Anyone who has been following the evolution of the home entertainment market is aware that Blu-ray and digital are both trending up, while DVD is heading down. The latest data from the Digital Entertainment Group, the home entertainment industry’s leading advocacy group, delivers the details. Consumer spending in the home entertainment sector rose 1.43% with both Blu-ray, which saw an increase of 13.3% over the same period last year, and digital, which saw double digit increases in both Electronic Sell-thru and VOD, gaining market share and revenue at the expense of DVD. Yet not everyone is bidding DVD goodbye just yet. In an interview with Home Media Magazine, Jeffrey Katzenberg, CEO of DreamWorks Animation “…remained bullish on packaged media, characterizing the format as “settled in on a plateau” for the better part of a year — a trend the studio has seen globally. “We’ve seen pretty strong stabilization … in the [DVD] market,” he said. “On a title like Madagascar 3, as an investment and return-on-investment, it is a very, very strong title for us and will be very profitable for us [due to disc]. I wish it were like it was in 2003 or 2004 or 2005 [where home entertainment] was widely profitable. This is a very strong performer for the company.” That’s a pretty strong endorsement from somebody who knows the home entertainment business. But what if you’re not the CEO of a major Hollywood studio? What if you’re a mid-sized distributor, an independent studio or a sports league wondering what format to release your next titles? What if you’re a non-narrative distribution company — are digital and Blu-ray you only options? DVD’s been around for over 10 years, but will it live to see 20? From where we sit, with clients both big and small continuing to bring us DVD projects, DVD still has legs. We expect that DVD will be around for a third and even a fourth decade. Why? Top Ten Reasons DVD Remains Relevant (in no particular order) 1. Consumer Cost. Even with retail Blu-ray Discs prices coming down, lead by none other than Warner Bros, the average price of a DVD is still less than that of a Blu-ray. While some titles sales ratios favor Blu-ray, particularly the blockbusters and the big studio titles, lesser-known titles still do very well on DVD in terms of both numbers and margins. 2. Standard Definition Looks Pretty Good: With the up-conversion algorithms in recent Blu-ray players, a standard definition DVD looks pretty good…not hi-def quality, but for the casual viewer, it might be OK. 3. Blu-ray Player Penetration Doesn’t Equal DVD: While Blu-ray player penetration is still on the upswing, with 42.1 million households owning at least one, DVD players are found in 91% of American households, nearly twice as many. Lots of customers. 4. Production Costs: It still costs less to master or replicate a DVD vs. a Blu-ray. For distributors and producers who are looking to maintain slim margins, DVD is still a cost-effective way to go. 5. Licensing Costs: Licensing for Blu-ray adds to the cost of any title produced. It’s come down since the beginning of the format, but it’s still required. 6. Always On: Even as the market share of digital continues to increase, nothing beats having a disc in your hand. External bandwidth restrictions and competition within the home for bandwidth can make streaming problematic from a practical standpoint. If the power’s on, you’re good to go. 7. Certainty of Quality: The streaming experience is improving, but nothing is more frustrating than settling in to watch a streamed show, only to see the ‘loading’ message bar pop up…again…and again. Digital services will adjust their data throughput to accommodate lower bandwidths, but then quality suffers. And that negatively impacts the experience. 8. Ease of Use: DVD has been around long enough that everybody knows how they work. Streaming still requires a bit of technological savvy and knowledge that isn’t quite as ubiquitous. No disrespect, but my Mom knows how to make the DVD player work with her TV. She doesn’t know about streaming and VOD. 9. Bonus, baby!: Lots of DVD’s have bonus. Streaming and VOD can, but usually don’t. (Yes, Blu-ray has bonus too, and some pretty darn good bonus if we do say so ourselves…but work with me here.) 10. Collectors: Have you ever heard anybody boast about the Collector’s Edition files they have of Lord of the Rings or Terminator or Batman? No. But they’ll definitely take down their Collectors Edition Boxed set of those titles and many others from their revered place on the living room shelf and be pleased to pass that bad boy around. Nuff said. Got more reasons? Let us know and we’ll share them in a future post.
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