Thursday, July 14, 2011

The Death Of DVD (Part II)

In previous posts I've commented on how DVD retail sales have fallen off a cliff in the UK, leading to retailers such as Tesco looking at launching a video on demand service and adding to the woes at the UK's biggest entertainment retailers, HMV.

Now, another nail can be heard being banged into the coffin as Netflix start charging more in the US for their postal service than for their streaming service. At the same time they've separated the two services.

I hear that there's blind panic in the movie industry as they seek to plug the holes appearing in their business.

Amongst the major problems that the producers have are:

1) They have failed to tackle piracy in any meaningful way, and especially online piracy
2) They have failed to build a distribution network which works in their favour: in the olden days the studios owned the cinemas in order to vertically integrate their businesses; now they have to depend on LoveFilm and Netflix.
3) The old 'release windows' have gone at a time when content can be made globally available in minutes and nothing has replaced this.
4) Some markets, the US in particular, have become price sensitive, and people are not going to the cinema nor paying for cable in many instances.

And just as with soccer in the UK, the costs aren't going down. Well, not yet. But the concept of a 'bankable' star is being seriously threatened as the film value chain begins to creak and break.