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Uh-oh. You know how online movies are always being held up as the pot of gold waiting at the end of the rainbow? How downloading movies, or streaming them over the internet, will more than make up for dwindling DVD revenue? Well, London-based consultancy Screen Digest has downgraded its digital film sales forecasts by one third.
The consultancy, whose forecasts all the Hollywood studios subscribe to, has slashed its digital film revenue estimate from $1.5 billion in 2014 to $943 million.
It seems we’re just not as keen to watch movies on PCs and on our Xboxes as Hollywood wants us to be.
Alarm bells rang when last year’s digital film sale revenue was off by 19%. Screen Digest had predicted $360 million in sales. The reality was $291 million. This is the first time that Screen Digest has restated its forecasts for the sector since 2006.
Senior analyst Arash Amel tells me that 2009’s results hide a more troubling figure. The drop off in interest in downloading movies to own is even steeper. The consultancy expected DTO to generate $250 million last year. Now it believes the industry struggled to pass $199 million. Amel says, “Download-to-own has always been seen as the pot of gold at the end of the rainbow, just out of reach. Well, that pot of gold is fading.”
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Download-to-own still doesn’t make sense with today’s 20GB high-def movies and limited (and unstable) disk storage space. Among all this talk of the death of DVD sales and the future being streaming & downloads people seemed to have forgotten why DVD sales actually died: the format wars. Consumers were baffled by two years of HD-DVD vs. Blu-Ray — who wanted to buy more DVD’s with the next format being just around the corner? Blu-Ray is not the same huge advance in quality as DVD was over VHS, so there’s less impetus to change format. Streaming is still slow, and average consumers don’t have the technical know how to amass a high-def download-to-own library. So it’s not that people don’t want to buy movies to own, it’s that the media companies are confusing consumers with too many options and formats.
fools! when will people realize that it’s not downloading to your computers, but downloading to your television that will generate the greatest revenue??? Imagine onDemand morphing into a digital download service that stores programming on the same harddrive that has your DVR. It’s not that far away – we’ll probably be there by 2014.
With the sales of huge, gigantic television screens doing very well, why would anyone think that people would like to view a feature film on a 15 or 17 inch screen. The cost of buying a DVD is just a little too much for most families living on $50 thousand dollars a year or less. That would be a whole lot of middle class families in the US who are now losing their homes, etc. I would guess, my best guess is that even though entertainment is always important in a depression or recession or whatever you chose to call it, the actual cost is prohibitive. So, it makes some sense that taking the family out of the house now and then as a treat, to a theater, is more appealing to those who are really struggling. Then, for lower to middle class families, forget it. They simply don’t have the cash/or credit to buy the big TV or to go out to a cinema. They simply fall of the scale. They don’t watch movies and think that people who do are elitists.
Just like the i-pad. It looks cool, has some great apps, but ultimately feels clumsy, is hard to hold on to and most importantly, who wants to bring it to the beach? I’ll take a softcover book or a physical DVD over that any day.
Just imagine, soon we will be walking into a friend or potential lover’s home and will have no clue as to who they are because there are no bookshelves or DVD collections that give us any hint of who they are as individuals. Sad.
don’t forget to factor in who owns the pipes. If this business is ever going to scale up, the implications of the recent U.S. appeals court ruling that invalidates the FCC’s authority over net neutrality will have to be addressed, or Comcast and Time Warner and others that own the pipes and the content may be the real winners.
“It seems we’re just not as keen to watch movies on PCs and on our Xboxes as Hollywood wants us to be.”
I’m sorry, did I miss something? To date, Hollywood has not figured this out, hence, watching movies on PC’s and Xboxes hasn’t exactly been a cash cow for Hollywood.
HOWEVER – as is pointed out above by several posters, the technology is HERE and is going to become mainstream soon enough for ALL CONTENT TO BE DELIVERED DIGITALLY, VIA YOUR TV, whether you pay a subscription fee like current cable, or rent or downlaod movies – WHATEVER – and, speaking as an actor, as it effects us? Under this brilliant “new-media deal” moderate SAG and AFTRA signed with the AMPTP?
WE’RE FUCKED.
DTO sales forecasts don’t surprise me, but the narrow minded views of some of the comments do.
I am a tech early adopter. I’m not an innovator, just early adopter. This summer I will end my contract with DirecTV and I will not pick up anything else. I have the basic Netflix package with sctreaming movies, and I have Boxee (www.boxee.tv) on a computer hooked to my HDTV via HDMI. I will watch almost all of the movies and shows I want except for specialty networks like HGTV and FoodTV, online via Boxee.
More and more people will use a computer as their interface with the TV, and the computer will be more and more like Tivo or similar interface. Movies can be stored in a much smaller space in digital form and be played at the same high resolution.
DTO is flawed because of the viewing limitations. If I can have the file to place with my other converted movies and let Boxee pick up the movie cover, etc, then that would be fine, but as it is I have to use various third party players or licenses. I won’t do that.
I worked in the digital distribution area for one of the major players and think the key sentence in the article is: “It seems we’re just not as keen to watch movies on PCs and on our Xboxes as Hollywood wants us to be.” Which is simply not the case; consumers want to watch what they want to watch, when the want to watch it on the device of their choosing. Some will pay handily for the priviledge of doing so, others won’t.
What will drive the digital distribution model for consumers (& I’m not suggesting that the studios have figured out their business model for actually making enough $$$ to support their production costs), is:
(1) Integrated IPTV. The explosive growth in the number of televisions that can utilize a broadband connection (DSL/Cable/Satelite) to access the internet.
(2) The Collapse of Windowing. When “Date Night” is available on Digital POV and at the theater at the same time, consumers will have more choice and will spend more $$$. Of course, this is a huge sticking point for the exhibitors, cable companies, Best Buys and Blockbusters of the world. The studios are trying to move in this direction without disrupting the current revenue stream they receive from theatrical and DVD. Mark Cuban is right, it will happen.
(3) The ability to move “owned” digital content freely between devices. (E.g. if I buy (not rent) a digital movie on iTunes, I should be able to access it easily on my TV, my phone, and my PS4 via some universal ownership code. Probably the toughest proposition right now. (Actually, Steve Jobs could do a lot to make this happen if he chose to do so.)
To make the above forecast downgrade the case for digital distribution not being the future for Hollywood content is naive. Remember, as the traditional music business went down the toilet, no one believed the online music business would be significant. Albeit different (& many would say better), online is the music business now and that bodes well for video entertainment consumers going forward. (As for the traditional way of doing business in Hollywood, maybe not!)
People tech literate enough to watch movie downloads on their TVs are tech literate enough to pirate movies. I think as each year passes, kids become more and more tech literate. Piracy will only grow and movies will soon be a cheap digital commodity just like music is now.
Eventually history will show major home video profits as a 30-40 year fluke. This business is, and always will be about theatrical exhibition.
The real promise is breaking the studio distribution stranglehold. Right now it costs a lot of money to put movies into theaters, along with marketing.
Distributing movies on the internet allows two critical things. One it allows real low-cost guys to develop skills (internet farm team) for a new generation of writers, producers, directors, and actors. Second, it allows things to be BROAD.
The internet is often “long tail” (lots of little stuff sold very cheaply that add up ala Amazon or Itunes) but it does not have to be.
Theoretically, a few actors/producers could create a mass-market movie and sell it conveniently at low prices, but with low cost. The internet allows CHEAP DISTRIBUTION which can if the movie is very popular, allow mass consumer movies.
This means a Star Wars, or Raiders, or Die Hard, or Lethal Weapon. Action-Adventure movies that Hollywood cannot do now, trapped by elitism, “Malibu Mansion disease,” and inability to connect to Joe Average. Don’t forget the original Star Wars was made cheaply by a then hungry Lucas. Obviously, you need to be able to transfer your film to whatever device — burn DVD, or Ipod, or Laptop, etc.
Sales of 3-D TVs are not going to “rescue” Hollywood — it will either make mass market popular movies, or dissolve like Detroit as huge margins disappear. Neither is Blu-Ray. It’s still in the low teens money-wise for rentals, and that is because unemployment is still around 22% total (considering U-6, discouraged from looking for work). ONLY a robust, booming economy with lots and lots of disposable income will rescue Hollywood from years of low margins on everything.
Can Hollywood survive with low margins? Likely not. EMI went from a huge label to being the junk company of Guy Hand’s Terra Firma. MGM, and probably a few other studios are right on track.
Piracy is an issue, but even worse is apathy. A pirate who loves a movie might eventually by the legit copy to get extra features. Someone who doesn’t even care won’t even have that likelihood.
For someone who hates Hollywood so much you sure spend a lot of time thinking about it. Thou dost protest too much – reminding me of Jimmy Swaggart in the old days preaching against the evils of pornography. What raging hypocrisy are you hiding?
People aren’t into movies on the web as much as games and social networks; plus the Great Recession took a hit. Beyond that – has anyone noticed that PAY CABLE TV ain’t what it used to be? More & more of its customers (and my friends) are dumping Cable entirely & only watching stuff on their computers now. Days ago I had a talk with a major Time Warner Cable exec, and they’ve got their heads in the sand over this – they don’t see this as a threat to their business & they’re ignoring it. I mentioned the similarity of this moment in time to the Music Industry from years ago, and he pooh-poohed the whole thing. Now you’ll know why Disaster is going to hit Pay TV, and how they didn’t see the writing on the wall…
I use my PS3 as a media server, to play games, and to stream Netflix. I have cancelled my 150 channels of cable TV (that I rarely watched) and have not missed them. Studios are sitting on a huge archive of content. The faster they digitize it and make it painless to distribute the better. Unfortunately, the technology (wireless connected TV and/or PC) is not easy enough to use for the average consumer. Hulu, Boxee, and Netflix are heading in the right direction but none of them has a complete solution for the end user at this time.
Hollywood is in the batter’s box and will struggle with the changing landscape just like the music industry and the newspaper industry. In the end, the consumers will reward the smart people who make the new technology experience hassle free and punish those who want to cling to the past ways of doing business.