Digital-media sales stalled in Q1

Dare · 07-06-2009, 06:01 PM

Except that receiving your movies over a wire isn't a storage format. You can't put a download on a shelf. So if we're going down that road, of course Best Buy doesn't push VOD devices. Most people get such devices from their cable companies, and are usually restricted from using other devices. In other words, they aren't marketed because there is no market. Downloads and streaming are usually associated with game consoles, which I don't see the retailers being shy about, or computers, which aren't entertainment center specific. So you are comparing apples and oranges. What you need to be talking about is Blu-ray and DVD, or as we were talking about earlier, DVD and VHS.

Kosty · 07-06-2009, 08:24 PM

Quote:

What you need to be talking about is Blu-ray and DVD

DVD and DVD+BD was down in 1Q 2009 compared to 1Q 2008 by $155.67 M but actually is up by a tiny $1.33 M in the 2Q comparison.

Code:

PERIOD              DVD   Blu-ray   DVD+BD

1Q  2009          2,419.11  196.62   2,615.72
1Q  2008          2,681.08   90.31   2,771.39

2Q  2009          2,402.98  228.51   2,631.49
2Q  2008          2,533.37   96.79   2,630.16

1Q+2Q 2009        4,822.09  425.12   5,247.21 
1Q+2Q 2008        5,214.45  187.10   5,401.55

ack_bak · 07-06-2009, 10:56 PM

Quote:

Originally Posted by Dare

Except that receiving your movies over a wire isn't a storage format. You can't put a download on a shelf. So if we're going down that road, of course Best Buy doesn't push VOD devices. Most people get such devices from their cable companies, and are usually restricted from using other devices. In other words, they aren't marketed because there is no market. Downloads and streaming are usually associated with game consoles, which I don't see the retailers being shy about, or computers, which aren't entertainment center specific. So you are comparing apples and oranges. What you need to be talking about is Blu-ray and DVD, or as we were talking about earlier, DVD and VHS.

I was just pointing out the only ways to watch a hidef movie. That is it. DVD is certainly not HD.

We seem to be talking in circles. DVD continues to lose marketshare to other technologies. It has already peaked. There is no arguing this point, it is a fact. DVD margins have shrunk in recent years as the market became saturated. I don't really see anyone arguing this as well. Blu-Ray, HD DVD, and digital distro were all brought to market in hopes that it would create a new revenue stream to stop the bleeding for home video for studios, retailers, and CE's.

I believe that this cycle (DVD losing marketshare, and other technologies gaining marketshare) will continue. Does that mean that DVD will be gone tomorrow? No. But the studios can force the issue. Circuit City removed VHS in their stores in 2003. Clearly there was still a market for VHS in 2003 (Walmart waited until 2007), but they realized that they had more to gain by promoting the new technology and leaving the scraps to the likes of Walmart and other retailers for VHS.

Will DVD play out this way down the road? I don't know. It is up to retailers, studios, CE's and consumers. But I don't see DVD suddenly rebounding and taking marketshare away from Blu-Ray. I don't see shelf space for DVD's being expanded in stores. I don't see CE's ditching Blu-Ray to make more upconverting DVD players. In 3-5 years (the timeline I have been talking about) the studios can simply force the issue by giving us two SKU's. A SKU that has the BD and DVD copy. And a SKU that only has the BD copy. They may sell fewer copies of a movie but the margins would be higher for either SKU, and this may also force people towards downloads/streaming which has much higher margins than traditional optical disc rentals. I think 50% marketshare for Blu-Ray by Q4 2012 is attainable. It will require price drops on hardware and software, or studios and retailers getting aggressive with phasing DVD out.

Studios, retailers, CE's.. The industry. They are in this to make money. They are publicly traded companies that have to show revenue growth and profit. They may try and redefine the industry (ie raising prices) at some point to gain back leverage. How much profit is there to really split on a $2.99-5.99 DVD? How much will they be hurt if they simply focus only on new releases for DVD and the rest of their energies on higher margin technologies?

As I mentioned in a previous post I can see DVD hanging on for at least another 5-8+ years from now. Blu-Ray is most likely the last optical disc format we will see and could easily be around another 10-12 years.

At some point in the next 5 years or so (after Blu-Ray has peaked) I am hoping the next big thing is announced and I can start moving towards that.

ack_bak · 07-06-2009, 11:03 PM

Quote:

Originally Posted by Kosty

DVD and DVD+BD was down in 1Q 2009 compared to 1Q 2008 by $155.67 M but actually is up by a tiny $1.33 M in the 2Q comparison.

Code:

PERIOD              DVD   Blu-ray   DVD+BD

1Q  2009          2,419.11  196.62   2,615.72
1Q  2008          2,681.08   90.31   2,771.39

2Q  2009          2,402.98  228.51   2,631.49
2Q  2008          2,533.37   96.79   2,630.16

1Q+2Q 2009        4,822.09  425.12   5,247.21 
1Q+2Q 2008        5,214.45  187.10   5,401.55

And you have to wonder how much a role the economy is playing in this. If the economy were not in the dumps, optical disc revenue in 2009 could be up much higher.

Dare · 07-07-2009, 01:15 PM

Circuit City certainly didn't elect to remove VHS because they wanted to guide consumers. They did it because the writing was on the wall. Consumer purchases were falling sharply, and the expense of maintaining an inventory was higher than their sales could justify. They were forced by consumers to abandon VHS. No company is going to stay in business by refusing to sell a product that makes money. (Granted, Circuit City is no longer in business

) They were already bleeding at that point, and needed to take steps to preserve their business. Reading that as a retail chain weaning consumers off of a particular format against their will is silly.

Industry would be insane to push DVDs out of the market prematurely. Insane. There is a large market segment at the low end, which is the whole reason DVDs can be found for such low prices, and pushing that segment off the map will create a vacuum, either forcing Blu-ray prices into the basement (I would love that, but I don't think that's what the industry is after), or forcing people off of optical media all together. And let's not forget, Blu-ray is inferior to DVD in many respects that aren't related to audio and video quality, particularly the maintenance level required for the players, which could be a deal-breaker for most people. Even if, even if, industry had the power to choose for consumers, nothing good for them could come from their attempt. This attitude that industry can force consumers to do anything is cynical and paranoid, quite frankly. The issue can't be pushed, and will not be.

ack_bak · 07-07-2009, 01:56 PM

Quote:

Originally Posted by Dare

Circuit City certainly didn't elect to remove VHS because they wanted to guide consumers. They did it because the writing was on the wall. Consumer purchases were falling sharply, and the expense of maintaining an inventory was higher than their sales could justify. They were forced by consumers to abandon VHS. No company is going to stay in business by refusing to sell a product that makes money. (Granted, Circuit City is no longer in business

) They were already bleeding at that point, and needed to take steps to preserve their business. Reading that as a retail chain weaning consumers off of a particular format against their will is silly.

Then explain this:
http://www.thefreelibrary.com/DVD+RE...d)-a0103864855

This is the first week that DVD passed VHS in rental volume. It was June 2003.

Circuit City started dropping VHS support (minus hardware and blank tapes) in June 2002:
http://www.nytimes.com/2002/06/21/bu...for-dvd-s.html

The last release on VHS from a major studio was in 2006 for VHS and Walmart stopped carrying movies in 2007. In 2005 there were still over 90 million households that had VHS players.

There was still a strong demand for VHS in 2002 when Circuit City stopped supporting it. The answer Dare is that they moved away from it to promote the format with higher margins and a growing audience. Shelf space costs money. Margins on VHS had shrunk and Circuit City seemed to have no problem giving the business to Walmart and other retailers. Was the writing on the wall for VHS in 2002? Probably, but it still was very popular with consumers and had many years of life left when Circuit City pulled the plug.

Quote:

Industry would be insane to push DVDs out of the market prematurely. Insane. There is a large market segment at the low end, which is the whole reason DVDs can be found for such low prices, and pushing that segment off the map will create a vacuum, either forcing Blu-ray prices into the basement (I would love that, but I don't think that's what the industry is after), or forcing people off of optical media all together. And let's not forget, Blu-ray is inferior to DVD in many respects that aren't related to audio and video quality, particularly the maintenance level required for the players, which could be a deal-breaker for most people. Even if, even if, industry had the power to choose for consumers, nothing good for them could come from their attempt. This attitude that industry can force consumers to do anything is cynical and paranoid, quite frankly. The issue can't be pushed, and will not be.

You seem to be talking about 2009. I am talking about 2012-2014. Retailers are already shedding shelf space for DVD hardware and software for Blu-Ray now. In 2012-2014, we could easily see them accelerate this and only carry the newer DVD releases. Retailers (like CC was back in 2002-2003) are bleeding now. Again, how much profit is there on a catalog release on DVD that sells for $2.99-7.99 brand new in most stores? DVD is declining. There are less titles being bought (units sold) and the prices are lower than ever before on catalog titles. You are lucky to get more than $1-2 trading in used DVD's.

DVD will not disappear even then. There will be a large market online via retailers. I can see Walmart and Best Buy cutting way back on DVD selection in store but still offering a massive selection online.

But in the next five years I believe the combination of Blu-Ray and streaming will have the majority of the market vs DVD for both rentals and sales.

Lee Stewart · 07-07-2009, 03:52 PM

OK Ack - let's talk about 2014 . . .

If DVD drops 5% (sales) each year beginning with 2009, then 6 years from now - it will have dropped 30%. That implys that it is still at 70% strength from where sales is today ($14B ??).

And rentals have yet to go down like sales have so there is no way to forcast rentals for DVD other than to imply it stays flat. That's $7.5B per year.

People seem to have a hard time grasping the difference between an evolutionary format and a revolutionary format. They travel the same road but not at the same pace.

I was in Wal-Mart yesterday - the cheapest DVD's they sell are still the $5 bargin bin specials. I didn't see any $2.99 priced DVD's. Their Fathers Day special was 5 for $20.

ack_bak · 07-07-2009, 09:22 PM

Quote:

Originally Posted by Lee Stewart

OK Ack - let's talk about 2014 . . .

If DVD drops 5% (sales) each year beginning with 2009, then 6 years from now - it will have dropped 30%. That implys that it is still at 70% strength from where sales is today ($14B ??).

And rentals have yet to go down like sales have so there is no way to forcast rentals for DVD other than to imply it stays flat. That's $7.5B per year.

People seem to have a hard time grasping the difference between an evolutionary format and a revolutionary format. They travel the same road but not at the same pace.

I was in Wal-Mart yesterday - the cheapest DVD's they sell are still the $5 bargin bin specials. I didn't see any $2.99 priced DVD's. Their Fathers Day special was 5 for $20.

What makes you think DVD will only drop by single digits once BD hardware is priced at $49 and below and BD software pricing becomes more competitive?

Lee Stewart · 07-07-2009, 09:58 PM

Quote:

Originally Posted by ack_bak

What makes you think DVD will only drop by single digits once BD hardware is priced at $49 and below and BD software pricing becomes more competitive?

I keep seeing that $49 price. Would you please provide a link to that. It was referenced I believe in an Asian newspaper/website.

Kosty · 07-07-2009, 10:22 PM

Quote:

Originally Posted by Lee Stewart

I keep seeing that $49 price. Would you please provide a link to that. It was referenced I believe in an Asian newspaper/website.

He's talking about years from now.

That $49 you are thinking about was talk of the projected manufacturers build cost for Blu-ray standalone players.

bicker · 07-08-2009, 05:48 AM

Cost is relatively unimportant. Only suckers price things based on cost.

Nikopol · 07-08-2009, 05:51 AM

Well, once you're talking about selling at cost or even below cost, it becomes quite important. This has been an ongoing point of discussion regarding Blu-ray. (PS3 being sold probably below cost in the past, standalones were assumed to have limited pricedropping potential due to alleged high costs for both parts and licences)

bicker · 07-08-2009, 06:29 AM

That's why you don't aim to sell at cost or below cost.

That sort of thing works for hardware, where by selling the hardware at a loss you lock the purchaser in to purchasing service or software from you, at a sufficient-enough mark-up to eventually pay for the hardware. But you never want to be selling software at a loss. You want to sell software strictly based on value.

MikeRox · 07-09-2009, 06:49 AM

There is going to be a natural bridging to Blu-ray in hardware. Far more so than there was with VHS purely because of the backwards compatability. Once branded Blu-ray players are below the £100 mark (they're not far off now) when that DVD player goes kaput or the usual "upgrade" or puchase of a new player, it won't be worth retailers keeping upscaling DVD players in stock unless they're the £20 variety as Blu-ray does that with BD playback on top.

I think as software prices drop (we're already seeing movies in single digits in Blu-ray racks now) they will come more in line with DVD catalogue prices (some BDs are £8 instore at HMV, online retailers start at £6.99 now, this range will grow exponentially over the next 12-24 months) suddenly the BD will become as much of an impulse purchase as the DVD currently is.

It'll be a natural progression, I don't think DVD will ever outright die out, some content just isn't worth putting on Blu-ray and many lower budget TV shows are still shot in SD, these will IMO continue to be DVD only. I personally see more of an amalgamation of the formats over time. Especially if hybrid discs were ever to become common place and cost effective. (again they aren't now, but I'm talking 2-3 years down the line)

bicker · 07-10-2009, 05:28 AM

The point, though, it "should" eventually get to the point where the cost of producing two formats, DVD and BD, is higher than the cost of reducing the price of BD to what they are (at that time) selling DVD for. The issue here is that, due to the cost of BD, it looks like that's going to be a long time coming, longer than one would expect given the experience with DVD and VHS.

07-06-2009, 06:01 PM	#91
Dare I moon you. Join Date: Jul 2007 Location: Phoenix, Arizona Posts: 4,436	Except that receiving your movies over a wire isn't a storage format. You can't put a download on a shelf. So if we're going down that road, of course Best Buy doesn't push VOD devices. Most people get such devices from their cable companies, and are usually restricted from using other devices. In other words, they aren't marketed because there is no market. Downloads and streaming are usually associated with game consoles, which I don't see the retailers being shy about, or computers, which aren't entertainment center specific. So you are comparing apples and oranges. What you need to be talking about is Blu-ray and DVD, or as we were talking about earlier, DVD and VHS. __________________ LG GGC-H20L Super Multi Blue Blu-ray & HD DVD ROM Drive 58 31

07-07-2009, 01:15 PM	#95
Dare I moon you. Join Date: Jul 2007 Location: Phoenix, Arizona Posts: 4,436	Circuit City certainly didn't elect to remove VHS because they wanted to guide consumers. They did it because the writing was on the wall. Consumer purchases were falling sharply, and the expense of maintaining an inventory was higher than their sales could justify. They were forced by consumers to abandon VHS. No company is going to stay in business by refusing to sell a product that makes money. (Granted, Circuit City is no longer in business ) They were already bleeding at that point, and needed to take steps to preserve their business. Reading that as a retail chain weaning consumers off of a particular format against their will is silly. Industry would be insane to push DVDs out of the market prematurely. Insane. There is a large market segment at the low end, which is the whole reason DVDs can be found for such low prices, and pushing that segment off the map will create a vacuum, either forcing Blu-ray prices into the basement (I would love that, but I don't think that's what the industry is after), or forcing people off of optical media all together. And let's not forget, Blu-ray is inferior to DVD in many respects that aren't related to audio and video quality, particularly the maintenance level required for the players, which could be a deal-breaker for most people. Even if, even if, industry had the power to choose for consumers, nothing good for them could come from their attempt. This attitude that industry can force consumers to do anything is cynical and paranoid, quite frankly. The issue can't be pushed, and will not be. __________________ LG GGC-H20L Super Multi Blue Blu-ray & HD DVD ROM Drive 58 31

07-09-2009, 06:49 AM	#104
MikeRox Blu Blu Skies! :D Join Date: May 2007 Location: Huddersfield, United Kingdom Posts: 12,414	There is going to be a natural bridging to Blu-ray in hardware. Far more so than there was with VHS purely because of the backwards compatability. Once branded Blu-ray players are below the £100 mark (they're not far off now) when that DVD player goes kaput or the usual "upgrade" or puchase of a new player, it won't be worth retailers keeping upscaling DVD players in stock unless they're the £20 variety as Blu-ray does that with BD playback on top. I think as software prices drop (we're already seeing movies in single digits in Blu-ray racks now) they will come more in line with DVD catalogue prices (some BDs are £8 instore at HMV, online retailers start at £6.99 now, this range will grow exponentially over the next 12-24 months) suddenly the BD will become as much of an impulse purchase as the DVD currently is. It'll be a natural progression, I don't think DVD will ever outright die out, some content just isn't worth putting on Blu-ray and many lower budget TV shows are still shot in SD, these will IMO continue to be DVD only. I personally see more of an amalgamation of the formats over time. Especially if hybrid discs were ever to become common place and cost effective. (again they aren't now, but I'm talking 2-3 years down the line) __________________ REGION B 4TW! Latest HD additions - I Love You Man - 17 Again - Born on the 4th of July - Paul Blart: Mall Cop - Monsters, Inc. HD Movies - Um... Lost count >_< bout 250 Latest Gaming Additions - Mirrors Edge - Scene It BOS - Wartech: Senko No Ronde - Lego Indiana Jones/Kung Fu Panda 2 pack - Silent Hill

Similar Threads to Digital-media sales stalled in Q1
Thread	Thread Starter	Forum	Replies	Last Post
Consortium formed to standardize digital media	Lee Stewart	High Definition Media	9	09-13-2008 11:35 AM

07-07-2009, 03:52 PM	#97
Lee Stewart Behold - the future! Join Date: Jan 2007 Location: Albuquerque, NM Age: 58 Posts: 25,188	OK Ack - let's talk about 2014 . . . If DVD drops 5% (sales) each year beginning with 2009, then 6 years from now - it will have dropped 30%. That implys that it is still at 70% strength from where sales is today ($14B ??). And rentals have yet to go down like sales have so there is no way to forcast rentals for DVD other than to imply it stays flat. That's $7.5B per year. People seem to have a hard time grasping the difference between an evolutionary format and a revolutionary format. They travel the same road but not at the same pace. I was in Wal-Mart yesterday - the cheapest DVD's they sell are still the $5 bargin bin specials. I didn't see any $2.99 priced DVD's. Their Fathers Day special was 5 for $20.

07-08-2009, 05:48 AM	#101
bicker High Definition is the definition of life. Join Date: Jun 2006 Location: Burlington, MA Posts: 1,532	Cost is relatively unimportant. Only suckers price things based on cost.

07-08-2009, 05:51 AM	#102
Nikopol Uwe Boll's my hero Join Date: Aug 2007 Location: Maelstrom Blu-rays: 14 Age: 4 Posts: 6,374	Well, once you're talking about selling at cost or even below cost, it becomes quite important. This has been an ongoing point of discussion regarding Blu-ray. (PS3 being sold probably below cost in the past, standalones were assumed to have limited pricedropping potential due to alleged high costs for both parts and licences)

07-08-2009, 06:29 AM	#103
bicker High Definition is the definition of life. Join Date: Jun 2006 Location: Burlington, MA Posts: 1,532	That's why you don't aim to sell at cost or below cost. That sort of thing works for hardware, where by selling the hardware at a loss you lock the purchaser in to purchasing service or software from you, at a sufficient-enough mark-up to eventually pay for the hardware. But you never want to be selling software at a loss. You want to sell software strictly based on value.

07-10-2009, 05:28 AM	#105
bicker High Definition is the definition of life. Join Date: Jun 2006 Location: Burlington, MA Posts: 1,532	The point, though, it "should" eventually get to the point where the cost of producing two formats, DVD and BD, is higher than the cost of reducing the price of BD to what they are (at that time) selling DVD for. The issue here is that, due to the cost of BD, it looks like that's going to be a long time coming, longer than one would expect given the experience with DVD and VHS.