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A spokesman for DEG: The Digital Entertainment Group says the trade organization didn’t deliberately choose a Friday afternoon to release its dreary new report about consumer spending on home entertainment in the first half of 2011. But from a PR perspective it probably doesn’t hurt to bury news that shows VOD and electronic distribution still can’t make up for the collapse in sales of DVDs. The headline number is that consumer spending on all forms of home video — including DVD and Blu-ray disc sales and rentals, VOD, and online — fell 5.1% vs the first half of 2010 to $8.3B. Last year, spending fell 3.3% in the first half of 2010. DEG says this year’s drop isn’t so bad because last year included Avatar. (It seems that the blockbuster was good enough to include last year when it made sales look strong, but is supposed to be treated as an anomaly now that it makes comparisons look weak.) Still, there’s no getting around the steep decline for DVDs. Consumers bought nearly $3.9B worth of DVD and Blu-ray content, down 18.3% vs the first half of 2010. At this time last year, disc sales were off 7.1% vs. 2009. DVDs are the culprit: Although DEG only reports figures for “packaged goods,” it notes that Blu-ray sales are up more than 10%.
Meanwhile, the rental business saw a few milestones in 2Q as sales at bricks-and-mortar rental stores like Blockbuster — which Dish Network recently bought out of bankruptcy — plummeted 29% to $393M: For the first time consumers spent more at subscription services such as Netflix ($808.1M, up 24.4%), kiosks including Redbox ($403.7M, up 36.7%) and VOD ($455.9M, up 0.3%).
DEG managed to find some reasons for cheer. The trade group’s release notes that total home entertainment spending only fell 3.6% in 2Q, an improvement from the 6.4% decline in 1Q. It also says that the industry “is extremely optimistic about the second half of the year,” when home video providers will offer Paramount’s Transformers: Dark Of The Moon, Warner Bros’ Harry Potter And The Deathly Hallows Part 2, and Disney’s Pirates Of The Caribbean: On Stranger Tides.
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Hey, DEG, guess what, the economy sucks. Middle class and lower income folks don’t have disposable income to burn on DVDs and BluRays, especially not to own them. Just giving you the heads up.
Aside from not having disposable income, the movies being churned out have very little repeat value.
Except for a handful of the top ten animated movies – Toy Story 3, Despicable Me, Tangles etc – because you buy those for kids – it’s not like people are clamoring to own Iron Man 2, True Grit, Alice and Grown Ups on DVD for a second viewing.
Well they are actually, the titles you’ve mentioned, Iron Man 2 especially have sold very well. Iron Man 2′s total sales are pretty much identical to Iron Man’s/ It sold fewer DVDs, but that is because it sold a lot more Blu-Rays they pretty much evened out. True Grit has sold well over a million Blu-Rays, no mean feat at all, especially for a Western ad Alice In Wonderland hasn’t exactly been a poor seller oon DVD & Blu-Ray either
Speak for yourself. I have watched “Iron Man 2″ at least 6 times, “Alice in Wonderland” 3 times and “The Hangover” probably 5 times since I purchased them. I watched all the Harry Potter movies in the week leading up to the newest one. I watched all the Marvel movies leading up to “Captain America”. I’ve watched “The Dark Knight” twice since I upgraded it to Blu-ray. There are people out there that LOVE watching movies. They are great things to have in your collection especially in the summer months when there is absolutely NOTHING to watch on TV. It’s cheaper than premium movie channels or On Demand from your cable company and, sometimes, a better experience than going out to the movies (due to price, bad seating, poorly lit screens and people talking). So, to each their own.
Well, if they made it more advantageous to buy the discs then their sales wouldn’t plummet so much. When “Captain America” comes out on DVD price it at $12.99 and the Blu-ray at $17.99. Then price the VOD and iTunes at $9.99 to rent and $19.99 to download. If you encourage the consumer to BUY what you want them to by making it desirable, they will do it. Consumers are only as smart as you tell them to be. OR stop making your titles available electronically altogether! I wish some studio would stand up and NOT release their biggest blockbuster of the year on video AT ALL. This whole business has become more about pushing product instead of getting people in seats. Release “Amazing Spider-Man” on 1000 screens and not 4000. Make theaters sell out showings again. People want what they can’t have.
I like your idea, but in the age of getting what you want when you want it via how you want it, will the consumer bypass what they can’t have?
Diamonds aren’t a precious stone. The price is kept up because a certain number of people set the price and control the flow of the product. Real estate isn’t a precious commodity. Land is land. No matter where you purchase it, a square foot of dirt is the same in Oklahoma as it is in Manhattan. It’s all about supply and demand. People want what they can’t have. Look at fashion. Do you really think that it costs $600 for a designer pair of pumps? People will pay crazy amounts for things they can’t get so they will be “the elite”.
If you make theatrical films unavailable on home video again, the cinema business will show an increase. If you decrease the number of screens a film shows on, it will give the movie “legs” and stay in theaters longer because people will “need” to see it because they can’t get in. If you go back to the days of six month to a year windows for home video, cable and VOD, it creates more of a demand. The companies have given the “angry children” what they want and now are suffering for it
I realize DVD is a dead format, but having a physical copy of a film (not digital) is the only way to guarantee you can watch a favorite movie whenever you want. I’m definitely buying fewer DVDs these days, but my existing DVD library ain’t going anywhere.
I don’t know about you, but the main reason I buy less DVD’s than ever before is that the current product sucks. Who wants to see this crap even once, much less own it? When Hollywood starts putting out quality product again, then the public will come around.
It is the digital age. Stop trying to sell 8 tracks and cassette tapes.
Excellent post. The high-paid studio execs are too dumb to learn from the mistakes of the music industry. You can’t force or trick the consumer to do anything. Those who try to dictate what the market wants will do so at their own peril and deserve to fail for being ignorant.
Take a look at almost any big-box store, the DVD section has been reduced from several aisles to one or two. Plus, for those who talk about the bonus features, hardly anyone watches those. Yes, I know there are some fanboys, but for the most part, who has the time to watch that crap? Deleted scenes were deleted for a reason. Most commentaries are a snooze-fest. And after you’ve seen one “making of” you’ve seen them all.
Maybe for YOU, but not everyone feels that way. For me, there is nothing like the image and sound quality of Bluray. The only reason I’m personally buying less movies, has nothing to do with the digital age. There are less movies that I want to own, that’s all.
I think the move to get rid of DVD Bonus features for rentals is a big mistake.
That used to be a big part of renting a DVD. I MANY times bought a copy of the DVD after watching extra features and blooper reels and such on DVD.
But now that they’re gone I find myself saying, “No way” because of a fear of the “deleted extras” being crap.
Consumers are very wary of trickery, studios.
Put the extras back into the rental releases and I think you’ll see a bump in sales.
This is the same logic that I use for streaming product on Netflix. There are times that I either love a movie so much or don’t completely understand what the filmmakers were going for that I want to hear the commentary track and you don’t have that option when streaming or VOD. I guess the home video (DVD/Blu-ray) business is going to become a niche/specialty shop business.
The problem with these numbers is that they only discuss dollar amounts, not actual units sold. DVD and BD’s have been steadily dropping in price for the past four years and more and more catalog titles are being released on BD under the ten dollar pricepoint. Currently amazon has 514 BD titles under $10, 1,434 titles from $10 – $15 and 1,404 titles from $15 – $20. So that’s over 3,300 BD titles under $20 yet BD sales INCREASED by 10% regardless of the price drop to the format. Perhaps that and the 290,00 titles on DVD under $20 have something to do with the lower sales dollar-wise As for this contention by the children like Aeiouy that it’s the digital age and therefore they are trying to market a dead product, first the numbers don’t indicate that because the digital products didn’t make up the difference and the fact that as noted, BD sales INCREASED by 10%. There’s also the issue of Netflix changing their pricing structure. Netflix expects disc-based media to be with is for at least another twenty years and they’ve made it very clear that if they could they would change their entire model to a streaming business. The change in the pricing structure was designed to specifically to cater to their disc business.
The REAL problem is, there is a bunch of shit movies being made.
Nobody wants to dare pin the culprit on the simple fact that every Walmart has a few Redboxes positioned at the entrance? Why buy the movie when you can watch it overnight for a buck. And a buck a night is less rental value than Blockbuster’s old $4 a night.
Why would someone spend $14 on a DVD when they can block a buck on it – and they don’t even have to return it to that Redbox – since there’s a Redbox every side of the street corner on your commute to work the next morning?
When I first moved to my neighborhood, we had five Blockbuster videos and a Hollywood video in three miles of my house. In less than five years, they’re all gone. But as I pointed out, the area is now swarming with Redboxes – There’s three of them at a single intersection.
Also in the last year the studios have drastically reduced their vault titles – outside of MOD programs. So less of an offering to collectors.
I don’t think redbox has anything to do with it. At least for me. If there is a good movie that I want to own, I’ll buy it, regardless of whether or not it’s at the nearest Redbox.
Everything ties together. Why buy when you can rent? Why go to the cinema when you can buy or rent it cheaper? Here’s an example: Say a family of 4 wants to go out to the movies to see “The Smurfs”. Just to get in the door, that’s 2 adults ($20) and 2 kids ($14.50). If you’re lucky, it stops there but most parents will have to stop by the concession stand and drop another $30 on snacks. That’s a minimum of $35 just to see a “family film”. Why would anyone pay that when they can buy the movie on Blu-ray four months later for $25 at Wal-Mart or rent it from Redbox for $1? Many people have great home theater set ups with flat screens and sound systems that give them a better experience for half the price.
Also, there are some out there (like myself) that are collectors. I have a “movie library” like many have libraries of books. It gives me great satisfaction to peruse my personal Blockbuster and see the titles I have collected and remember the feelings I had seeing them in theaters or the friends I saw them with. Every film is a piece of my history. I can’t get that from iTunes.
The reason DVD Sales are plummeting is not just that people are buying more or less, its the SBT Program. It drove MGM head first into the ground,then David Bishop sold the idea to Stringer, Pascal, and Lynton at Sony, then every other studio wanted in.
For those that dont know – SBT is Scan Based Trading. When you go shopping next at your local Safeway, Vons, Ralphs, Albertsons, etc…and you see a grip of DVD’s at the checkout aisle, remember this: the supermarket did not pay 1 red cent to get those movies there. All the merchandising fixtures, all the corrugates, all the shipping and receiving, all the visits by reps, studio people, marketing people, merchandising and sales people, – its all paid for by, (you guessed it) – the studio. The supermarket can hold onto it, can lose it, it can get stolen – doesnt matter – the Studio is on the hook for it. It is a lose-lose-lose-lose situation. And as every day goes by and we continue hearing about how DVD sales are declining, more studios are looking for more stores to partner with the SBT Program. (Think: Staples, Office Depot, Petco, Brookstone). Why – they dont have to pay for the product, the shipping, the marketing, the sales, none of it! Who would buy DVD’s at any of these places?? No one – that’s who. And yet, the DVD business unit’s continue pleading with the heads of every studio in town to continue shipping in thousands of more units daily.
Here is another little fact about the SBT Program. Lets say that a consumer does purchase a DVD at their local grocery store. Boom – theoretically, the studio should get the credit (price point, etc.). But lets say that same consumer returns the DVD the following day. The studio now owes the market another credit. Can you imagine what the HE finance department looks like at every studio in town that subscribes to this formula? A complete fucking circus.
I will say that programs like Redbox and Netflix will always have an upper hand on physical inventory – because there are organic, and natural progressions to physical inventory. However, walk into any Best Buy on a Friday or Saturday night, or a Wal-Mart and Costco on the weekend. People are still buying up DVD’s, at $19.99 a piece like it is NOT going out of style. Yes, the price point goes down and up, but they are still buying the product. {I understand part of this too: if it costs you the same to go to a movie, park, have dinner and a beer, and with the DVD you dont have to listen to some idiot talk about GLEE or American Idiot, or text all night long, then watch the DVD at home in your pajama’s, cause $19.99 is worth it}. And big retailers ARE a success. Why? Because these are programs that are not part of the SBT Program. Big outfits like these (i.e. – WalMart, Costco, Best Buy, Target, Sams Club), tell the studio how much product they want, they write the check, and the product is their’s. Simple. Let them sell it for whatever the hell they want, so long as the Studio has met it’s price point. They dont get involved in some bullshit scam like SBT.
Want to see numbers change? Drop SBT Completely. If the small markets want product \ inventory, let them buy smaller quantities at a different price point. But let them pay the studio first – up front – like everyone else. They dont want to do it – then let them sell what they are good at: banana’s and cascade.
Until then – these numbers will ALWAYS, ALWAYS be skewed.
Do the math. Drop the SBT Program. Its the biggest scam out there.
I couldn’t agree with you more…