How Will Things Fall In A BD/DVD Marriage?

[Lee Stewart]

Okay, then how do you believe that this change will affect DVD and BD moving forward as a product? How will that affect floor space, production, etc.? Do you see DVD/BD rental pricing coming in line with each other across the board, and if so, how will that affect rentals and percentages? At some point, will it make more sense for stores to stop renting certain DVD titles in favor of BD?

I don't see a time when DVD and BD will be priced the same either for rental (kiosk) or for sale. BD is a premium product and it will be used to generate higher revenue then DVD.

I see more use of MOD for "obscure" catalog titles both for DVD and BD.

I see most "popular" catalog titles getting just a BD release.

The only way Hollywood can promote BD over DVD for new releases is when the adoption rate is high, 70+% and that is many years away from now. B & M stores may drop DVD players but I believe E-Tailers will continue to sell the under $30 Colby branded players. They still sold twice as many DVD players as they did BD players in 2010 (according to DEG); 20M versus 10M.

Disney is experimenting with their Pirates 4 release. I am definitely looking foward to seeing how consumers react to this.

And I also believe that consumers have "fallen out of love" with Hollywood movies simply because there is so much junk coming out of Hollywood of late that people are turning to other sources of entertainment like social networking. How do you a retailer or rentailer compete against that? You are at the mercy of another company. . . They make junk - you sell or rent that junk. No one went to see the junk in the theaters. No one is going to buy the junk when it hits the home video market. They might pay a buck or a buck fifty to rent it for an evening because that is what they feel the junk is worth.

[silverado]

Yes, that's very much the case that DVD still outsells Blu-ray. But, I'm not sure what the profits are from DVD (not just sales, but profits), and where exactly they are coming from. Wal-Mart is always a big seller for product which may have almost zero profit on it, and they too may be shrinking their floor space for optical discs. (not sure)

But, in 5 years, with DVDs current decline rate, and BDs growth rate, neither of which I believe will stay 'the same', BD may be outselling DVD in total revenue. And the majority of DVD catalog sales may come from those places which can keep them in stock (online).

It's entirely speculation, but how much does come from Wal-Mart? How much are the studios seeing in profits? How much of Wal-Marts sales of DVDs are new releases in stores? How many from bargain bins? How much from online purchases?

Amazon numbers are online exclusively. We all know that, so they are easier to figure out. But, if you want Stargate, you don't have to go to a store to hope they have it on BD or DVD, you get it, guaranteed, online... typically at the best price. So, will catalog titles have any place on store shelves?

The same question can be asked about BD (and I have asked this). Unless you are the studio with the big movie that week, you have to split 10-15 million between all the studios. How much profit is that?

[silverado]

I don't see a time when DVD and BD will be priced the same either for rental (kiosk) or for sale. BD is a premium product and it will be used to generate higher revenue then DVD.

I see more use of MOD for "obscure" catalog titles both for DVD and BD.

I see most "popular" catalog titles getting just a BD release.

The only way Hollywood can promote BD over DVD for new releases is when the adoption rate is high, 70+% and that is many years away from now. B & M stores may drop DVD players but I believe E-Tailers will continue to sell the under $30 Colby branded players. They still sold twice as many DVD players as they did BD players in 2010 (according to DEG); 20M versus 10M.

Disney is experimenting with their Pirates 4 release. I am definitely looking foward to seeing how consumers react to this.

And I also believe that consumers have "fallen out of love" with Hollywood movies simply because there is so much junk coming out of Hollywood of late that people are turning to other sources of entertainment like social networking. How do you a retailer or rentailer compete against that? You are at the mercy of another company. . . They make junk - you sell or rent that junk. No one went to see the junk in the theaters. No one is going to buy the junk when it hits the home video market. They might pay a buck or a buck fifty to rent it for an evening because that is what they feel the junk is worth.

While I do believe some consumers have "fallen out of love", the next generation of movie collectors have not "fallen in love" with collecting. They don't want to buy catalog on Blu or DVD. They seem to like instant streaming right now.

[Lee Stewart]

Coinstar No. 22 on ‘Fortune’ List

Redbox parent Coinstar has hit No. 22 on Fortune magazine’s 100 Fastest-Growing Companies list, up from No. 61 in 2010.

Apple came in at No. 21, Netflix landed at No. 24 and Amazon was at No. 45.

http://www.homemediamagazine.com/red...une-list-25053

[Lee Stewart]

While I do believe some consumers have "fallen out of love", the next generation of movie collectors have not "fallen in love" with collecting. They don't want to buy catalog on Blu or DVD. They seem to like instant streaming right now.

To expand on that - IMO they like cheap entertainment. It is coming in the form of Kiosk rentals and NF streaming. Of course that streaming is not really $8 a month. You have to have IP service before you can get the streaming and that can cost as much as $40+ a month - that's what it's costing me for cable broadband.

[MrAngles]

While I do believe some consumers have "fallen out of love", the next generation of movie collectors have not "fallen in love" with collecting. They don't want to buy catalog on Blu or DVD. They seem to like instant streaming right now.

This is what I don't understand. Yes people love instant streaming, but people also still love watching new movies during release week. When Transformers 3 comes out, how will people be watching it? I'm assuming not via streaming. Streaming isn't replacing buying movies, something else is picking up that slack, and I think it must be disc rentals.

[Kosty]

Yes, that's very much the case that DVD still outsells Blu-ray. But, I'm not sure what the profits are from DVD (not just sales, but profits), and where exactly they are coming from. Wal-Mart is always a big seller for product which may have almost zero profit on it, and they too may be shrinking their floor space for optical discs. (not sure)

But, in 5 years, with DVDs current decline rate, and BDs growth rate, neither of which I believe will stay 'the same', BD may be outselling DVD in total revenue. And the majority of DVD catalog sales may come from those places which can keep them in stock (online).

It's entirely speculation, but how much does come from Wal-Mart? How much are the studios seeing in profits? How much of Wal-Marts sales of DVDs are new releases in stores? How many from bargain bins? How much from online purchases?

Amazon numbers are online exclusively. We all know that, so they are easier to figure out. But, if you want Stargate, you don't have to go to a store to hope they have it on BD or DVD, you get it, guaranteed, online... typically at the best price. So, will catalog titles have any place on store shelves?

A lot of catalog DVD sales are low price units and relatively low margin compared to new releases.

DVD even at low prices are still higher margin than most consumer product categories but the new release movies at higher price points and higher margins are where the profits really are.

That is also by design where Blu-ray has made the greatest inroads in new releases and Blu-ray new releases are even higher margin than the DVD versions.

DVD titles that have been available for many many years do not sell much per title at all anymore and are kind of a grey goo filler for the most part on the shelves with rotating inventory. Blu-ray catalog and repackaged multiple movie DVD skus will more and more displace most single movie DVD catalog titles and most DVD stock will become TV shows and recent DVD releases.

But more and more Blu-ray catalog and recent releases will be stocked at brick and mortar retailers to match the growing Blu-ray ownership base and household penetration gains as Blu-ray is a profitable high margin product that also is an impulse buy at the point of sale.

[Lee Stewart]

This is what I don't understand. Yes people love instant streaming, but people also still love watching new movies during release week. When Transformers 3 comes out, how will people be watching it? I'm assuming not via streaming. Streaming isn't replacing buying movies, something else is picking up that slack, and I think it must be disc rentals.

I agree. It's OD rentals and VOD/PPV. OD rentals has remained stable in revenue despite a huge change in the industry/marketplace while VOD/PPV continues to grow each year.

[Malanthius]

This is what I don't understand. Yes people love instant streaming, but people also still love watching new movies during release week. When Transformers 3 comes out, how will people be watching it? I'm assuming not via streaming. Streaming isn't replacing buying movies, something else is picking up that slack, and I think it must be disc rentals.

It's not just disc rentals. It's that and piracy and that people already saw it in the theaters. The rest will wait for it to show up on HBO or whatever channel gets it first. Maybe some on VOD. They will all be on Facebook while they wait.

[Lee Stewart]

It's not just disc rentals. It's that and piracy and that people already saw it in the theaters. The rest will wait for it to show up on HBO or whatever channel gets it first. Maybe some on VOD. They will all be on Facebook while they wait.

There is an article floating around - just recent - that says people are spending 70% of their online time social networking.

[Malanthius]

There is an article floating around - just recent - that says people are spending 70% of their online time social networking.

Yup. I heard about that. And it's the sad truth. Growing up. If I wasn't playing outside. I was watching movies and tv. Nowadays my kids spend their free time inside on Facebook, texting and stuff like that. They will pop in the occasional DVD or stream something off of Netflix. Or playing a game if it's my son. But they are never asking me to run to the store to get that new movie. If we did t see it in the theater they have no problem waiting for it to show up on cable(Uverse) or get something from the local redbox. They have actually only gone to redbox twice. So maybe that's not the greatest example.

[Malanthius]

Actually thinking about it Lee. My wife and kids have rented a VOD movie about 5 times in the last couple of months. That's a real change in my household. We never used to use that service. Hmmm...

[Taffy]

Yes, that's very much the case that DVD still outsells Blu-ray. But, I'm not sure what the profits are from DVD (not just sales, but profits), and where exactly they are coming from.

We're not sure what the profits are from Blu either. The only thing we are sure of is DVD is murdering BR on sales 5 years after BR's introduction and THAT'S a hard fact.

Wal-Mart is always a big seller for product which may have almost zero profit on it, and they too may be shrinking their floor space for optical discs. (not sure)

If you're looking for a specific DVD title, it's a good bet that you'll find it at any Walmart type store. No need to order from Amazon in most cases.

Walmart didn't get to be Walmart without understanding profit margins. If it's not selling...the shelf space goes to something that is.

But, in 5 years, with DVDs current decline rate, and BDs growth rate, neither of which I believe will stay 'the same', BD may be outselling DVD in total revenue. And the majority of DVD catalog sales may come from those places which can keep them in stock (online).

Five years....huh. That's an awful long time looking forward and anything can happen. I'm hard pressed just trying to figure out what's going to happen next year particularly with some classics being converted to 3D. What happens could result in a lot of changes.

It's entirely speculation, but how much does come from Wal-Mart? How much are the studios seeing in profits? How much of Wal-Marts sales of DVDs are new releases in stores? How many from bargain bins? How much from online purchases?

Amazon numbers are online exclusively. We all know that, so they are easier to figure out. But, if you want Stargate, you don't have to go to a store to hope they have it on BD or DVD, you get it, guaranteed, online... typically at the best price. So, will catalog titles have any place on store shelves?

Good questions...all, and you're absolutely correct. All we can do is speculate and apply some common sense with the numbers that are available to us and by observing what goes on at local retail stores in terms of shelf space allocations.

[Taffy]

Yup. I heard about that. And it's the sad truth. Growing up. If I wasn't playing outside. I was watching movies and tv. Nowadays my kids spend their free time inside on Facebook, texting and stuff like that. They will pop in the occasional DVD or stream something off of Netflix. Or playing a game if it's my son. But they are never asking me to run to the store to get that new movie. If we did t see it in the theater they have no problem waiting for it to show up on cable(Uverse) or get something from the local redbox. They have actually only gone to redbox twice. So maybe that's not the greatest example.

Hi Mal...

Actually, if you think about it, HDD is a sort of "social network" for us. We all have a common interest in home entertainment and discuss it at length.

[vikingfan]

While I do believe some consumers have "fallen out of love", the next generation of movie collectors have not "fallen in love" with collecting. They don't want to buy catalog on Blu or DVD. They seem to like instant streaming right now.

The next generation of movie collectors have fallen in love with instant stealing, the same way most of them "collected" their music.