Further to my edge data thesis, I argued last night on CNBC that the DVD was dying. And the whole blu-ray / HD-DVD thing? Two dog packs fighting over a decomposing bone.
The nut of the argument? The usual: People are lazy Video-on-demand quality is good enough, price is low enough, and the assortment is enough that the mass market just doesn’t care that it doesn’t come on small shiny discs.
Now, don’t get me wrong. Nothing in technology never really goes away. There are still people making 3.5-inch drives, etc. It’s just that it’s now a crummy, no-growth business.
Related posts:
The current format war is not so much Blu-ray vs HD-DVD as it is Industry vs Consumers.
The whole thing has been kind of tragic to watch, and I hadn’t realized how much blogging I had commited to the issue until now:
http://www.technorati.com/search/blu-ray?from=http://businessopinions.blogspot.com&sub=searchlet
Along the same lines, there was a good interview with Reed Hastings, CEO of Netflix, in the March 27th WSJ, here:
http://online.wsj.com/article/SB117495492172249743-search.html?KEYWORDS=netflix+microsoft&COLLECTION=wsjie/6month
Hastings, makes similar points – all we can really argue about is not if, but when, the death of the dvd will be realized.
You couldn’t be more wrong. DVD sales are about 3X dvd rentals because consumers want to own the movies and be able to play them anywhere (living room, bedroom, car, etc) and multiple times. You cannot do this with a download. Also, on line downloads are less attractive because they are typically licensed in the PPV window which is 2-3 months after the DVD release date, and thus the titles are dusty. That is why VOD/PPV sales is a very small fraction of even video rentals, and it is the reason the cable cos and satellite cos complain to the rights holders about better windows. Hollywood is afraid of technology, and until they are comfortable with digital downloads, good content in a good release window won’t even be available. Until the mobility and content issues are solved, DVDs will be around a long long time.
VOD? In the U.S., maybe in the cities. But who is going to pay to wire up the small towns with fiber if we assume the quality should equal DVD?
>You couldn’t be more wrong.
Actually, I think he’s right.
It’s like Baris said, it’s *not* if the DVD is going to die, but when. Eventually the sticky parts of DRM will be ironed out or legal DRM Free solutions will present themselves. As well as bandwidth growth. The convenience of being able to purchase any movie and watching it immediately will be the Death Nell of the DVD. It may take some years still, but I do believe the Golden Age of the DVD is past and we’re headed for its Golden Years instead.
Paul,
Nice to see I’m not the only person on this bandwagon. Your argument was essentially the centre of my Entrepreneurship project last semester at UBC. Most of my classmates disagreed but I think you’re right.
All you have to do is look at existance proofs. Why hasn’t Itunes eliminated the CD? There is a critical mass of devices, the downloads are much easier because of the small file size, almost all of the great content is available, and consumers get ownership and portability of the media. The answer is people still like owning the disks, and don’t like DRM restrictions. Itunes is a very small fraction of music sales (1%-2%)
For DVD downloads, there isn’t a critical mass of devices to enable this, file sizes are enormous, almost no content is available, the media isn’t portable (cannot play it anywhere in the house) and carries DRM restricitons which consumers hate.
PaulK is blurring 2 issues here. The first is will VOD from cable eliminate rentals and I am arguing no because of the bad release windows and the fact that people like to buy vs rent disks. The second is will downloads replace DVD sales. Once again I am arguing it will take a much longer time than he thinks because there is no ecosystem to support it yet.
My attempted post was maybe a little too heavy on the self-promotion for the filter’s taste, so I’ll scale it back, and sum up on the issue:
a) consumer acceptance of Blu-ray and HD-DVD has been scant at best. The alleged successor(s) to DVD have been foundering, for several factors that I don’t have time to go into at the moment.
b) we are careening rapidly towards viable High Definition VOD. Sooner even than you may think.
c)DVD is not just going to curl up and die overnight, but as I’ve said before, we can see the end of the sidewalk from here.
If HDTV takes off the DVD (or its succesors) will be fine.
The last mile of the broadband infrastructure can’t support streaming HD without far more investment than the cable companies are willing to make.
It’s all about node size in the HFC cable plant and bandwidth available within each node.
If the marketplace doesn’t care about picture quality, then the DVD will go away pretty fast.