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 first half of 2004.
This from a medium that has boasted 26% annual sales increases in the past years in a seemingly unstoppable DVD explosion. Well, the explosion has ended and the crater is pretty deep: unmet expectations on all fronts. The highest selling DVD in the past year was, as expected, DreamWorks’ “The Incredibles,” but even the most incredible of DVD sales was far below the predicted sales numbers, an unsettling event that set studios and economists atwitter with the resulting buzz and forced big studios like DreamWorks and Disney to announce yearly earnings well below their estimates.
So with all this bad news, you’d expect the big studios who depend on DVD sales for their livelihood to stop the proverbial presses and do everything in their power to find new ways to buoy sales.
You’d expect it, but you’d be wrong. The media vanguard has pulled an Obi-wan Kenobi. “Strike me down Darth and I will become more powerful than you can possibly imagine…” They’re just standing there, business as usual.
The Luke Skywalkers of the world are standing by in horror. According to the indepth analysis at the Hollywood Reporter:
“When presented with the opportunity to aggressively explore viable new alternatives to their challenged business models, why didn’t traditional media players respond as if their existence depends on it, as suggested by a recent flood of troubling statistics?
“There was almost no interaction between traditional media companies and new media companies,” one high-level Sun Valley conference attendee says.
“Google was talking about video search and Intel talked about Wi-Max, and all the new media companies were talking about changing the existing business models. The traditional media companies sat there and listened to them with their heads in the sand, like it’s business as usual,” another conference attendee says. “It was really bizarre.”
“You would assume that with everybody in the same room, seeing the same presentations, and with traditional media stocks in a free fall and people worried about things like DVRs, streaming video and DVD sales that they would feel compelled to openly seek ways of doing something about it. But that didn’t happen,” the attendee says.”
Jedi master, or deer in the headlights of an oncoming truck? You be the judge.
But there do seem to be a few major winners in this fiasco. Our old pal Netfix is one of them. You can check out The Big Picture to get another perspective on this topic.
“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.”
DVR and VOD, or a combination of the two forms of technology seems to be another major winner. As evidenced by Netflix’s partnership with TiVo and their soon-to-be-launched Video on Demand service, discs themselves seem to be starting their long journey into oblivion. In one or two more decades, almost everything will be digital, so Hollywood should prepare for this contingency now.