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Optical (Blu-ray/DVD) and Digital (EST/UV) Sales Thread

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Old 01-28-2012, 05:37 PM   #1111  
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Originally Posted by bruceames View Post
Thanks Psound.

I'm not sure why DVD had a better deviation from average than Blu-ray these first two weeks. It would seem that the 5th quarter effect favored DVD. Tower said that one component of that effect is cashing in gift cards, so perhaps those redemptions were skewed towards DVD.

I also wonder if people returning Blu-rays to get the DVD had any effect. A common mistake in the haste of buying gifts would be to buy the wrong format.

The Nielsen ratios for Blu-ray top 20 look normal for those two weeks, so I'm inclined to think it's other factors, such as those mentioned above.
One of the interesting factoids that the CEA and NPD found in the last couple years is that gift card redemptions have occurred later and later during the past few years.

Many now it seems get redeemed 30-60 days after the holidays for a number of factors including consumers feeling confident of online redemption or looking for the best deals without a sense of urgency.

Blu-ray has gained more in the past few weeks than DVD so proportionally Blu-ray non new release sales have increased more. Its only in the YoY comparisons that Blu-ray gains are modest and a lot of that is the fact that the TBO comparisons in the last two weeks are down -14% and -21% so new release sales are less.

With less new release sales the greater base of routine DVD sales look better against Blu-ray catalog sales, even if Blu-ray catalog sales have gained.

When we get a week where the 2011 vs 2012 TBO is more even we might be able to see some more gains in the base rate of Blu-ray sales or a 5th quarter effect.

In the industry the 5th quarter effect is more accurately described as sales exceeding the routine rate of sales in the month of January for non new release sales for packaged media. The downward effect of poorer new releases (-14% and -21% in the TBO comparisons) would tend to make any growth in catalog sales in the overall revenue numbers be masked and hidden by the lower newer release sales and revenues generated by the less powerful new releases.
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Old 01-28-2012, 05:40 PM   #1112  
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Originally Posted by PSound View Post
Do we have the unit numbers for those weeks?
We do now.

HMM is now posting up the unit numbers each week.

If you click on the pie chart on the HMM website you get a detailed sales report chart that also includes the unit sales figures.

http://www.homemediamagazine.com/mar...k-ended-011412

http://www.homemediamagazine.com/mar...k-ended-010712
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Old 01-28-2012, 06:01 PM   #1113  
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Average Disc Cost YoY

BD -6.8%

DVD -5.4%
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Old 01-28-2012, 06:17 PM   #1114  
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I'm asking to get some more recent information from some of my sources.
I don't know what info that would be, but we already have the Nielsen top 20 ratios and the HMM/DEG data. That's all one needs.

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One of the issues I see in your analysis here is the issue between unit marketshare and revenue marketshare for both T20 and T50 recent releases and new weekly releases. For example the revenue marketshare for new releases on Blu-ray is much higher than the unit marketshare as Blu-ray is generally 25% to 33% higher per unit sold than a matching DVD sku.
For all intents and purposes, T20 is ideal. Not too many titles that you would have a majority that are non-new release (new release being up to 30 days old), and the T20 encompasses most of the viable new releases, although some can straggle into the top 50.

It's the right amount, IMO, to consider "new release", and it's for the best, because that's the data we have.

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For Blu-ray, before the 4Q I was told by several industry sources that Blu-ray recent releases (akin to top 20 sales) were around 60% of total Blu-ray unit sales and around 80% of revenues as Blu-ray recent releases also had a much higher price point especially when BD+DVD combo sales were considered.
That data would contradict the pre-4Q Nielsen ratios, which are definitely lower than that. However, if that is true and the Nielsen data is off, then that would reinforce my argument that the T20 DVD revenue is as low as what I shown mathematically. Just substitue 80% in the above equations for 40% and you will see what I mean.

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We have now weekly unit sales information and I have now the unit sales for the 2010 and 2011 and TYD 2012 period from HMM for DVD and Blu-ray. We have already the HMM revenue estimates for 2010 and 2011 and YTD 2012.
I don't see right off hand where that unit data is going to be of any use here.

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We do have the The-Numbers Top 30 DVD revenue and unit estimates as well going back to 2006. We have there Blu-ray top 10 estimates going back to May of 2011 as well. Even if flawed and different in methodology and assumptions a comparison between the two gives us a starting point for some estimates and order of magnitude for the split.
I would prefer to leave The-Numbers alone, but on the side I have plugged in their data and it does reinforce my argument. I just don't need that type of 'data' and I'll only go there as a last resort.

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On factor that I did not consider until you brought the subject up recently here is the effect the growing success and growing new release marketshare of Blu-ray new release units and revenues would have on the proportion of DVD sales that are new release related versus DVD catalog sales. As Blu-ray gains more and more in new release marketshare the proportion of DVD sales that are new releases will continue to decline and the portion that are catalog sales will increase.
One would hope that as the Blu-ray library grows, the T20 revenue share drops. It's not easy to measure that directly, but it can be measured fairly accurately as a proportion of DVD.

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My guess at this time is that Blu-ray new release sales Top 30 titles are generating about 50% to 60% and 70% to 80% of Blu-ray revenues.
70% to 80% seem reasonable. I would go with the lower range of that though.

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When we get some 2012 weeks without any new releases in them and we can see what the routine base rate of Blu-ray and DVD sales are on those weeks we can get a better idea of what the routine BD sales are now in 2012.
Last year the base was close to $20 million on those weeks without any new releases to speak of. That would be a high base though, considering the average BD week was $41 million, making the average BD T20 share only 51.2%. It's definitely higher than that, and is probably a result of people buying other titles because no new releases are available.

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I'll have to meditate a bit on the rest of your analysis there to see what I think of it, but my immediate thoughts are that its overestimating the revenues for catalog sales to a substantial degree. I'll look at in more in detail to see where I disagree with your assumptions and at the moment I think I follow your logic but somewhere along the line some of the assumptions bias it toward catalog revenues and away from new release revenues.
I'll look forward to it.
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Old 01-28-2012, 06:43 PM   #1115  
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I'd prefer that I was off in my assessments of the probable ratio of new release revenues to catalog sales for both Blu-ray and DVD were off.

I agree it would be better if catalog sales generated more income for Blu-ray but I do not think it is the case to the degree that you think it is for either Blu-ray or DVD.

But as time goes on Blu-ray is gaining in catalog sales over time and in the percentage of new release sales as well so both catalog sales and new release sales for Blu-ray are both moving targets.

Thank you for your calculations there. As I said I'll look at them in more detail to see where I disagree with the assumptions.

But you did bring into light to me the simple fact that as more and more Blu-ray finds success and growing unit and revenue marketshare with new releases, where Blu-ray has made the most progress, the DVD ratios between new releases and catalog sales will change over time.

I thank you for that as that's something I did not consider before you brought it up.
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Old 01-28-2012, 06:44 PM   #1116  
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I think top 20 sales for each week is a good metric for the reasons you describe.
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Old 01-28-2012, 06:47 PM   #1117  
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One of the factors to consider even when there are no new releases for the week is that recent releases from the past few weeks in the Top 20 titles for the week still are a lot of the sales and its tough to break out the sales of the non top 20 titles and the revenues that older releases generate.
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Old 01-28-2012, 09:13 PM   #1118  
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Quote:
Originally Posted by Kosty View Post
One of the factors to consider even when there are no new releases for the week is that recent releases from the past few weeks in the Top 20 titles for the week still are a lot of the sales and its tough to break out the sales of the non top 20 titles and the revenues that older releases generate.
Yeah one can only estimate, but we do have a reasonably accurate correlation between DVD and Blu-ray, via the differences between average top 20 share and overall share.

Here is the formula which encompasses all of what I have been discussing:

D = (C*A*(1-B)/B)*(1-A)

Where:
A--> overall average Blu-ray share (24% last year)
B--> T20 average Blu-ray revenue share (estimated at 40%)
C--> estimated average percentage of T20 Blu-ray revenue, as a percentage of its whole (% of sales which occur within the T20).

D--> average percentage of T20 DVD revenue, as a percentage of its whole.

There are four variables, one of which is known (A = 24%), one of which needs to be solved for (D), and two unknown variables (B and C). One of those unknown variables, B, at 40%, is close enough for practical purposes to use as a fixed number. However it can be adjusted upwards or downwards as well (that's why they call it a variable ). The variable C, T20 Blu-ray percentage, as a percentage of its whole, is the variable we can plug in estimates to see how it affects D, the corresponding DVD T20 revenue percentage.

So plugging in, as we did before:

A=24%
B=40%
C=85%

We get

D = (.85*.24*(1-.40)/.40)/(1-.24) = 40.2%


Now, let's use your estimates (from what I can gather) of 60% for B, and 75% for C.

D = (.75*.24*(1-.60)/.60)/(1-.24) = 15.8%

So, as you can see, if the average Blu-ray top 20 vs. DVD revenue share is 60%, and the average BD sales revenue resulting from T20 sales is 75%, then the average DVD sales revenue resulting from T20 sales is only 15.8%.

That's not even 1/2 of what I estimate it is!

Last edited by bruceames; 01-28-2012 at 09:17 PM..
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Old 01-28-2012, 09:18 PM   #1119  
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Quote:
Originally Posted by Kosty View Post
I'd prefer that I was off in my assessments of the probable ratio of new release revenues to catalog sales for both Blu-ray and DVD were off.

I agree it would be better if catalog sales generated more income for Blu-ray but I do not think it is the case to the degree that you think it is for either Blu-ray or DVD.

But as time goes on Blu-ray is gaining in catalog sales over time and in the percentage of new release sales as well so both catalog sales and new release sales for Blu-ray are both moving targets.

Thank you for your calculations there. As I said I'll look at them in more detail to see where I disagree with the assumptions.

But you did bring into light to me the simple fact that as more and more Blu-ray finds success and growing unit and revenue marketshare with new releases, where Blu-ray has made the most progress, the DVD ratios between new releases and catalog sales will change over time.

I thank you for that as that's something I did not consider before you brought it up.
Glad I was able to shed light on something for you.
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Old 01-28-2012, 09:30 PM   #1120  
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Interesting formula but I'm not sure if we can generalize like that.

Each week and throughout the year the variability of the price points of leading titles for both DVD and Blu-ray can lead to some extremes and only a few titles like Avatar or major titles discounted as loss leaders by retailers could skew that calculation.

The formula as you have identified here seems to have some inherent flaws or assumptions that may be in trying to generalize to an annual period the weekly data sets or by treating all titles equally even if some titles like Avatar or other tent pole releases may have vastly different price points or volumes than most releases.

Again I salute your attempt here to quantify the issue and I cannot see the flaws as it on the surface seems sound to me in the abstract but the results do not seem to match the order of magnitude of known data.

Let's think about this in some detail and perhaps we can find a formula that works in the near future.
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Old 01-28-2012, 09:35 PM   #1121  
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Glad I was able to shed light on something for you.
I always appreciate your input analysis and observations even when I disagree with your conclusions.

But I really did miss that increasing Blu-ray revenue and unit marketshare would interact of course with the DVD ratio of new releases to catalog sales. Blu-ray has greatly increased its new release market share in the past couple years as the user base has grown and product changes like BD+DVD combos have increased and of course that has decreased the DVD new release marketshare compared to catalog sales.

That's a big 'duh" that I first did not consider at all in the discussion.
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Old 01-28-2012, 09:37 PM   #1122  
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Quote:
Originally Posted by Kosty View Post
Interesting formula but I'm not sure if we can generalize like that.

Each week and throughout the year the variability of the price points of leading titles for both DVD and Blu-ray can lead to some extremes and only a few titles like Avatar or major titles discounted as loss leaders by retailers could skew that calculation.

The formula as you have identified here seems to have some inherent flaws or assumptions that may be in trying to generalize to an annual period the weekly data sets or by treating all titles equally even if some titles like Avatar or other tent pole releases may have vastly different price points or volumes than most releases.

Again I salute your attempt here to quantify the issue and I cannot see the flaws as it on the surface seems sound to me in the abstract but the results do not seem to match the order of magnitude of known data.

Let's think about this in some detail and perhaps we can find a formula that works in the near future.
Ok, let me know what you can figure out. But the formula as I have presented is correct. Surely you have checked that out.
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Old 01-28-2012, 09:41 PM   #1123  
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Quote:
Originally Posted by Kosty View Post
I always appreciate your input analysis and observations even when I disagree with your conclusions.

But I really did miss that increasing Blu-ray revenue and unit marketshare would interact of course with the DVD ratio of new releases to catalog sales. Blu-ray has greatly increased its new release market share in the past couple years as the user base has grown and product changes like BD+DVD combos have increased and of course that has decreased the DVD new release marketshare compared to catalog sales.

That's a big 'duh" that I first did not consider at all in the discussion.
I'm not really making any conclusions Kosty. I am simply plugging in estimates to see how it affects the other variables. The formula is proof that there is a massive difference between the how much DVD sells within the top 20, vs that of Blu-ray. If you think that somehow DVD T20 is 50% of it total and Blu-ray 75%, then you are mistaken. It's a mathematical impossibility, given what we know of the other variables.
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Old 01-28-2012, 10:06 PM   #1124  
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The one methodological issue I possibly see in the calculation is taking the discrete weekly Top 20 marketshare and revenue and unit data sets with 52 wide variations in volumes for the Top 20 unit marketshares and applying that to the entire year.

But we now do have the entire estimates for units for all of 2010 and 2011 and 2012 going forward so we might be able to get something closer based on the consistent HMM dataset for both units and revenues for DVD and Blu-ray.

We of course have the The-Numbers DVD Top 30 and Blu-ray Top 10 data as well.
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Old 01-28-2012, 10:10 PM   #1125  
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Quote:
Originally Posted by bruceames View Post
I'm not really making any conclusions Kosty. I am simply plugging in estimates to see how it affects the other variables. The formula is proof that there is a massive difference between the how much DVD sells within the top 20, vs that of Blu-ray. If you think that somehow DVD T20 is 50% of it total and Blu-ray 75%, then you are mistaken. It's a mathematical impossibility, given what we know of the other variables.
Again, I'm not as sure your formula does not have some inherent assumptions in them for the annual top 20 ratios as it may seem to assume less weekly variation in volumes than we know is the case.

We know that some weeks have vastly higher volumes than others so some of the variables may be wrong in your calculations.
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