Packaged Media Moves to EST (electronic sell through)

In case you missed it, the death of Blu-ray has come and gone with “a date that will live in infamy…” February 25, 2019. That corresponds to Samsung the leading OEM seller of Blu-ray players at 37% market share, (Sony is at 31% and LG 13%) calling it quits for the last surviving consumer physical media format, even though at the time, the company had four of Amazon’s top selling BRD players, including the top seller on its site. But emerging trends in electronic sell through (EST) indicate that this does not mean the end of archived media.

Case in point, Warner home entertainment reported a 12% US growth industry-wide in its year to date 2019 sales for its EST TV catalog, and in Q3-19 that number bumps to 15%, on par with the total YoY growth in 2018, according to the group. EST includes “consumer purchases or perpetually licenses a digital reproduction. This licensed reproduction could be in the form of a file downloaded to the consumer’s internet- connected device or local hard drive, or via access to the content in a virtual storage locker or cloud-based service for streaming on demand to the end-user,” according to the OTT review.

Warner Brother’s home entertainment VP Jeff Brown, states it’s the proliferation of streaming services that’s created the phenomena.

…most people who make digital TV purchases have previously seen some episodes before on broadcast or streaming. Thus, more TV series getting exposure through streaming services creates more opportunities for sales,

In addition, according to Brown, when series are removed from Netflix (with some 60M U.S. subs, electronic sell through of that title go up according to Warner data, what he calls fragmentation of content availability.

As reported recently in our digital distribution DD last month, part of the calculus is the relative ease in delivery of 4K over the top (OTT) video streaming compared to the hurdles and solutions needed to bring a new higher resolution format to fixed (packaged media) devices. Remember, Netflix had UHD streaming going into homes as early as Q2-2014, mainly because it had a streaming software solution. Added to this, the company began producing its own UHD content for streaming, bypassing the often difficult studio negotiations. And in the process Netflix, like HBO and others before them, began circumventing the traditional Hollywood content producers.

For physical media like Blu-ray discs, the writing was on the wall as early as 2015. In that year, Blu-ray and DVD sales fell in the US by 12% as digital-media sales climbed a healthy 16%, (based on data from the Digital Media Group). 2015 saw digital sales surpassing physical-media purchases, at $8.9 billion vs $8 billion in sales, respectively, helped by video streaming subscriptions boost that jumped 20% to hit $5.7 billion.

So go ahead, hold on to those BRD’s and stack them right next to the vinyl LP’s, and singles, the laser disc albums, and even some fond bakelite platters of the ‘nipper the dog’ RCA days. Life moves on in the digital era of connected streaming, but all this gives pause to that sage wisdom, nothing dies, it simply changes form. Stephen Sechrist