We have been documenting the slow death of CDs over the past 7 years. This year brought the first slowing sales in that other shiny polycarbonate disc, the DVD.
In a recent report, Alliance Bernstein Research observed that through early December, DVD sales
were down 4.1% YTD, including a 2.1% decline in Q4. Bernstein cited data from Nielsen VideoScan.
DVD sales were flat in 2006,pulling in the same ~$16 billion as 2005. Total home video revenues — including both sales and rentals — looks like they will hit ~$23 billion in 2007. That’s a $ billion shy of 2006 revenues.
These are only minor drops, but what makes them significant is that, no matter how you measure it, 2007 is the first negative year-over-year sales growth since DVDs came to market.
I suspect that the usual attention scarcity — which have been hurting CD sales — are also be impacting DVDs. And DRM certainly isn’t helping (What do you mean I can’t watch this DVD on my iPod?). However, DVD buyers are also wrestling with the additional factor of the latest format war.
Speaking personally, I’ve throttled back on my DVD purchases, as I await the winner of the HD/Blu Ray battle. Whatever DVDs I buy these days are disposable/rental priced (i.e., $5.99). The various HD formats are much pricier, and until that fight gets resolved, I, like many consumers, are buying less (Do I want this in HD? Gee, I better wait). Who wants to get stuck (again) with another extinct format?
There may be other macro factors at play: namely, an over-extended consumer. That showed up in not just DVD and CD sales, but in concert ticket revenue, also.
Despite several big "reunion" tours — the Police, Van Halen and Genesis — the total North American concert industry posted its slowest year since 2004. According to Pollstar, the top 20 tours generated $996 million, down 15.6% percent from 2006 totals. The 2004 total was $951.1 million, when Prince and Madonna were touring. Perhaps a long tail effect is spreading less revenue to more bands.
Here’s the specifics on revenue and ticket prices:
Top 20 Selling Tours of 2007 (Millions)
| 1. | The Police | $ 131.9 |
| 2. | Kenny Chesney | $ 71.1 |
| 3. | Justin Timberlake | $ 70.6 |
| 4. | Celine Dion | $ 65.3 |
| 5. | Van Halen | $ 56.7 |
| 6. | Tim McGraw and Faith Hill |
$ 52.3 |
| 7. | Rod Stewart | $ 49 |
| 8. | Genesis | $ 47.6 |
| 9. | Josh Groban | $ 43 |
| 10. | Rascal Flatts | $ 41.5 |
| 11. | Dave Matthews Band | $ 41.1 |
| 12. | Billy Joel | $ 39.1 |
| 13. | Roger Waters | $ 38.3 |
| 14. | Bruce Springsteen & The E Street Band |
$ 38.2 |
| 15. | Hanna Montana / Miley Cyrus |
$ 36 |
| 16. | Elton John | $ 35.7 |
| 17. | Jimmy Buffett | $ 35.6 |
| 18. | Barry Manilow | $ 34.8 |
| 19. | Toby Keith | $ 34.3 |
| 20. | Maná | $ 33.9 |
(Based on total dollar volume of tickets sold)
Source: Pollstar
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An interesting side note: The average price of concert tickets (sold through StubHub’s secondary market) in 2007 was $117 — a price decrease of $28 per ticket compared to 2006. Note that these are not face value, but secondary (scalped) tickets.
Highest Average Ticket Price of 2007
| 1. | Celine Dion | $ 347 |
| 2. | Elton John | $ 260 |
| 3. | Hannah Montana | $ 257 |
| 4. | Eric Clapton | $ 253 |
| 5. | Bon Jovi | $ 239 |
| 6. | Bruce Springsteen | $ 226 |
| 7. | Van Halen | $ 217 |
| 8. | Genesis | $ 210 |
| 9. | The Police | $ 209 |
| 10. | Michael Buble | $ 195 |
(For tours that sold over 3,000 total tickets)
Source: CNN Money, Stubhub
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You something unusual is occurring in the economy when consumers pull back on their entertainment spending . . .
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Sources:
CDs Are Dying. Are DVDs Next?
Eric Savitz
Tech Trader Daily, December 21, 2007, 2:36 pm
http://blogs.barrons.com/techtraderdaily/2007/12/21/cds-are-dying-are-dvds-next/
Big media sees reversal of fortune
Georg Szalai
Hollywood Reporter, Dec 11, 2007
http://tinyurl.com/yszshy
DVD-ISASTER SALES
BRIAN GARRITY
NYPost, December 4, 2007
http://www.nypost.com/seven/12042007/business/dvd_isaster_sales_806649.htm
The Police Lock Top 2007 Tours Spot
Wednesday, Dec 26, 2007 1:02PM
http://www.pollstar.com/news/viewnews.pl?NewsID=9020
U.S. concert business slumps despite reunion tours
Dean Goodman
Reuters, Sun Dec 23, 2007 12:44pm EST
http://www.reuters.com/article/musicNews/idUSN2129255420071224
2007 StubHub Concert Ticket Annual Report 2007
December 05, 2007: 06:12 PM EST
http://money.cnn.com/news/newsfeeds/articles/marketwire/0336458.htm
The Life Cycle of a CD or DVD
http://www.epa.gov/epaoswer/osw/students/finalposter.pdf
I used to buy about 5-10 DVD movies a year , and rent from Blockbuster another 5-10 a year, but when my parents got me a Netflix subscription all of that changed.
Now I never buy DVD movies, but I’m watching more, probably around 30 a year.
If I am at all typical this is killing the blockbusters, but helping the little known ones and TV shows.
Oh, and it stuck as well. When the free 6 months ran out I was happy to pay $8.99 a month to continue.
I have a number of movies in all of the following formats.
VHS-NTSC
VHS-PAL
VCD
LD
DVD Region 1
DVD Region 3
And many more in 2 or more formats.
They tell us that the major part of the price we pay for movies is the intellectual property, since the cost of making a DVD or other format is actually quite low.
Then why is it, that if I want to upgrade to a new format I have to pay full price? It’s a racket of course. Which is why I have no sympathy for when they scream about their counterfeit or illegal download/ P2P sharing losses.
stagnating CD’s and DVD’s? how good can that be for AMZN?
We actually got a lot of CDs and DVDs for Christmas, but other than as gifts, we don’t buy them much. Usually it’s an Itunes download or a Netflix rental. We won’t typically buy a CG or DVD unless we really want to keep it around due to limited storage space.
Who knows what will happen between HD DVD and Blu Ray. Sony has a strong vertical grip from content to distribution, and Microsoft isn’t going to just let Sony take over the entertainment industry.
I just feel lucky that I was able to convince my wife to let me buy a PS3… so I’ve opted for the Blu Ray format. I love HD, but my wife claims that she can’t see the difference. Given that I’m a child of a Samsung employee, watching HD vs standard digital is like night and day.
I currently subscribe to Blockbuster and have been successful in getting some Blu Ray dvds sent to us. But it appears that the availability of the “good” movies is practically nonexistent. I like the convenience of getting my movies in mail and the option of dropping them off at a physical store for another dvd. Also, I understand some BB stores have HD and Blu Ray, but I haven’t found one yet… although the clerk at my local BB store has informed me that they’ll start carrying them in Feb.
I’m probably like most people that recently bought a Blu Ray or HD DVD player… why waste money on a standard dvd and why pay $60 for a Blu Ray dvd. For now, I’m just going to have to rent/subscribe from Blockbuster, even though I have to be on the waiting list for now.
Yea the Netflix thing never works for me or some of the friends I know. Usually their DVDs just sit around for a while, collect dust and are shipped back.
Honestly, I think there are a few other factors, although I don’t have sourced evidence:
– Americans just don’t have time to watch nearly as many movies
– Most movies are only worth seeing once
– Somewhat of a rebellion against those in Hollywood and the movie/entertainment industry that make far too much $$ for what little they do.
There’s maybe 20 movies worth watching a year… Anything that doesn’t get at least a 6.5 on IMDB is crap until proven otherwise (massive word of mouth), and even then I’m not inclined to see a movie unless the rating is a 7.2++.
@ Sam Park: $60 a movie for Blu-Rays? I’d pay a little attention to Amazon.com, as they’ve run SEVERAL buy one get one free deals on Blu-ray movies bringing the average cost per disc down to the $10-13 range–cheaper than most dvds!
I’m neutral in the format war, but I lean towards Blu-ray simply because I feel it is the technically superior format. 50gb of storage vs 30 (even though there is a 51gb hddvd disc supposedly coming, but not quite here yet), higher maximum bitrate, etc.
If anything, I think this format war has been a great benefit for people like me who are neutral and love high definition stuff. When Blu-ray first came out, the movies were of horrible quality. Now, quality is outstanding (with a few exceptions of course), there are tons of buy one get one free sales sending the avg cost of a movie plummeting to discounted dvd prices, and let’s not forget the fact that movies done well in high definition on a good display are simply breathtaking. Once you get into HD and then try watching a DVD again, you’re going to wonder why more people aren’t jumping in (unless they’re blind of course!). A word of caution though–there ARE several duds out there that simply don’t look much better than a DVD (an inexcusable thing for a studio to do IMO), but there are threads in the Blu-ray/HDDVD areas on AVSForums that let users rank/rate the picture quality of Blu-ray and HDDVD movies. Bottom line is that both Blu-ray/HDDVD have so much potential, and more customers demanding higher quality releases can only benefit everyone more.
My opinion is that everyone should just get a Playstation 3 and Toshiba A3 (I think they’re down to around $150 now with something like 10 free movies at Amazon) and take advantage of the buy 1 get 1 free sales (there’s one going on at amazon right now for hd-dvd, you can pick up the first four Harry Potter movies in HDDVD for something like $39.90 total). Honestly, so many movies have been sold on BOTH formats that for one to simply just die and become totally obsolete at this point is going to piss a LOT of people off. Dual format players will start to get better and cheaper next year, 51GB HDDVD discs will come out hopefully, and both formats will probably coexist just fine. But if they want to keep up the war that is leading to $10-13 average disc prices, fine by me!
Really, how much time is there in life? Why do I need a collection of CDS that I will never have the time to listen to or a collection of movies that I will never have the time to watch? And to tell you the truth I often just sit at Borders and read the latest book for free. I’m inundated with info that suits me fine. Plenty of music, plenty to watch on the telly. I’d rather spend quality time with my loved ones.
joe… I was simply making a general observation about the $60 prices. Prices for these tech stuff always come down to reasonable levels. However, I do agree with you that I can’t watch sub-HD quality picture anymore and that both formats can coexist.
Some commenters suggest a certain fatigue factor, with which I agree but which is probably difficult to quantify.
Since the deleterious effects (every consumer is a potential criminal until proven otherwise) of the infamous DMCA have seeped down to moi, I’ve ratcheted down my DVDs and CDs consumption to about a tenth of what I used to buy when the concept of fair use meant something.
Fortunately for me, I have family living in the civilized world (ex-DMCA territories) who can provide me with the goodies.
But my dollars are saved for other uses than feeding this racket.
Francois
WhooWhee! Over 200 bucks for a Van Halen ticket. Talk about not knowing how to massage the sweet spot in ticket pricing. I still have a Stone’s ticket stub from the 70’s that ws 12 bucks. Van Halen was probably 20 bucks in the eighty’s.
There is another piece for you to write Barry. How housing inflation has caused inflation in other areas like this. Discovery has a car auction show that often shows how the prices for muscle cars has gone through the roof since 2000.
Sorry Eddy, Diamond Dave, not paying that to see you guys!
I can buy some economic headwinds as contributing factors…..
But
What about the cultural deficit that is so obvious in that list, it’s like 1984 redux,
which reflects an artistic depression unseen since the 50’s.
and
has the Media industry fallen so far behind the curve that we are waiting for a rebirth of both music and Film, into their new forms.. as blogging has reshaped journalism, movies and music need to be reborn.
and
what about cable’s responsibility. at this moment there are no less than 15 movies available on my TV free of charge then no shortage of PPV, and rental options.
As much as I love the idea that it’s economic. my bets are more on a redistribution of the way we consume media, and the cultural depression that is “pop culture”.. I mean.. look at the hemogony in that list.
Anyone care for some Dry White toast?
Where is “The Clash” and the “Sex pistols”; what about a rebirth of punk, as told by hip-hop? or punk manudo.
Concerts drive CD sales and they have become priced as a luxury item. At the same time, the quality of the product has deteriorated. And who listens to the Howard Stern/advo-commercial radio model of today.
Without mass exposure, even today’s lousy music won’t sell. (List #1 reads like a romp down nostalgia lane).
“Concerts also slump”
Given the ticket prices, I would say its about time.
Re: HD
Great, another new format, another new collection. Does this one require me to replace all of my AV equipment purchased in the last ten years and make all of the content I have technologically and socially obsolete?
I’m sick of the double-dipping. Every few years, a new edition of a favourite CD or DVD comes out, this time with new “Exclusive!” content. I don’t have time to watch or listen to everything I already have, yet they want me to buy more!
I’m also sick of the people bragging about the size and resolution of their monitors and the size of their collection. Whatever happened to just sitting down to watch a movie?
I’m the type of person that reads the public reviews of the movie on IMDB before I’ll make the money commitment or even the time commitment many days to watch it. What I have found, especially of the blockbusters, is that most of what hollywood is producing the last few years is formulaic, repetitive and not creative. It is thus not even worth the effort to watch, let alone buy.
Maybe if hollywood started making accurate historical biographies people would start to get inerested again but even when they have good solid material to work with they can’t even stick to the truth. Then they wonder why no one is interested in their product.
A good example is the historical figure of Constantine. I just learned the other day that there hasn’t been made a movie about him since the 50’s or 60’s yet his influence on modern western culture is dominant. His life story is epic and filled with tons of plot twists and turns. So why not tell his story? I guess because he is Christian and thus anathema to the liberal hollywood mindset. That is the only reason that makes logical sense to me.
Another example is the many fantasy children’s stories of the past. There are centuries worth of these from our past yet they are not getting produced. Why? I would rather watch something like that than die hard for the fourth time. Is it possibly because they carry a strong moral message that is against the hollywood worldview again? What other reason could there be? Does it take a Mel Gibson to produce all these things? Maybe, because it sure doesn’t seem like anybody else wants to even though there has to be a market for these things
P.S. Now that CGI has come into it’s own a lot of these fantasy stories should be ripe for the plucking. Let’s hope hollywood does something with them