one for my parents. Pickings for both hardware and software were very slim in most stores (I was stationed in Tennessee at the time in the Army, my parents lived in Central Florida). Hardware and software was very expensive compared to VHS.
- Things really started picking up in 1998/1999, but there were over 90 million households that had VHS players in the US by the end of 1999 and barely 5 million that owned DVD players. But the shift had really begun.
- 2000 and beyond were major years for DVD. A lot of this was fueled by $100 and below priced players and the shift in stores to DVD from VHS. VHS was the bastard child. It was yesterdays news. But the media was still cheaper and DVD did not overtake VHS in rentals for another 3+ years.

So where are we today? DVD is declining. Software sales peaked in 2005 and hardware sales peaked in 2004 per the DEG. It is a gradual decline. Probably will not be as steep as VHS. But it is declining. The studios, CE's, and retailers are not hedging their bets on Blu-Ray, but remember this did not happen until 2008. It has only been a year since Blu-Ray gained full major studio support. But it is not hard to look at the Nielsen numbers and Kosty's graphs and come to the conclusion that Blu-Ray is gaining traction. Is it performing to expectations? Very doubtful, but that can be due to a number of reasons the first being the economy. But the studios also did not count on DVD sliding as far as it did last year either. I think this is due to both emerging technologies and the economy.

That is why I am pointing to Blu-Ray having big years in 2012-2014+. I think those years will be the years when cheap hardware will rule and we will see many Americans make a shift away from DVD if the price is right.

I think most people will get that Blu-Ray is superior to DVD. They won't need to be sold too hard to understand this. But it will come down to whether or not the price is right for them to buy in. If the studios insist on keeping Blu-Ray priced much higher on most titles than DVD, we will most likely not see Blu-Ray have the success it could have if there is price difference is marginal.


Best Buy is the #1 store for Blu-Ray. I used to only buy Blu-Ray online, but have found some great deals on catalog titles at Best Buy, Walmart, and Target in 2009. I still buy about 80% of my titles online, but prices are definitely improving in my neck of the woods. Especially when I get the manufacturers coupons from Sony, Disney, and Paramount. With the coupon B&M stores are almost always cheaper. Sometimes with the coupon the BD is the same price (or cheaper) than the barebones DVD. But you have to watch the bargain threads and subscribe to the studios email circulars and clubs (all of them are free). My local Walmart for new releases is definitely pricey without the coupons, but they are very competitive with Amazon in terms of some catalog titles. Walmart.com is often better than Amazon and offers free site-to-store shipping.

But the Nielsen numbers don't lie. I will wager that Transformers 2 will get 20-30% marketshare on Blu-Ray when it is released later this year. It will undoubtedly be the #1 selling title on home video in 2009. And that is for unit sales. Revenue wise I can see TF2 scoring close to 35% marketshare for BD vs DVD.

ack_bak

Well, that is what most economists are predicting. That Q4 2009 will be when things start a very slow increase and the declines will be reversed.

But who really knows?

Lee Stewart

Ack:

The handwriting was on the wall for the end of VHS when Warner announced that The Matrix would be available on DVD six weeks before VHS. That was September 1999.

DonnyDC

So studios and retailers really are pulling the strings.

Lee Stewart

Warner did in that case. Who else did that?

DonnyDC

You tell me.

Dare

Actually, we still disagree on the core premise. DVD had already been floating around for a few years before 1999, in that early-adopter, pre-detonation phase. People got to become familiar with this new format. Reviews were showing up, everyone knew somebody in their circle of friends who had a DVD player, and buzz was starting. Consumers were already familiar with CDs, which they bought in droves over ten years earlier to replace their record collections, and the idea of "movie CDs" to replace those clunky crappy VHS cassettes that nobody really liked seemed intriguing. But very few bought players because they were too expensive. Give us affordable players, the public said. You got it, the industry said. The cheap players arrived, and sales exploded.

The public could have rejected DVDs, if they were less convenient, more cumbersome, bulkier, and less durable than VHS. (Just as we did reject DIVX, which some studios were pushing so hard, they had nothing less than DVD's gruesome death in their sights.) But they weren't. DVDs were better in every way. So the public demanded it, and snapped up everything that was offered. Industry would cease to exist if it ignored what the public was clamoring for. DIVX vanished in a puff of rejection, and DVD prevailed enormously.

Your industry-leading-consumers premise would have us all watching DIVX discs.

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ack_bak

DIVX was hardly industry leading

It was a rental based format that was primarly owned and pushed by Circuit City. There were few choices, in terms of players, and movies were limited as well. Many electronics stores did not carry DIVX because they did not want to put money in the pockets of Circuit City.

Many movie buffs and videophiles lashed out against DIVX for many reasons (PQ, the usage of pan and scan on most titles, the lack of extra features).

DIVX did not succeed because there were alternatives (DVD, renting from Blockbuster, etc) that offered a superior experience and had more support.

Dare

Aha! You do agree with me.

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ack_bak

Sure, within the context of my post:

Right now, lets compare the options for somebody wanting to watch movies in hidef. There is:
- Blu-Ray
- PPV/On Demand via your cable/sat provider
- Downloads/streaming


Out of those, Blu-Ray is the only format I see being pushed when I walk into a store. None of my local Best Buy's, Target's, Walmart's, or Costco's (etc) carry Vudu or AppleTV or any type of dedicated streaming device in their stores.

All of the above formats aside from Blu-Ray track closer to the DIVX model (ie rental model for the most part, no extra features, less superior PQ).

This is why I see Blu-Ray being successful. Like DVD before it, Blu-Ray has the support of the retailers, major studios, rental companies, and CE's. It offers consumers the options to rent or buy. As the prices drop, I see it being a natural evolution for most consumers who rent and own DVD now as they purchase HDTV's.

Clearly there are many that may cling to DVD due to price and/or lack of interest in HD, and that format will continue to exist for a long time to come. But I don't think it is unrealistic to see Blu-Ray continuing to grow (especially as prices drop) to the point where it has more marketshare than DVD. It certainly will not happen in the next 12-24 months. It could happen in the next 36-60 months.