How Will Things Fall In A BD/DVD Marriage?

[AV_Integrated]

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, instead of just reiterating the facts to everyone, which most of us already know - such as how long BD has been out, that DVD is outselling the format, etc., why not go ahead and add your thoughts as to the subject of the title and feel free to give your speculation to what we will see in the future between DVD and BD as formats? Somehow you've managed to post several times in this topic without actually stating your thoughts on this matter at all, and I would like to hear a well thought out response from you as to the OP.

[silverado]

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.

LMFAO!! I never considered that this is our "social network" but you are 100% correct. My wife and my kids check Facebook and Youtube constantly and here I am.
Classic observation.

[Malanthius]

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.

Hola! You are right! now all I need is an iPhone app for the site.

[MrAngles]

My wife is on facebook for a very good portion of her free time, but she's almost always watching a movie or tv show at the same time. I post on here while I'm at work or watching a movie. I always took it as a given that this was normal... I keep seeing that social networking is a competitor to watching movies, but I just don't see it. Do people really sit at a computer and chat online for hours without doing something else?

[Kosty]

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.
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.
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.
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.

A typical Walmart at the height of DVD was only carrying 3000 DVD skus at most. That's a tiny fraction of the DVD release list that ever was a brick and mortar store.

Mist DVD sales are at lower price points than DVD new releases or Blu-ray new releases or Blu-ray catalog and overall Blu-ray is more profitable per unit sold. So the Blu-ray revenue portion also contains more profit as a very large portion of the DVD revenues and units sold are low price point lower profit margin per unit catalog sales.

If Targets and Best Buys are now stocking 500 to 1000 Blu-ray skus those are doing a lot more volume per title than any catalog DVD sku has done in the past few years.

[Taffy]

Taffy, instead of just reiterating the facts to everyone, which most of us already know - such as how long BD has been out, that DVD is outselling the format, etc., why not go ahead and add your thoughts as to the subject of the title and feel free to give your speculation to what we will see in the future between DVD and BD as formats? Somehow you've managed to post several times in this topic without actually stating your thoughts on this matter at all, and I would like to hear a well thought out response from you as to the OP.

....and I thought I was being rather opinionated and blunt with my posts. I've highlighted some text that I think are relevant to the discussion.

Matters more. Maybe I'm missing something but I'm under the impression that during one of Blu rays worst weeks, DVD still came through with 100 million in revenue and accounted for 85% of revenue.



Now...I was no business major and I'm not a "number's" man, but despite BR's premium pricing, DVD still appears to be totally dominant. DVD's main selling point??? It's cheaper and has a hell-of-a-lot more titles. Go to any Walmart and check it out.

That being said, I enjoy Blu ray, but...there's a lot more things I'd prefer to do with my spare time than watch a movie I've already seen. Never-the-less Black Friday is slowly rolling around and you know what THAT means to seasoned BR buyers. Time to look for bargains on BR titles released in previous quarters. Yes...that's right. Blu ray has become, for me anyway, a seasonal purchase.

Just some thoughts....

You're missing the point. As bad a week as it was last week for Blu ray (18 million), it still resulted in a 100 million dollar week for DVD. Hell...it's been "bad" weeks for BD software for months now while DVD still comes in better than 100 million consistently. Me thinks nearly half of that 100 million must come from stores like Walmart.

Similarly... as good as the up coming weeks (4th Q) may be for Blu ray revenue, they're much better for DVD. Just check your own charts.

I don't hold stock in BD being much of a success story down the road sales wise...not when consumers can easily rent the same newly released movie for $1 at you local Redbox kiosk and/or record that favorite HD catalog title on your DVR. That's just too much hurdle to overcome imo.

Nothing wrong with a studio pricing its product to take advantage of those consumer's that care more about ownership than pricing. Let 'em eat cake...as far as I'm concerned.

Personally...I think the buying trend for most OD consumers these days is to spend less...not more, but hey.....

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.
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.
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.
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.

I forgot about Lion King 3D conversion in theaters this week:

Families are turning out in force to see the 3D conversion of The Lion King (theaters also are playing the toon on 2D screens), which was largely intended to promote the Oct. 4 release of the Diamond Blu-Ray edition of the film. But the theatrical run is turning out to be a phenomenon in and of itself.

http://www.hollywoodreporter.com/new...on-king-236736

That's great.

[Taffy]

A typical Walmart at the height of DVD was only carrying 3000 DVD skus at most. That's a tiny fraction of the DVD release list that ever was a brick and mortar store.

Mist DVD sales are at lower price points than DVD new releases or Blu-ray new releases or Blu-ray catalog and overall Blu-ray is more profitable per unit sold. So the Blu-ray revenue portion also contains more profit as a very large portion of the DVD revenues and units sold are low price point lower profit margin per unit catalog sales.

If Targets and Best Buys are now stocking 500 to 1000 Blu-ray skus those are doing a lot more volume per title than any catalog DVD sku has done in the past few years.

....so, you're trying to make an argument that profits from $18 million in sales are preferable to 100 million in sales.

[Kosty]

....so, you're trying to make an argument that profits from $18 million in sales are preferable to 100 million in sales.

LOL. You are talking about the lowest week of the year there. Hardly typical.

Well on most weeks its more than $18 M its averaged #28 M this year and we will have multiple $100 M weeks this fall. But those newer recent release sales are about 50% or more profitable on average than a catalog DVD sale so its a very important segment.

[Malanthius]

LOL. You are talking about the lowest week of the year there. Hardly typical.

Well on most weeks its more than $18 M its averaged #28 M this year and we will have multiple $100 M weeks this fall. But those newer recent release sales are about 50% or more profitable on average than a catalog DVD sale so its a very important segment.

So, during the good time of the year DVD sales will soar. The peaks it hits on your charts are amazing. You saying there is no profit to be had from DVD anymore?

[Lee Stewart]

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?

I am surprised that no one has addressed this. I thought this was a good discussion point.

[Kosty]

So, during the good time of the year DVD sales will soar. The peaks it hits on your charts are amazing. You saying there is no profit to be had from DVD anymore?

You are twisting my words.

Both DVD and Blu-ray volumes will increase with better releases and the holiday sales season.

Right now and its even getting better Blu-ray is gaining significant marketshare in units and more so in revenues from the most profitable segment of the revenue stream, that of higher priced high margin new releases. In addition Blu-ray is replacing a high margin DVD new release sale with an even higher Blu-ray or BD+DVD combo new release sale.

Its not enough yet so far this year to offset the attrition in DVD catalog sale revenues and it ain't never going to be like DVD at its peak but the better releases coming up will close that gap even more.

DVD still is a very profitable consumer good with relatively high margins even for low priced catalog sales. Its just that the margins are even higher with new releases and Blu-ray not only is higher margin than DVD for new releases it is increasingly getting a higher and higher part of that segment.

60% Blu-ray unit marketshare for X-Men:First Class is probably 70% of the revenues generated for package media sales and most of the profit to the studios for the Blu-ray version as an example. Since it was not heavily discounted retailers did similar margins.

DVD still has a large mass of routine sales but again most of those are low price low margin skus and as Blu-ray gains some traction there the profits from Blu-ray in that segment will grow as well.

[Kosty]

I am surprised that no one has addressed this. I thought this was a good discussion point.

That's about right. The routine base of sales for other than the big release for Blu-ray has been about that range this year. But that's about $7 M higher than last year and it will substantially increase this year as the rest of the September and the 4Q seasonal volumes start to increase.

That base of Blu-ray sales is also higher margin than an equal amount of routine DVD sales would be as the typical Blu-ray is $7-$10 more each week than a typical DVD unit sold and that gap is higher on low volume weeks where catalog sales dominate.

[Lee Stewart]

That's about right. The routine base of sales for other than the big release for Blu-ray has been about that range this year. But that's about $7 M higher than last year and it will substantially increase this year as the rest of the September and the 4Q seasonal volumes start to increase.

That base of Blu-ray sales is also higher margin than an equal amount of routine DVD sales would be as the typical Blu-ray is $7-$10 more each week than a typical DVD unit sold and that gap is higher on low volume weeks where catalog sales dominate.

This is what Silverado was addressing:

[Taffy]

LOL. You are talking about the lowest week of the year there. Hardly typical. Well on most weeks its more than $18 M its averaged #28 M this year and we will have multiple $100 M weeks this fall. ut those newer recent release sales are about 50% or more profitable on average than a catalog DVD sale so its a very important segment.

While Blu ray may be having 100 million weeks, DVD may be having multiple 400 million dollar weeks during the same period. Man...look at those 4th Q DVD peaks. Mighty impressive

[Kosty]

This is what Silverado was addressing:

Spoiler:

Err that's a week with a typical distribution of a blockbuster release.

The Top 20 Sellers chart including DVD shows the same pattern.

In any case the non top 20 sellers for DVD are always selling more units and revenues as there are just a lot more DVD skus out there for sale and individually the title sales are small but they add up to a bunch in the aggregate.