NPD: Disc, Not Digital, Drives Home Entertainment Revenue (1 Viewer)

[Adam Gregorich]

According to Home Media Magazine:
Sales of Blu-ray Disc and DVD movies remain the largest source of revenue for the movie industry, accounting for 61% of home video spending on movies (excluding Netflix and other subscription video-on-demand services) in 2012, according to new data from The NPD Group. The percentage was down from 64% in 2011.
Port Washington, N.Y.-based NPD attributed the decline in part to lower average prices paid for Blu-ray titles, which fell 7% to $19.97 per unit last year.
“There is a significant base of video customers in the U.S. who continue to be comfortable with physical formats, and a large majority haven’t made the complete transition from discs to digital video,” said Russ Crupnick, media analyst with NPD. “For the time being, at least, consumers still like to own and rent movies and TV shows on DVD and Blu-ray, even in a world of where connected devices and digital rental, streaming and ownership options are becoming more accepted and commonplace.”
The full article can be found here.
According to the article digital distribution is up 2% Have you actually bought a digital copy of a movie this year? Have you bought more Blu-rays since the prices are dropping?

 

[Jeff Job]

I have never bought a digital copy of a movie - the only ones I have are copies that were packaged as part of the Blu-Ray/DVD. My deciding factor in buying a blu-ray is how often I am likely to watch it. Prices aren't low enough right now to make me want to do another format change (VHS to DVD was expensive enough).

 

[Ruz-El]

The only digital copies I have paid for where independent releases owned, created and released by the artist via their own websites, and never over $5. These files are completely "unlocked", with no DRM and I can play them on anything that fits the format and any number of devices. Until the studios match that type of performance, I will never buy a digital download of a movie from them. The few times I've seen streaming at friends houses it was total bunk. I'll stick to the Bluray/DVDs thanks.

 

[Richard V]

I have purchased one digital download from Amazon (Violent Saturday), but the quality of the movie and formatting of the screen were soooooo poor, that I doubt I will ever do that again. I'll stick with Bluray and DVD, if the film is not available on Bluray.

 

[Jason_V]

This news and information is good fodder for the inevitable conversations about the death of physical media in favor of cloud based or downloads. It's always been my contention physical media will not disappear. No way Hollywood is going to decide they don't want 61% of the home video dollars. To answer the question...only one and kinda. I bought a copy of What About Bob from iTunes. Have I bought more BD's? Kinda, maybe...I don't know how to answer that exactly. Lower prices are certainly a perk, but I'm knocking on the 800 disc door. I primarily pick things up on release week (when prices tend to be cheaper) and during sales (like November at Amazon). Or really fantastic deals like the recent WBShop sales on Treme, Hung and How to Make It in America.

 

[Jacksmyname]

I buy all my movies on Blu Ray/DVD. I like the physical media on display in my home. I'm a fan of the big box sets. To my eye, they just look nice. Case in point, the Blu Ray box set of Lawrence Of Arabia. Pure class. So far, no digital downloads for me.

 

[Steve Tannehill]

I can count on one hand the digital downloads I have purchased, and have fingers left over. They are primarily for movies that are not on blu that I can download in 1080p high definition from iTunes. The rest of my movie purchases are on disc, and the vast majority of those are blu.

 

[TravisR]

I have no digital copies of movies, music, books or comic books. I've got lots of codes for movies and comics but have less than no interest in redeeming them.

 

[Rick Thompson]

I give the codes and digital copies away. Why woould I watch something on a small screen when I can watch it on a 62" screen? Ditto for the DVDs in the two-packs. Will never pay for streaming or download. Not worth the grief.

 

[Persianimmortal]

Shame that most of these "discs" are actually DVDs, not Blu-rays.

This news and information is good fodder for the inevitable conversations about the death of physical media in favor of cloud based or downloads. It's always been my contention physical media will not disappear. No way Hollywood is going to decide they don't want 61% of the home video dollars.

Although I prefer movies in physical format for a variety of reasons, let's not pretend that eventually, individual movies in physical format will likely disappear. Let's examine a current example: computer games. Ask any PC gamer now, and almost without fail they will tell you they have at least a few purely digital games (e.g. on the Steam platform). Boxed PC games are rapidly disappearing off shelves. Most people are used to owning a PC gaming library that only exists in the cloud or installed on their PC drive. Never underestimate the fact that the average person is quite lazy and impulsive, so being able to download/stream a movie whenever they feel like it without leaving home, at a low cost, will eventually mean people will likely have a single digital library of movies on their PC drive or some sort of digital locker, rather than a shelf full of discs. And in the long term, given resolution and bitrate increases for movies (e.g. 4K), it would make more sense to consolidate and store these massive files on some sort of drive medium or the cloud anyway.

 

[Douglas Monce]

I bought 6 or 7 blu-rays in 2012 which was up from 1 or 2 the year before. At this point it has to be something I REALLY want. I cut the cable about a year and a half ago, so streaming is my primary source of casual TV viewing. I bought myself a Roku for Christmas, and use it to access Netflix and Amazon Prime, as well as the many free services available on it. I've never bought a digital copy of a movie. Doug

 

[Jason_V]

Originally Posted by Persianimmortal
Shame that most of these "discs" are actually DVDs, not Blu-rays.
Although I prefer movies in physical format for a variety of reasons, let's not pretend that eventually, individual movies in physical format will likely disappear. Let's examine a current example: computer games. Ask any PC gamer now, and almost without fail they will tell you they have at least a few purely digital games (e.g. on the Steam platform). Boxed PC games are rapidly disappearing off shelves. Most people are used to owning a PC gaming library that only exists in the cloud or installed on their PC drive.
Never underestimate the fact that the average person is quite lazy and impulsive, so being able to download/stream a movie whenever they feel like it without leaving home, at a low cost, will eventually mean people will likely have a single digital library of movies on their PC drive or some sort of digital locker, rather than a shelf full of discs.
And in the long term, given resolution and bitrate increases for movies (e.g. 4K), it would make more sense to consolidate and store these massive files on some sort of drive medium or the cloud anyway.

I'm not pretending. Download and cloud-based only are at least a decade away, if not longer. Why?
1) The entire country has to have access to high speed internet for affordable prices. Not possible right now.
2) The technology to get the material from the cloud to your home is not 100% reliable. Look to recent outages in the PSN Network and Netflix (I think it was Netflix over the Christmas season).
3) The quality is not there. Meaning: I can get a movie in 1080p on a BD at home in better quality (plus extras) than anything streaming or download can provide. I spent a few hours two nights ago trying to download both Batman: The Dark Knight Returns and Two Towers via UV. Guess what? Not even close to being done yet.
4) Digital locker technology has to consolidate. Between Flixster/UV and iTunes and whatever else, they need to be under one banner and one banner only. People are not going to guess where their items are.
Until all of these items-and more-are taken care of and everything works flawlessly 100% of the time, physical media will not go away.
For the conspiracy theorists: if you do not have a physical copy of a movie on your shelf and rely on a cloud based system where you have little control, you are at the mercy of the studios regarding making those films available. Maybe Tom Hanks decides he doesn't like Cloud Atlas anymore and decides to pitch a fit. Such a big fit that it is no longer available via the cloud...but the disc is still on the shelf. Maybe there's a "problem" with political docs or movies (Game Change, Farenheit 9/11, etc.). And they get yanked out of the cloud...but the disc is still very playable on my machine.

 

[Ruz-El]

Originally Posted by Jason_V
For the conspiracy theorists: if you do not have a physical copy of a movie on your shelf and rely on a cloud based system where you have little control, you are at the mercy of the studios regarding making those films available. Maybe Tom Hanks decides he doesn't like Cloud Atlas anymore and decides to pitch a fit. Such a big fit that it is no longer available via the cloud...but the disc is still on the shelf. Maybe there's a "problem" with political docs or movies (Game Change, Farenheit 9/11, etc.). And they get yanked out of the cloud...but the disc is still very playable on my machine.

This is exactly why I wont purchase downloads at this point. You're effectively renting at a retail sale price. No thanks.

 

[Jeff Ulmer]

From a practical perspective, I would much rather have a cloud based film library - the space savings, and convenience of a simple touch screen search and instant availability would be ideal. Not to mention never having your media fail (which I have experienced) or "improved" versions constantly being released. It should also allow for a lot more titles to be available since the producers don't have the investment in inventory. However, there are several caveats to that model. First is that the quality is equal to or better than disc based - not there yet, and likely not a long time given bandwidth limitations. Second is reliability of service - again, not there yet. Third is that pricing makes sense - this is going to be a tough one given that I can buy a physical disc for under $10, so having "rental" versions available at even half that cost, while a savings for most films that only get viewed once or twice, still doesn't seem like a value. A Netflix type model is okay, but it has neither the selection or quality to replace a disc. Fourth is that titles aren't being removed once released. Lower disc prices are certainly responsible for encouraging me to purchase, but I am no longer will to pay a lot for discs anymore. Even $20 is way too high for a single film, unless it is very special case, even $15 is pushing it for most titles.

 

[Patrick Donahue]

I just don't have the fears of putting money into a digital library that some here have. I look at it this way - I think of all the money I've put away over the years into my retirement fund. I have no physical stock certificates in my home to show the shares I own, it's all just digital bits and bites housed in my mutual fund company's server. When I see how much $$$ I might spend in iTunes movies compared to that? Small potatoes... And there is one thing I really do love about streaming - with Best Buy having seriously shrunken down their selection, the best place to obtain the titles I want is Amazon. It's a heck if a lot nicer to hit the "buy" button on my remote than to have to wait 5 days for a disc to arrive in the mail.

 

[Jason_V]

Originally Posted by Patrick Donahue
I look at it this way - I think of all the money I've put away over the years into my retirement fund. I have no physical stock certificates in my home to show the shares I own, it's all just digital bits and bites housed in my mutual fund company's server. When I see how much $$$ I might spend in iTunes movies compared to that? Small potatoes...

Now you're talking my language since I work in the retirement industry.
The difference is you have access to that money at all times. There may be rules around when you can and can not take it...and when taxes and penalties are due...but the money is always going to be yours. You can prove you bought X amount of shares and those shares can't be taken away if a company (say, Home Depot) decides to take them away. The stock price could drop and therefore your shares are worth zero, but that's in no way akin to the movie/TV show being housed on a server.
You may not have stock certificates, but you should have confirmation statements of the number of shares each transaction you initiated bought. And you should also know what is held within those mutual funds. (It will also depend on the type of retirement account; I work with small business owners who used their retirement money to fund their own businesses. Every last one of our clients has stock certificates. I do understand we're talking two different things on this point, though.)
With media, if the server/internet goes down or the studio/distributor loses the rights to show the movie online, you're sunk. With mutual funds and retirement accounts, you should have access to that money via the web, regular mail, e-mail and the voice response system. For all of those things to go down at the same time would be kind of wild. Having Amazon or iTunes or the internet break or get "throttled" are all entirely possible at any given time.

 

[Chuck Anstey]

Although I prefer movies in physical format for a variety of reasons, let's not pretend that eventually, individual movies in physical format will likely disappear. Let's examine a current example: computer games. Ask any PC gamer now, and almost without fail they will tell you they have at least a few purely digital games (e.g. on the Steam platform). Boxed PC games are rapidly disappearing off shelves. Most people are used to owning a PC gaming library that only exists in the cloud or installed on their PC drive.

There are two big problems with this example. 1. A PC's natural state is to be connected to the internet. If you have a computer and internet, they are connected. We have a long way to go before TVs' and players' natural state is to be connected to the internet. 2. Possibly a bigger reason than the first, my Steam games are downloaded onto my PC and run from my PC. I do not have to be connected to the internet to play them and I do not play them running from another machine somewhere in the cloud. The future of digital movies is for them to be streamed live, not downloaded onto the local machine permanently (nowhere near enough bandwidth or space). No internet or bad internet connection or server down equals no movie. There are plenty of issues with Steam (what if Steam goes bust at the top of the list) but at its most basic it is simply another way to get the game from the developer onto my computer, where it would reside whether I went to the store and bought a disc or downloaded it. It is not the same as changing every game to run somewhere on the cloud and gamers only get lightweight client programs on their PC to interface with a gaming server. That is what is being proposed for movies.

 

[Patrick Donahue]

All fair points pros and con. Let me add one more in favor of streaming (to play devil's advocate)... The main point against owning digital seems to be that the studios can pull your movies at any time. Very true. Although doing so would not be in the studios best interest. If consumers saw their purchases disappearing, they would stop purchasing. Studios would not like consumers to stop purchasing, as they make their money from purchases, not renting or from services like Netflix. Additionally, there is a thread going on over at MacRumors where some posters are talking about some titles they purchased from the iTunes store that are no longer available to purchase, yet they are still available in their libraries to stream....

 

[Ruz-El]

Originally Posted by Patrick Donahue
Additionally, there is a thread going on over at MacRumors where some posters are talking about some titles they purchased from the iTunes store that are no longer available to purchase, yet they are still available in their libraries to stream....

That's another thing too. When I die my friends and family can enjoy my physical movie library (most likely sell it off, if I'm being honest). With streaming downloads, it's all gone since it's non-transferable. You paid to rent/lease, not own.

 

[Persianimmortal]

I think there's some confusion here. I agree that at the moment, cloud-based services are not 100% reliable, so I personally wouldn't want all my movies stored in the cloud. Furthermore, bandwidth and Internet connectivity are not completely faultless, so streaming or downloading for example can be time-consuming and the product is typically of lower quality, mainly for mass consumption. This is the situation in the present day, and one of the reasons why I too prefer and buy physical BDs. However, the original statement I was replying to was this:

This news and information is good fodder for the inevitable conversations about the death of physical media in favor of cloud based or downloads. It's always been my contention physical media will not disappear.

A lot of people are saying this, and I still contend that this is completely incorrect. Physical media will disappear over time, and probably sooner than we think, because at some point they'll just stop releasing the highest quality stuff on physical media. Sure, CDs and DVDs will probably live on for a while yet, but BD and 4K material is just prime for digital. If you think about it, the resources that go into creating individual discs in cases, all packaged up and sitting on a shelf taking up lots of space, some of which are never purchased, is grossly inefficient both economically and environmentally. It makes far more sense to find a better way to deliver the ultimate product - which is after all just a movie in digital form - in a manner where supply always equals demand precisely, at the lowest cost to the manufacturer and consumer. Streaming is one option that will always be there, but I personally think digital downloads will be more common, similar to the Steam model. You will purchase and hold your library of movies via some sort of digital locker or online account. Of these, you can then download as many as you want to a local drive of some kind, whether on your PC, portable device, or a standalone player, or even a built-in storage module in your TV. Say it can hold 2-3TB of movies at one time, which at 50GB per film would be 40-60 whole discs of movies stored locally. You can purchase new movies at any time and download them straight away, or just keep them in your digital locker for later download when required. This is precisely how the Steam model works for PC gaming. Bandwidth usage is irrelevant. Steam allows you to download huge amounts of data whenever you want at no extra cost. In my Steam account I currently have 33 games I have purchased since I started using Steam in 2004. Of those, at any one time I only have one or two games actually downloaded and installed on my PC. Steam also allows me to create physical backups of my games on a local drive (i.e. download, compress and archive them) in case I don't trust the cloud, or if I want to quickly reinstall them on a new or reformatted drive without having to redownload them. Some games these days, even if purchased in boxed format, force you to download the bulk of their content via Steam anyway when you insert the installation disc (e.g. Skyrim did this). All you need for this model is an Internet connection. It doesn't have to be blazingly fast to allow sustained high quality streaming, since all you are doing is downloading the movie to your local storage point (a drive of some kind). Quality is unaffected because the entire movie is being downloaded, exactly as it would appear on disc, not streamed in real-time. Most everyone has access to some sort of Internet connection, Internet usage is growing extremely fast, as is bandwidth, speed and storage sizes. And let's be honest, the "hicks in the sticks" demographic is hardly out there buying BDs right now, so they're not the target market for digital downloads anyway. It will take some time, perhaps another few years and someone innovative enough to create the appropriate platform and associated service with complete reliability, but it will happen. In perhaps 5-10 years from now, we'll look back at how quaint a movie on a 50GB disc was at 1080p resolution, much the same as even now, some of us wonder how we put up with a movie on an 8GB DVD 5 years ago, or having a music library consisting entirely of hundreds of CDs taking up so much space. But ultimately, as I said, the big push will be from the manufacturers. If the right service exists for them to go purely digital, they'll force us onto it by not releasing content on BD, or charging a serious premium for BD over digital, until most everyone gets on board.