As DVDs become ever more important to Hollywood, sales may be plateauing. Nearly 80% of American homes have a DVD player, and these late adapters seem to be buying fewer discs.
Both Pixar and Dreamworks disappointed Wall Street recently, as "The
Incredibles" and "Shrek 2" failed to live up to the incredible hype
set for them.
The NY Times notes that we are reaching a "saturation point:"
"While sales of discs are expected to rise 13 percent this year in the United States, the salad days of 20 to 30 percent annual growth are a memory. Most movie libraries are now out on DVD, and stores like Wal-Mart are slashing disc prices, which means less profit for studios.
To jump-start growth, the studios are turning to their television archives for new material. But those sales are expected to slow, too.
This is particularly bad news for studios, which rely more and more heavily on DVD sales as the video rental business shrinks and income from theaters flattens. For example, Americans spent $9.1 billion on feature movies on DVD last year, 47.9 percent of the money studios made from those films.
That’s up from 28.7 percent in 1996, when videotapes still dominated."
Still, plus 13% is better than a shrinking 7%, as CD sales have done.
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click for larger graphic
Courtesy of NYT
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By next year, the studios will derive more revenue from DVD ssales
than they will from all other sources: theatrical, rentals, and other.
What has made me throttle back buys is the number of Discs that are spares in extra material: Outtakes, interviews, alternate scenes, director/actor commentary.
I can see the movie on HBO/Starz. If you are not giving the consumer something value added, they won’t shell out $15 per. The math is pretty simple here.
While some have lamented the glut of new titles, I don’t believe that’s a problem. Much of these will find a niche audience, adhering to the Long Tail thesis of consumer media. Between Netflix, Amazon and Blockbuster, there’s plenty of interest in limited run Indies.
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Sources:
A DVD Standoff in Hollywood
By KEN BELSON
NYTimes, July 11, 2005
http://www.nytimes.com/2005/07/11/technology/11dvd.html
Discs slip, pain studio
DreamWorks has to revise estimates of earnings because of poor DVD sales; SEC doing informal probe
BY HARRY BERKOWITZ
Newsday, July 12, 2005
http://www.newsday.com/business/ny-bzdream4340175jul12,0,2358037.story
Except for the childrens DVDs that get worn out in the minivan DVD player (Nemo, Mary Poppins in my house). Why do people actually purchase DVDs?
My Netflix subscription keeps me in all the movies I have time to watch, and has an incredibly deep library. I can watch the Robert Morse “How to Succeed in business…” as often as I like, and if the disc goes bad I just mail it back with a note.
You can’t generalize about the DVD sales market. Some people take the attitude that they don’t need to own them if they live near a blockbuster or subscribe to Netflix. Other people just want to have a stack in the library of their favorites that they can peruse on any given evening. Particularly people with kids.
But c’mon: who the heck can expect 20-30 percent growth indefinitely in ANY product? A 13-percent rise in sales seems pretty good.
The whole trend of buying DVDs seems to following the VHS format – that is, that people (particularly early adopters) started by buying movies, but then the rentals become more common as the late adopters come on board. Hollywood needs to get agreement on the new DVD format ASAP to get another round of upgrades from early adopters.
I have really never understood why people want to buy DVD’s unless they are going to watch it all the time. With Comcast there is almost every night something that I can watch without having to pay extra for it
If Time Warner were to start doing HD VOD I would never leave my house.
Although DVD sales are slowing, there is a very BRIGHT light at the end of the tunnel. High Definition Disks. There is a format war between Blu-Ray and HD-DVD, but once that is settled, people will have to buy a whole library once again.
But you may ask, why would people do such a thing. The main reason is that once High Definition TV (in it’s many forms) is available over the air, over cable, and at Blockbuster, people will buy the HD monitors. Also PS3 and Xbox 360 are also High Definition ONLY. All of a sudden the DVDs people purchased will look like crap on thier new TVs, and you need to buy the High Definition movie.
I know the arguement against this is that movie downloading will become the norm. However keep in mind that a next generation optical disk will hold something like 25 Gb. That is a long time to download over current broadband technologies. At 3 Mb/s that is still an 18 hour download. Until fiber comes into the home, you are looking at getting High Definition Movies through other channels.
So Hollywood will start selling the little disks soon. The PS3 will probably the tipping point for this to begin happening. It will have a Blu Ray player.
People buy DVDs because they like to own them. They like to put them on their shelves to define themselves to others. They like to give them as gifts. They like to keep them in the player for their kids.
You might as well ask why people buy and keep books instead of just borrowing them from the library.
*sigh*. Don’t believe the hype. I read this article when it first came out several months ago. You’re all missing the point.
Overall DVD sales are strong. They’re just whining because sales of Shrek 2 and The Incredibles are slowing down. Wait a second. Hasn’t both those movies been out for quite a while now? Wouldn’t it be obvoius that you can’t keep on selling the same number of copies of those movies forever? That they would sell more the first week/month whatever of release, and eventually that will hit everybody?
Yup.
A major problem is that businesses expect almost infinite profits. It creates an unnaturally high bar, and when that bar is not met, all hell breaks loose.
It is natural for DVD sales to slow down, but that doesn’t mean that Studios shouldn’t be panicking. DVD is entering the next phase in the product life cycle (and we all know that the last phase is death). Blue ray or HDVD will repalce DVD, but how long can anyone honestly expect DVD to to last? MP3 is fast replacing CD. Within the next decade or two, the discs will become a memory and everything will be digital. It is the way of things.
Studios: “Strike us down and we will become more powerful than you can possibly imagine…”
There is no question that DVD sales are slipping. Even as player saturation reaches a head with up to 94% of VCR homes anticipated to own DVD players by 2006, sales have slowed to a paltry .02% increase in the first half of 2005 as compared to the fi…
Studios: “Strike us down and we will become more powerful than you can possibly imagine…”
There is no question that DVD sales are slipping. Even as player saturation reaches a head with up to 94% of VCR homes anticipated to own DVD players by 2006, sales have slowed to a paltry .02% increase in the first half of 2005 as compared to the fi…
Growth is slowing — not sales.
What this means is that DVDs are growing more slowly — not contractiong. . . .
“MP3 is fast replacing CD. Within the next decade or two, the discs will become a memory and everything will be digital. It is the way of things.”
Man, talk about believing the hype.
Two years after that comment was made, more people bought cat litter than bought MP3s.
http://www.wired.com/news/technology/0,70170-0.html
Please also remember that VINYL sales doubled in 2006.
E-books were invented in the 1970s and people have been predicting the paper book’s demise for almost 30 years…..
“In the next decade or two” discs will still be around and will probably be more popular than you think, given that they are real and tangible and not sterile, characterless files.
Why do people “actually purchase DVDs”? Why have people purchased books for decades when they could have just gone to the library? Because they love the art form and want the tangible objects to display, share, keep and use.
I’m an avid dvd collector. But I don’t just buy any dvd, only one’s that interest me. What I have seen lately is the lack of bonus material on these disks. If there isn’t enough
extra material, then I just don’t buy it. I’ll rent it. Studios need to realize that collectors want extras and good quality transfers. Stop catering to the stockholders and cater to your customers.