Hollywood's DVD Cash Cow Starting To Falter

from the more-for-less dept

Mon, Nov 24th 2008 1:05pm — Carlo Longino

DVDs are Hollywood studios' most significant moneymaker these days, but sales are falling: one service says they're off 9 percent overall this year, while sales of higher-priced new releases are down 22 percent. With the way the economy is going, a spending slowdown isn't all that surprising, though entertainment revenues have historically held up quite well in down times. But studios are facing a scarier fact: perhaps consumers are losing interest in buying DVDs. One particularly bleak spot is the sales of Blu-ray, which was intended to spur consumers to buy expensive DVD players to match their new HDTVs, then replace their libraries with expensive new Blu-ray discs so they could get better picture quality than from standard DVDs. But sales of players have been slow, and sales of the discs haven't been much better.

The original article spends a lot of time talking about price, but never goes so far as to say that it's starting to look like consumers have no willingness to pay a premium over regular DVDs for Blu-ray's supposed benefits. For many people, the difference in picture quality simply isn't enough to justify buying a new DVD player -- no matter how cheap -- and buying more expensive discs, particularly as money gets tighter. James Surowiecki at the New Yorker has a good post on this angle, saying the vast difference in picture quality between VHS and DVD helped drive sales of the latter, but the difference between DVD and Blu-ray isn't wide enough to have a similar effect. But the studios say the down economy will give Blu-ray a boost, because "the supply of Blu-ray players is likely to sharply exceed demand in the coming holiday season, pushing down prices." That seems like a nice way to spin low sales expectations, but even if you ignore that, Blu-ray prices have a long way to fall before they're anywhere near competitive with upconverting standard DVD players.

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Filed Under: blu-ray, dvds, hollywood

46 Comments

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thomas, 24 Nov 2008 @ 1:12pm

what..not piracy?
I am shocked! they do not seem to be blaming piracy this time! Why buy blu-ray anyway? The players and disks are too expensive and you never know if your new disk will even play. I still buy DVDs, but a lot less than before, simply because what they sell tends to be so much crap.
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Chronno S. Trigger, 24 Nov 2008 @ 1:28pm

Give it 4 more days
I know quite a few people who are waiting for the Black Friday sales to get a blu-ray player. I'd bet they're not the only ones. Let's see what happens then.

It may not be an economic downturn but people saving up for Black Friday. :P
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Anonymous Coward, 24 Nov 2008 @ 1:44pm

DVDs aren't about picture quality
"the vast difference in picture quality between VHS and DVD helped drive sales of the latter"

That wasn't what got me to get a DVD player. For me, it was simply that it's darn near impossible to find VHS movies anymore. As a parent of several small children, I can say that my old vhs movies have much better picture quality than the scratched up, unreadable DVDs that I waste money on.
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Ironskull, 24 Nov 2008 @ 1:45pm

Blu ray player quality
I bought one Toshiba Hi-def and two Blu-ray players before I got a reliable machine that would play everything without, freezing, burping, and throwing-up.
Perhaps if the industry would quit using the public's money for R&D maybe we wouldn't be so hesitent in investing in new technology.
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Kevin Stapp, 24 Nov 2008 @ 1:57pm

I think another major factor is increased availability of on-demand movies, downloading and streaming. I've noticed more and more people moving to other distribution channels simply because it is more convenient. When you consider the price of a blu-ray DVD it is simply cheaper to buy/rent a digital copy or stream the movie on-line.
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Steve R. (profile), 24 Nov 2008 @ 2:01pm

Market Saturation Anyone?
One thing this country ignores is that you can only sell so much. Even if new stuff is coming out, people are less inclined to buy. In part, this may also be do to the availability of movie rentals and on demand viewing.
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Anonymous Coward, 24 Nov 2008 @ 2:02pm

Two truths
There are two truths about the current industry problems:

1) Industry execs have no one to blame but themselves.
2) Industry execs will try to blame everyone but themselves.
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stephen, 24 Nov 2008 @ 2:06pm

i second stapp
I bought my wife every season of newsradio and arrested development, but with her addicted to hulu, she doesn't need dvd's anymore. we also watch a lot on demand. me, i just bittorrent what i want and erase it, no longer even saving stuff for later viewing. it's always there on the internet.
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IanK, 24 Nov 2008 @ 2:08pm

1. Regular people rarely complain about picture quality, although I've never watched a DVD on an HDTV. The biggest transition of going from VHS to DVD is the instant fast forwarding, and rewinding. Doing the same with VHS (and beta) was really annoying.

2. People still have DVD players on their computers. Get BR drives on computers, and sales may start to take off.
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John Kramer, 24 Nov 2008 @ 2:13pm

Blue Ray
The one BIG thing that Hollywood could do to get people buying more Blue Ray discs and players is to drop the price of Blue Ray discs. It's ridiculous to be paying as much as $10.00 more for a Blue Ray Disc that a DVD.
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Steve, 24 Nov 2008 @ 2:14pm

no pirates?
are the pirates bored with movies and have sailed into other water?
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Anonymous Coward, 24 Nov 2008 @ 2:15pm

Prices
I'm interested in a blu-ray player. The hardware prices are getting _nearly_ tolerable. However, the movie prices are way too high. Compare $20 for dvd and $35 for blu-ray. Nearly double. And thats not counting all the discounted dvd's you can buy.

Blu-ray isn't going to take off until the software prices come much closer to dvd.
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Anonymous Coward, 24 Nov 2008 @ 2:16pm

People bought DVDs b/c they have menus. VHS to DVD was more than a change in quality to mainstream consumers. DVD to BD is ONLY better quality to mainstream consumers.
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NullOp, 24 Nov 2008 @ 2:17pm

Sales down....
Wow, that's awful! The greedy studios are not making as much as they feel they are entitled to make. Maybe people are watching the videos they already paid for. Or, maybe, the ones they paid for and are worth watching again. That reduces the number to choose from significantly. In any case, thanks for the good news!
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Johnny Canada, 24 Nov 2008 @ 2:31pm

Sales are dropping, big suprize.

Maybe if there was something worth buying.
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waiting, 24 Nov 2008 @ 2:40pm

don't have a blu-ray player. have a dvd player, but don't want to buy dvds that will soon be obsoleted. so, buying nothing for now.
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whatever, 24 Nov 2008 @ 2:43pm

dvd - good enough for me
I'm glad to see so many others sharing my opinion. I'm a gadget freak, but have no intention of moving to bluray or any other HD format until my DVD player breaks AND I have an HDTV, rather than a 10 year old 27" RCA CRT TV. Meh, even then I'll just buy another $25 DVD player, or stream from my computer.
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Tim, 24 Nov 2008 @ 2:48pm

Not so sure about price
I'm not convinced that price is the leading factor in this, I know for a large majority of the people out there yes it would be true, but for me the issue is with the needing to constantly upgrade the firmware on the blu-ray players to get the disk to work properly. Yeah you could by a PS3 because it's tested the best for this issue and in most cases the cheapest, but I'm not going to buy a PS3 just for a blu-ray player and I'm sure as hell not going to buy it as a gaming console, just doesn't appeal to me as the 360 does. But that's just me. How about you figure out the DRM issue so we don't have to flash the damn player all the time so I can watch a movie.
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Anonymous Coward, 24 Nov 2008 @ 2:56pm

"saying the vast difference in picture quality between VHS and DVD helped drive sales of the latter, but the difference between DVD and Blu-ray isn't wide enough to have a similar effect."

WHAT???? I dare you to do a side by side comparison of an upconverted DVD against it's Blu-Ray equivilent. There is a huge difference, it can even be quantified as a number of pixels updated 24 times per second.

VHS Quality 720x240 (interlaced) = 172,800 px
DVD Quality 720x480 (progressive) = 395,600 px (2x VHS)
BLU-RAY (720p) 1280x720 = 921,600 (>2x DVD)
BLU-RAY (1080p) 1680x1080 = 1,814,400 (>4 DVD, >8x VHS)

Maybe Blu-Ray isn't the problem maybe the problem is the lack of 1080p televisions. The difference between a 768p image and DVD quality (upconverted) is remarkable but not as dramatic as DVD to 1080p.
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Anonymous Coward, 24 Nov 2008 @ 2:59pm

Re: DVDs aren't about picture quality
Learn to "pirate" your DVD collection and you won't have to worry about it. Keep the master for copies later and burn off copies...when they get trashed, toss 'em and make a new one.
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Steve R. (profile), 24 Nov 2008 @ 3:03pm

Re: what..not piracy?
"and you never know if your new disk will even play."

Eliminate the DRM and reliability issue should be solved. DRM "costs" the industry. Eliminate the cost of DRM and the price of the DVD could be reduced to promote sales. Mass market products require mass market solutions.
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Anonymous Coward, 24 Nov 2008 @ 3:05pm

Re:
DVD @ Wal-mart: $5.99
Blu-Ray: $32.99
Online stream: $10/mo (12,000+ title...200+ worth watching)

For me, the price is the big factor. Anything I can't stream gets picked up at a RedBox on the way home from work for $1.
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Mike Strong, 24 Nov 2008 @ 3:09pm

Blu-ray Still Too $$
I have a blu-ray player, but only buy stuff on half.com for the price I specify on their pre-order deal. It takes a LONG time to get someone to finally give up and unload a "Like New" blu-ray for $10, but it happens.

The publishers are smoking really bad stuff if they think we're going to pay the retail prices for blu-ray. It's not THAT much better of an experience.

I love HD, but they can kiss my keister if they think I'm going to shell over that much money for these discs.

Happy Thanksgiving everyone!
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Anonymous Coward, 24 Nov 2008 @ 3:13pm

@3
uh, DVD quality is vastly superior to VHS as well as more durable.
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Todd, 24 Nov 2008 @ 3:28pm

Sorry, but you aren't a gadget freak if you own a 27" CRT and a $25 DVD player.

The Price of software is the issue for me. I own both HD-DVD and Blu-Ray, so I am more than willing to pay for the higher quality. But I have to really want a movie to justify $30 for 1 movie. I mean, we're talking $100 for 3 movies. There is no such thing as an impulse buy when it comes to Blu-Ray, it's always a planned purchase.
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Actual Inventor, 24 Nov 2008 @ 3:46pm

Re:
Agree with Kevin. On-demand movies are having a big effect and that bodes well for HD movies downloaded from the net...when the studio's get around to making it easier.
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ahhh, 24 Nov 2008 @ 3:49pm

those AXXO rips burned to disc play pretty damn well in a decent up convert dvd player....

everything else gets streamed off netflix and played through the lap top hooked to my TV
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PaulT (profile), 24 Nov 2008 @ 3:54pm

For me, the whole HD battle has been a loser from the start. I don't own a massive TV nor have any interest in buying one. With the initial enforcement of region coding, lack of extras on Blu-Rays, etc., let alone the cost, I have zero interest.

I do, however, still buy a lot of DVDs. Prices have come down a lot, and the factors that attracted me in the first place (no more chewed tapes, cheap to import, extras) are all still there. The difference in picture quality between VHS and DVD was never a major factor for me (though I doubt I could go back willingly), and an upscaled SD DVD is good enough for me.

To my mind, there are 4 major reasons why DVD sales are faltering:

1. Economic uncertainty. Whichever way you spin it, DVDs are a luxury, and people are cutting back on those.

2. Shady tactics. Everyone's had the experience of buying a "special edition" that has about 4 extras spread over 2 discs. Or, a bare bones disc that's followed 6 months later by the "real" special edition. people just wait for the price to come down, or the new version to be released - we've been fooled too many times by double dipping for it to work now.

3. Market saturation. Every crappy movie ever made is getting a DVD release. Add to that the fact that what's been driving the DVD market for years is the availability of back catalogue releases - want The Godfather or Blade Runner in a new edition that's 50x better than the VHS? Sold! Want to buy the 5th "director's cut" or box set of the same movies? No. Want to buy the new crapfest instead of dipping into those classics? Of course not!

There's also the factor that many people were just buying DVDs to upgrade their existing VHS collection. Few of those want to splash out yet again on another new version just for a better picture and sound that they need a $2000 system to notice the difference on.

4. Downloading. I don't mean the boogeyman of "piracy", but rather there's more choice. Many people join Netflix nowadays but never rent a physical DVD. XBox 360 has a movie rental service that's good enough for many. Combine that with the growing realisation among many DVD buyers that they simple don't watch everything they buy more than once, in-home renting is good enough for many.

So, what's the solution? The DVD market will continue to contract as it has definitely peaked, but they can add longevity by removing regional coding, not trying to double dip every 6 months and basically giving people what they want. In the meantime, they need to expand upcoming markets like download/VoD and produce movies that people actually want to buy. Last year, they complained of disappointing sales of movies like Spiderman 3 and Fantastic Four 2. Well, that's because they sucked! I guarantee this holiday season's Dark Knight and Wall-E will do better, because they're much better movies!
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TheZorch, 24 Nov 2008 @ 4:15pm

Its the DRM Stupid!
There is one big reason why Blu-Ray isn't selling .. DRM.

All those tens of thousands of HDTV early adopters who are probably still paying for HDTVs costing $10,000 or more are not going to go out and buy new HDTVs with HDMI ports just so they can enjoy HD movies which they were promised when they bought those HDTVs in the first place.

The MPAA is their own worst enemy, they promised these people content, then screw them over by saying they need to buy a whole new TV just to watch movies in HD. That is wrong, unethical and makes no sense. DRM doesn't stop pirates, never has, never will, but it does stop customers from enjoying products. The movie and music industries are just going to have to live with the reality that there is piracy, and they need to focus on shutting down the large organized crime syndicates who make huge profits from the counterfeit DVD/CDs and not some John/Jane Doe who downloads a movie/song via P2P. Yes, the economy is a contributing factor, but DVD and CD sales have been dropping for quite a while before the economy turned bad.
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Timothy Pheil, 24 Nov 2008 @ 4:54pm

DVDs
Blame the DVRs. We always have so much on our DVR, we don't have time to watch DVDs. Theres also much better programing on different cable networks. That we still don't have time. I'm having to store stuff on a portable HD so whens its to hot to go out in the summer will have something to do. I gave up on Blockbuster (the price doubled in 6 mths) and Netflix (movies on the top of my list were showing up on cable on demand a month later).
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mischab1, 24 Nov 2008 @ 5:09pm

Re:
Carlo didn't say there is no difference, he said that the difference isn't great enough to drive sales. In other words, the improvement in picture quality isn't big enough to compensate for all the minuses.
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hegemon13, 24 Nov 2008 @ 5:26pm

Re:
Actually, it is not even a change in quality to most consumers. To really appreciate a significant difference, you have to have a large-screen 1080p TV, something that the mainstream does not yet have.
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hegemon13, 24 Nov 2008 @ 5:36pm

Re:
You lost credibility the moment that you gave a fixed resolution to VHS. VHS is analog and does not have an exact pixel resolution. That's the equivalent of talking about how many megapixels your 35mm camera has.

Though you can capture 720 pixels of width from VHS, it is not at all equivalent to the 720 pixel width of a DVD. A VHS tape is, as far as image quality goes, approximately equivalent to a 300-400 pixel-wide digital video. Even that is not a proper comparison, though, because the crispness or blurriness depends a lot on the quality of the recording and the wear on the tape.

DVDs provided a major step up in many ways: Instant scene access, no rewinding, no quality degradation if you take good care of them, 5.1 surround sound, special features, commentaries/multiple audio tracks, no previews (at least on the early discs), dramatically improved picture quality, multiple versions of a movie on one disc, easier storage, etc.

Blu-ray offers: substantially better picture and sound for those few who have the equipment to see the difference, and a few poorly-implemented online features.

Wonder why people aren't flocking to Blu-ray the way they did to DVD?
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hegemon13, 24 Nov 2008 @ 5:39pm

Re: Its the DRM Stupid!
I hate DRM, but it has little to do with why Blu-ray isn't selling. Most customers have no idea what Blu-ray DRM is.
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Freedom, 24 Nov 2008 @ 6:39pm

Optical media just doesn't make sense.
We are finally seeing what happened to the music industry and CDs happen to the movie industry. Bandwidth, torrents, etc., have gotten to a level that it allows someone to easily get movies for free and purchasing DVDs are no longer required.

Just as in the early days of MP3s on the Internet, we'll find more and more people give their immediate friends a hard time for buying DVDs/BRs and show them how to acquire the movies for free. Add in that the pirated copies have no restrictions and it is pretty easy for most people to justify not paying for a movie. (Didn't say it was right, just that it was easy for most to justify.)

I can't see any reason why history won't repeat itself and the movie industry has a great chance to do learn from the music industry before it is too late.

The writing is on torrent wall!

Freedom

P.S. In my little circle of friends, over the last 3 years I've watched all but 2 folks switch to getting their movies via torrents. The 2 folks that have continued are collectors with 5,000+ DVD/BR collections. The others are just "normal folks". The younger ones learned first, ironically taught the older ones in the group and so on... Really kind of interesting in fly on the wall sort of way.
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crystalattice (profile), 24 Nov 2008 @ 7:44pm

Re: DVDs aren't about picture quality
The picture quality helps but I think the bigger draw for consumers is the fact that DVDs don't have to be rewound and they allow for random access.

Plus, they have extra features but, personally, those aren't a big selling point. After I watch the special features once, I will probably never view them again.
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crystalattice (profile), 24 Nov 2008 @ 8:01pm

Re: Prices
Good point. When you can pick up DVDs for $5 in the bargain bin, you get half a dozen for the price of one Blue-ray.
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Vincent Clement, 24 Nov 2008 @ 9:29pm

Re: DVDs aren't about picture quality
As a parent of several small children, I can say that my old vhs movies have much better picture quality than the scratched up, unreadable DVDs that I waste money on.

You haven't looked hard enough on the internet. Plenty of programs available to make backups of the DVDs. I make a backup of all my DVDs and put the original way for safekeeping.

I also keep a copy on my computer because I have the room and I also convert them to Xvid so I can cram a bunch of movies onto one DVD that can be played in my kids portable DVD players. I can easily get over 6 to 8 hours on one DVD with a good picture quality. Therefore, no need to switch DVDs mid-trip.
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Vincent Clement, 24 Nov 2008 @ 9:32pm

Re: Market Saturation Anyone?
Things that are competing for your limited media dollars: DVD, Blu-Ray, Ringtons, CDs, Online music, console video games, handheld video games, PC video games, apps for your iPhone or Blackberry, etc.
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Vincent Clement, 24 Nov 2008 @ 9:33pm

Re:
You do realize that a blu-ray player will play DVDs. Nothing obsolete here.
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Anonymous Coward, 25 Nov 2008 @ 5:57am

Gee
DVD vs VHS: Better picture, added features, random access, more durable, smaller form factor, no rewinding

BR vs DVD: Better picture, troublesome DRM

Yeah, I can't understand what the problem is, either.
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Anonymoose, 25 Nov 2008 @ 12:38pm

Could it be that people don't want to pay for the same movie three times?
In the conversion from VHS to DVD, many replaced libraries. Who wants to do that again? Especially at 2x the cost per film?

There's a curious artifact in the dual-positioning of the industry; you 'buy' the medium, but license the content on it - except your license is tied to the specific atoms you 'purchased', so it's not really a license to a film, so much as an object. Which, by the way, you can't back up, change formats, or otherwise use freely in your home, as you can other objects.

Digression. Just because lightning struck once with converting libraries to DVD doesn't mean it will repeat. Bad timing, not enough difference in quality, high price, and competing with on-demand, purchased digital downloads and BitTorrent (more complex for the average consumer, but best experience).

They can't have it all ways and expect people to pour cash into their open mouths. How many times can we be expected to pay for the same films over and over?

Fail.
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Anonymous Coward, 25 Nov 2008 @ 2:43pm

Re: dvd - good enough for me
If you have a $25 DVD player, and a 10 year old CRT, I would hardly consider you a gadget freak.
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Anonymous Coward, 25 Nov 2008 @ 2:56pm

Re: Re:
If BD really wanted to compete with DVD, they would make it worth while for the majority of the population w/out an HDTV to switch; ie, put more SD material on BD format, like an entire season of seinfeld on 1 BD instead of 5 DVDs, that way people would be inclined to switch over for the convenience, not simply the improvement in picture.
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Rekrul, 25 Nov 2008 @ 5:07pm

Maybe it's time for Hollywood to sue the government for f***ing up the economy. After all, if people had more money, they'd be more willing to buy luxury items like movies. Clearly the drop in sales is the government's fault.

As for the price of discs; I've bought several DVDs at a local dollar store, some of which were double features. Sure, the quality isn't the greatest, but it's no worse than watching the old broadcasts on TV and you can't beat $0.50-1.00 per movie. Contrast that with $20 movies or $30-50 for a single season of a TV show. Want to buy 10 movies and 3 TV shows (at an average of 3-5 seasons each)? That's $600-800 right there.
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Jack, 26 Nov 2008 @ 8:10pm

Several people have asked me recently to explain Blu-ray to them, to which I reply that it is like a DVD with even better picture and sound quality but much more expensive and subject to playability problems to try to prevent piracy. They usually seem over it at 'much more expensive'. For myself, I'd have already bought two flat screens to replace my aging TVs, but have decided to wait until the old sets die. Picture quality continues to improve, prices continue to fall, but most importantly I don't know when the industry will make yet another connector or security change like HDCP.

As far as DVDs, I knew a handful of people who bought DVDs like mad in the last decade. All have almost entirely stopped. They figured out they didn't rewatch them enough, there will always be a 'better edition' of popular movies, that DVDs too will be obsolete someday, and that rentals are so easy as to make owning too many DVDs seem a waste of cash.
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