Posts Tagged ‘DVD’

3CD: Well, that was fun. I’m bored. What’s next?

I stopped in at my local Best Buy this past Saturday (10/30) to look for an inexpensive upscaling DVD player (yeah, I know that’s redundant) for my in-laws.

While I was there, I wandered around the store to see what was being showcased in the store demos. 3D, which was a big thing back in April, had clearly fizzled out – at least, as far as store personnel were concerned.

Of four possible 3D demo stations, only one had any glasses – the Sony Bravia 3D demo in the Magnolia section. A nearby Panasonic 3D demo had clips from Avatar rolling in 3D on a plasma TV, but not a pair of glasses to be found.

At the entrance to the Magnolia store was a Samsung 55-inch LCD 3D demo. Trouble was, the channel was set to a 2D telecast of the Michigan State – Iowa college football game and no 3D glasses were anywhere to be seen.

Behind the service counter in the regular TV section was yet another 3D demo, this time featuring the 46-inch UN46C7000 Samsung LCD TV. And just like my last visit, the TV was showing Monsters vs. Aliens in 2D, again sans 3D glasses.

A possible fifth demo at the end of one of the aisles used to feature Panasonic’s 50VT20 plasma, but it had been taken down. This was the only demo that had any working 3D glasses a few months back.

So, what was all the  buzz about at BB this time? Why, Sony Internet TV, of course!

If you think TV remotes are complicated, wait until you try THIS keyboard!

Yep, it’s time to get out on the Internet and dig for content, using Google’s search engine and Sony’s incredibly small and dense keyboard. I didn’t see a single person attempt to use it during my 30 minute visit to the store.

In addition to Sony’s support for Google TV, Logitech has a new set-top box you can connect to the Ethernet port on your existing TV – or to the HDMI input.

Sony also showed a new “Internet TV Blu-ray Disc Player” that incorporates the Google interface. It’s the silvery box in the lower middle part of the photo, and encourages you to “take advantage of Full HD 1080p Blu-ray Disc Capabilities.” (???) No mention of 3D anywhere in the exhibit, so there may be a ‘separation of church and state’ thing going on as far as Sony is concerned.

Oh, and that inexpensive upscaling DVD player? I wound up going down the street to 6th Avenue Electronics and scoring a Panasonic DVD-S58PP-K with HDMI output and CEC for $50. Can’t beat that with a stick.

Blu-ray: Those hotcakes must be getting cold

Warner Brothers Entertainment recently expanded its DVD2Blu promotion to include any DVD of any movie or TV program – not just DVD releases of Warner titles.

For those readers who are not familiar with the program, DVD2Blu allowed anyone to trade in older WB movie titles on DVD and get a credit towards the purchase of a new Blu-ray version. The upgraded BD would cost about $8, including shipping.

Now, WB has expanded their program and will accept any professionally-produced DVD – movies, TV shows, sports, etc – towards the purchase of a WB Blu-ray movie or WB Television collection, with prices starting as low as $4.95. According to the ad, which is shown below and can be accessed at http://www.dvd2blu.com/ there are over 100 BD titles to choose from. Order more than $35 worth, and WB will throw in free shipping.

For Blu-ray fans, this is quite a promotion. You can send in DVDs you picked up at discount bins, discarded from libraries, or were given for Christmas presents. All you have to do is mail in the disc (not the packaging) and pay the discounted price, plus shipping (except where noted) to get new BDs for your collection.

From here, it seems like a desperate move by WB to thin out a backlog of BD titles that aren’t moving. Earlier this week, I wrote about the latest Digital Entertainment Group report that showed digital distribution of content is zooming ahead of physical distribution. The report also mentioned that tens of millions of BDs have been shipped to retail. Apparently tens of millions of BDs are still sitting at retail, too.

The costs of administering such a mail-in program aren’t cheap, either. All of the DVDs will have be disposed of, and there are the usual associated shipping and handling costs to deal with.

This move by WB is significant because they are one of the largest distributors of packaged media, along with Disney, who has yet to announce any type of redemption or discount program for their BD titles.

I recall a conversation with a Disney executive a few years back at the HPA Technology Retreat. His comment cut to the chase: “If the industry wants Blu-ray to be successful, they should just stop pressing regular DVDs and make Blu-ray the only optical disc format. That would do the trick!”

Of course, at the time, BD players were in the neighborhood of $500 – $700 dollars and largely ignored by the general public, who gravitated towards cheaper upscaling DVD players instead.

Times have changed. Nowadays, BD players can be had for as little as $80, and even 3D models are plummeting in  price – at least one is selling for less than $200, and a couple more are approaching that price point.

Given the slow but steady decline in overall sales of packaged media (DVD, BD, and the few VHS tapes that are still in circulation)  – down 8% this year over last – it’s time for Hollywood to ‘sink or swim’ by committing to the BD format and start making plans for the sunset of RL DVDs. Even Netflix has announced it will exit the DVD distribution business in the next five years and concentrate on its ‘bread-and-butter’ streaming offerings.

Wonder when the next round of BD fire sales will start?

It’s all in the Way You Spin the Numbers

Ahead of next week’s Blu-Con Blu-ray lovefest in Beverly Hills, the Digital Entertainment Group has just released its latest market analysis numbers for packaged media.

According to the DEG numbers, total consumer spending on packaged media through Q3 2010 came to $12.6B, a decline Y-Y of about 4%, while consumer transactions for home entertainment products were flat for the year. Digital distribution, which includes electronic sell-through (up 37% Y-Y) and video-on-demand (up 20% Y-Y), accounted for 13.5% of the total, totaling $1.7B.

Other interesting tidbits: Blu-ray saw its sell-through increase by 80% Y-Y to $1B. I’m not really sure what that number means, because overall packaged media (Blu-ray and conventional DVDs of movies, etc.) sell-through declined by 8% Y-Y, continued a slow and steady decline that started almost five years ago and has shown no signs of abetting.

The DEG states that Blu-ray hardware sales increased 104% Y-Y, with more than three million “set-top units” sold. According to DEG, this brings the installed base of Blu-ray disc playback devices to 21.2 million units in the USA.

Note that a “Blu-ray disc playback unit” obviously includes Sony PlayStation III consoles, but there’s no reliable way to tell how many of those are being used to watch Blu-ray movies.

Conventional packaged media is clearly in decline. Rentrak numbers show that spending on DVD and BD rentals was down 4.4% Y-Y to a total of $4.4B. That number would be a lot worse if not for Redbox and other kiosk rental operations, which saw an increase in revenue of 55% Y-Y.

DEG also went on to say that 98 million Blu-ray discs have shipped to retail so far this year, up 57% Y-Y. But that number doesn’t tell us anything about how many of them have actually sold. (It’s like the early days of DTV, when manufacturers quoted the numbers of TVs shipped to retail, and not the actual sales numbers.)

A few things can be divined from these numbers. First, as I just mentioned, the decline in packaged media sales shows no sign of slowing down, and the Blu-ray format is doing little to stem the tide. That’s been the case ever since the BD – HD DVD format wars were declared over, nearly three years ago.

Secondly, Hollywood may have some major bones to pick with Netflix’ and Redbox’ business models, but it’s these same two companies that are saving the studio’s chestnuts right now.  (Forget Blockbuster; they’re preoccupied with Chapter 11 bankruptcy proceedings and arranging temporary ‘debtor-in-possession’ financing just to keep their doors open.)

Finally, electronic sell-through is gaining momentum, even faster than video-on-demand. Customers like the idea of consuming entertainment at home through a high-speed broadband connection, feeding some sort of DVR or streaming in real time at lower resolution. They really don’t care whether they have a physical copy of the movie on a disc, as long as they can get it off a server someplace.

Home theater fans will argue that last point with me, but they’re automatically disqualified from the argument because they constitute a niche and a relatively small percentage of the population – a percentage that studios could never make a sustained living from.

No, the average viewer at home doesn’t care about squirreling away DVDs or BDs and hunting for them on movie night. And that’s been pretty clearly reflected in packaged media rental and sales trends for almost half a decade.

It’s all in how you spin the numbers.

Saturday mail delivery and DVDs: Six – no, make that two degrees of separation

Two announcements in recent weeks spell big trouble in the future for DVD rentals.

Sales of movies and TV shows on DVDs have been declining steadily for the past five years, which is not good news for Hollywood. However, DVD rentals have held fast, slipping only a tad a couple of years ago, and then recovering as Redbox “buck-a-night” rental kiosks have spread all over the country’s grocery and drug stores.

The dominant player in DVD rentals is, of course, Netflix, who is implementing a multi-year strategy to wean customers away from polycarbonate discs and get them to stream movies instead over broadband connections.  By Netflix’ own reckoning, DVD rentals will peak by 2013, and then start a slow decline towards extinction by the end of the decade.

They may want to move that timetable up a bit. The U.S. Postal Service just announced a hike of 2 cents in the cost of first-class postage, to take effect early next year. According to today’s M&E Daily, “…Janney Capital media and entertainment analyst Tony Wible …estimated that a (Postal Service) rate hike could add between $18 million and $30 million to Netflix’s physical distribution expenses in 2011.” That’s a real game-changer!

In a New York Times article from July 2, Netflix’ DVD operations head Andrew Redich was quoted as saying, “Big rate increases will absolutely squash business and will absolutely slow growth for a company like Netflix.” No kidding! No wonder the company is lobbying for a five-day mail delivery schedule instead, a move which would save the Postal Service about $2B per year.

Make no mistake about it – Netflix wants to move away from physical disc distribution to streaming, which would eliminate a ton of back-office expenses and staffing problems. The Postal Service announcement will likely hasten that move, which is not good news for DVD or Blu-ray manufacturers and distributors.

The other bad news is, of course, Blockbuster’s continuing financial troubles. Here are the vital statistics: In 2009, Blockbuster recorded a net loss of $569.3 million based on annual revenue of $4.06 billion. For Q1 of 2010, it had a net loss of $65.4 million. And BB is carrying $895 million in debt on its books. Last week, the company was informed by the New York Stock Exchange that it would be delisted as its average share price had been under $1 for a 30-day period (Blockbuster was hovering around 18 – 20 cents per share at the end of last week).

As for long-term trends, Adams Media Research stated earlier this year that 2009 in-store spending on DVD movies declined to $3.3 billion, down $1 billion from 2008 and $5.2 billion from the brick-and-mortar movie store’s high water mark in 2001.  Not a pretty picture!

So – are we seeing the last days of the DVD? Probably not for a few more years. But it’s clear that consumers like the idea of streaming content instead of buying and renting physical discs. It’s a convenience thing! (We’ve had a Blockbuster By Mail copy of Julie and Julia sitting here for almost two months, still waiting to get a ’round toit’ so we can watch it. Maybe it’s a laziness thing, too.)

The Postal Service is in almost as bad a jam as Hollywood and Blockbuster. Look at all the documents and forms that can be sent via email now, instead of through snail mail. Electronic payments, e-funds deposits, PDFs, JPEGs, virtual catalogs, you name it – if it can be digitized or scanned, it can be sent over the Internet, stamps be damned. How much longer before retail stores move entirely to electronic coupons? The ‘green’ movement is pushing more retailers to adopt online catalog and brochure formats, so more and more snail mail is just junk nowadays.

Maybe Hollywood can work with the Post Office on a movie about all this (to be streamed by Netflix, of course). They could call it, The Postman Never Rings At All. Or maybe, First Class 2: This Time, It’s 46 Cents.

And maybe we should just save that copy of Julie and Julia, instead of sending it back. It could be a collector’s item before long…