Two news items in the past week confirm that our passion for DVDs (and to a lesser extent, Blu-ray) is most definitely on the wane.
The first item comes from the Digital Entertainment Group, the official ‘industry cheerleader’ for packaged media. DEG’s Home Entertainment Spending report for the first quarter of 2012 states that expenditures on home video rose 2.5% year-to-year to a total of $4.45B, marking the first year-over-year gain in two quarters.
That’s the good news. The rest of the story tells us that spending on physical disc rentals dropped a whopping 25% from the same time period in 2011. (This category includes both Netflix and Blockbuster DVDs by mail, as well as brick and mortar stores). Even though kiosk DVD & Blu-ray rentals were up 30%, brick and mortar dropped almost 40% and subscription rentals went into free fall at 48%.
What goes down; must come up. Subscription streaming of movies and TV shows increased an amazing 545% Y-Y (yes, you read that number correctly!), while electronic sell-through posted somewhat more pedestrian numbers with a 17% increase and video-on-demand was relatively flat at about 7%.
The Blu-ray format saw a decent boost with consumer spending on Blu-ray discs up 23 % Y-Y overall. Physical sell-through was also flat at 2%, but catalog (movie) sales of Blu-ray discs jumped 27%. TV programs on Blu-ray increased 54%, although this is a smaller category than movie sales.
The DEG report also goes on to say that two million new UltraViolet accounts have been opened in the first quarter. UltraViolet is an industry initiative to provide a secure locker for ‘keys’ that registered users can use to open and view movie and TV files on just about any platform. If you bought the Blu-ray disc, you get a key for that disc to watch it wherever, whenever.
Taken as a whole, the numbers clearly indicate that the best days of optical disc media are behind it, and that more and more home viewers are becoming comfortable with streaming and digital downloads. DEG stated that 2.4M Blu-ray players were sold in Q1 ‘12, but I would maintain that is mostly for access to Netflix, Vudu, and Hulu streaming and YouTube Internet videos and secondarily to upgrade from older DVD players to Blu-ray.
Perhaps not coincidentally, Microsoft announced on May 4 that the forthcoming Windows 8 operating system will not feature built-in support for DVD and/or Blu-ray playback. If you wanna play discs, you’ll need to buy an aftermarket program for the first time in 14 years.
The Redmond, WA-based software giant could certainly start an interesting argument with DEG. According to M&E Daily, a Microsoft spokesperson stated, "Globally, DVD sales have declined significantly year over year and Blu-ray on PCs is losing momentum as well. Our partners have shared clear concerns over the costs associated with codec licensing for traditional media playback, especially as Windows 8 enables an unprecedented variety of form factors." (Your guess is as good as mine as to what that last sentence means!)
So there you have it - the numbers don’t lie. Clearly, consumers are enamored with the idea of streaming and apparently have no qualms about ‘cloud’ delivery systems for watching Harry Potter and The Wire. What will Q2 and Q3 of 2012 reveal in terms of DVD and Blu-ray buying, rental, and streaming trends?
Down in my basement studio, collecting dust, I still have a Toshiba HD-A3 HD-DVD player and about 25 compatible movies to play on it, many of which have never been opened. How long before my collection of Blu-ray discs and players joins it on that shelf?