Wednesday, December 15, 2010

Are DVDs apples and books oranges?

I saw the article below on ICv2  Daily Insider (it's a great source for pop culture news) and pondered the correlation for book selling.  I am a firm believer that physical books are not going away.  Proof that physical books remain viable comes from seeing that every Holiday gift list includes books right along side of iPads and Scrabble Flash as must haves to the fact that while eBook sales continue to skyrocket, more than doubling the 3rd quarter in 2010 from the 3rd quarter on 2009  - yet physical book sales remain flat or modestly down, demonstrating ebook sales are not replacing physical book sales, at least in a corresponding fashion.

Moving on to my point - is there a difference when comparing books and DVD sales?  Whether a movie is consumed via DVD or is streamed, the experience for the consumer is still the same on the ever expanding size and quality of their TV.  The difference is the method of delivery - acquired on-line vs. a physical store.  Books are more tactile compared to e-readers, however the experience on an e-reading device does not dramatically change from a physical book.   I get that books are different than movies.   I am reading my way through Keith Richards' Life - I enjoy toting it from my bedroom to my living room and will likely spend 2+ weeks with it.  Movies are generally done in 2 hours and a much less curated experience.  Still, I have to wonder with the litany of tablet devices coming out that will essentially be putting e-reader in more and more peoples hands if the comparison is not more apples to apples than the industry realizes.

The Decline of the Disc

Major Shift to Internet Delivery By 2014

Published: 12/14/2010 07:00pm
The importance of sales of DVDs to the entertainment industry is waning as the home entertainment industry enters a period of profound change with consumers switching from buying actual discs from multiple brick & mortar and online outlets to streaming and digitally downloading movies and TV shows from a few mega suppliers. According to Home Media Magazine, the Arizona-based research firm In-Stat predicts that, while Blu-ray sales will continue to increase, they won’t be enough to offset the drop in sales of conventional DVDs.  The total U.S. DVD market, which accounted for an estimated $13 billion in sales in 2009, will drop by $4.6 billion by 2014.   Taking up the slack will be streaming and digital downloads, which will grow from its current level of $2.3 billion to $6.3 billion by 2014.

Starting with videotapes, home entertainment sales have been a huge boon to Hollywood, which has seen attendance at theaters lag (record box office numbers are the result of higher ticket prices, not growing attendance).  After continuing growth in DVD sales the early years of this Century had made disc sales the ultimate arbiter of profitability, the box office ticket sales total of $9.87 billion in 2009 overtook sales of movie-based DVDs and Blu-rays, which declined to $8.73 billion for the year.

The amount of change in the home entertainment industry can be gauged by a recent comment from Netflix’s Reed Hastings, who during the company’s third quarter earnings call, said that his company is “now primarily a streaming company that also offers DVD-by-mail.”

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