Declining DVD Sales – More than Meets the Eye

dvdsPretty much everyone who follows the entertainment industry knows that DVD sales are declining. The “death of the DVD” has been happening for at least eight to 10 years now. But I’d just like to point out a few things that make the stories about the decline of the DVD just a little more complicated. First of all…though sales have gone down. Hollywood studios still make a lot of money on DVD and Blu-ray sales. Home video sales in 2011 were about $18 billion dollars. That’s right. Billion. Now, of course, that is down from about $22 billion (the peak of sales) in 2004. No one in business wants to be losing sales. But anything that you’re still making billions of dollars on is still a viable business – at least for a while. Just as a comparison, the online video business (which includes Netflix, Apple’s iTunes and other services) did about $992 million in sales in 2011. But the writing is on the wall. DVD sales are going down and streaming sales are going up. Even Walmart is getting into the game by adding a streaming service (VUDU) to Walmart.com. But streaming is not the only thing cutting into DVD sales – let’s not forget things like Facebook, video games, Angry Birds, Twitter…and on and on. So you’ve got an interesting situation here: A giant business is on the decline. But just like the dinosaurs, it won’t go quietly. The introduction of the Blu-ray format seemed to help DVD sales stabilize a bit. But, in my opinion, the vast majority of the public is not that concerned with the nuances of the resolution of their movies. The leap from VHS to DVD was so huge that everyone noticed. But the improvement Blu-ray makes over DVD just is not that big to the average consumer. But…on the other hand, let’s face it, it’s still a little bit of hassle to get pure streaming on your TV. The easiest way to do it is to use your cable provider (like Time Warner) to order up movies. Using Amazon or Netflix still requires one extra step (like a Roku box or Blu-ray player or game console) or a more-expensive smart TV. My point is that it’s not quite “plug and play” which is what most technology requires for wide adoption. It’ll be an interesting next few years to watch. The studios have already been finding alternative ways to maximize their profits with streaming services. And until the streaming services produce their own content, the studios will still have some leverage. So stay tuned…and, as always, call me or drop me a line (ryan@dva.com) if you have any thoughts on this.

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