Tuesday, April 17, 2012

Tipping Point for Home Film Viewing

A recent report from IHS Screen Digest predicts that streaming will surpass DVDs and Blu-Rays as the top distribution system for movies.  By the end of 2012, U.S. consumers will have watched 3.4 billion movies via streaming, compared to 2.4 billion views from physical media sources.  In 2011, the numbers were 2.6 billion views from discs and only 1 billion views from online streaming.
  Dan Cryan, senior analyst at IHS, said,
"U.S. consumers now are making a historic switch to Internet-based consumption, setting the stage for a worldwide migration of consumption from physical to online... But the transition is likely to take time: almost nine years after the launch of the iTunes Store, CDs are still a vital part of the music business."
The report attributed the rapid growth in the use of online movie delivery to subscription services like Netflix, Amazon Prime, and Hulu+.  In fact, viewing movies from online subscription services accounted for 94% of all paid online movie consumption in the U.S.

  The switch is, I think, indicative of more than just a shift in delivery system.  It also reflects (and contributes to) two more fundamental shifts in audience behaviors.
  First, while content has always been king in terms of the value of media consumption, historically the content has been tied to the physical delivery system and that's been how consumers thought about it. They watched TV, listened to radio, read a book or magazine.  With digital networks offering more distribution paths for media, people are increasingly separating the content from the medium, and recognizing that (almost) all of the value lies with the content.  When that happens, consumers increasingly recognize that the value comes not from owning a copy, but from the ability to access the content.  And subscription streaming services offer access to a lot more content.
  Second, online delivery offers consumers more choice and flexibility in viewing options, and consumers are learning the value of that flexibility and having more choice.  The shift here may be even more profound for media and content industries, as it is demonstrating that while content is king, that there are ways to add value to content, and that added-value aspects can drive consumption decisions in a highly competitive market.  While this may initially be a threat to traditional media, the idea of considering how value can be added is also an opportunity for product differentiation that media can take advantage of.

Source - 'The end of movies on disc': Online 'streaming' films will outnumber DVDs and Blu-Rays combined for first time this year,  Daily Mail Online


  1. As a Netflix user, I enjoy the service, but the selection is limited. While online streaming of movies is nice, I like having physical copies of movies because internet connection is not always available.

    I believe services like Netflix are also limiting users to content by the price. I used to receive a DVD by mail and have unlimited streaming, but when they decided to increase the price for having both, I chose unlimited streaming. However, I still am buying movies because I like having physical copies for traveling purposes.

    A similar article on this phenomenon comes from PCWorld's blog, listed here: http://www.pcworld.com/article/252650/online_video_expected_to_overtake_dvd_bluray_viewing_this_year.html

    They discussed the same report and finish the article by saying, "As of last fall, Blu-ray sales were still growing, and although DVD sales are plummeting, they still account for billions in revenue for Hollywood. Movie studios are in no rush to stop selling discs, even as a future dominated by online viewing looms." So, I think it will be a long while until physical copies become obsolete because people, like me, still want them. The most serious threat to that is online piracy.

  2. I wouldn't be surprised if the figure that stated that 3.4 billion movies will have been viewed via internet streaming is lower than the actual number viewed in 2012. Sites like NetFlix are somewhat more flexible to different demographics as every generation has its taste in cinema, and many of these movies can be viewed through online streaming services.

    However, I don't necessarily agree with the comments about the DVD industry because I personally believe that it is a medium that will suffer greatly in the coming decade despite its current success. If the rest of the article is correct, then consumers are beginning to realize that the content is what is valuable rather than the actual medium. Also, DVDs don't seem to have the same relationship with the movie industry as vinyl albums do with the music industry in the sense that they can become collector's items for the avid fan. This factor, along with the rapid expansion and availability of online movie streaming, I think will eventually jeopardize this industry and the movie industry may end up facing the same problems that the music industry faces today.

  3. Honestly, the only hardship I can see happening is what is already going on with companies like Blockbuster and Hollywood Video. Otherwise, web-based content offers up an array of cheaper options to gain capitol. While companies are not seeing $20 per DVD, they are not having to pay to produce as much. Not to mention that if you look back to the statistics in the article, more and more people are watching these mediums because of how cheap and convenient they are.
    Another cost saving measure is staffing. It takes more money to pay a staff to produce hard copied materials than it would to pay just a few website developers to put up your content.
    One again this just goes to show how the use of new technology into business usually is the best fiscal choice.

  4. The sad fact is that this could not be more true. Like Michael was saying, just look at the old businesses we loved like Blockbuster and Hollywood Video. But, I definitely agree with Clara that Netflix has a very limited selection. If I am being honest, there have been more times in the last year that I have wanted to go to Blockbuster or Hollywood Video to get a movie then in all my 20 years before. The reason is is because places like Netflix, Hulu and Redbox do not have near the selection that Blockbuster and Hollywood had. I understand that internet and streaming is much chaper to produce then wasting the money of making dvds that will eventually sit in the $5 bin at Wal-Mart, but I do miss the selection.

    I am all about technology advancing, but it is getting a little ridiculous. We are totally eliminating any human contact which is just furthering our demise into becoming a society like the one in Wall-e (shoutout to all my Pixar fans!!). I know what the articles are saying about the future and how dvds are just going to go out like cassettes and vcrs but I like to hope that they won't. But if they do, at least I know I can always count on McKays's!