Thursday, February 19, 2009

DVD sales plummet, Blu-ray unable to save the day

What does it really mean when DVD sales are falling. While prices have dropped, the unknown for me is whether the units purchased have dropped as well. I'm guessing they have too. For my family, I definitely have purchased less DVDs. When the kids were younger, many of my purchases were family-themed product, knowing that we would be watching these same films over and over again. And while movies are nice to own, I tend to first check out films on VOD. I can't think of a film that I need to own in my library. Perhaps people have gotten tired of filling up rooms with discs and might be more inclined to purchase digital copies that can be shared and moved among devices. I'd certainly rather bring a flash drive into the car for the rear DVD player than keep a dozen discs on the floor or in the door compartment.

"To be sure, Blu-ray is growing -- up 250 percent since 2007 -- but it still represents less than 3.5 percent of the overall market. Analysts now wonder whether Blu-ray will be able to pick up steam fast enough -- or if the future has already been handed over to online downloading and streaming alternatives. With companies like Netflix rushing into streaming as quickly as possible, that certainly seems like a strong possibility."

And Now Hulu Pulls Shows Off Boxee

First it was, and now Hulu will be taking its content off of Boxee. The problem is that the cat is out of the bag and it's hard to take a step back. Once content became accessible outside the confines of traditional TV, consumers were able to choose where they wanted to watch. That freedom of on-demand, coupled with the chance to receive this same content at a lower price meant that the old business model may not withstand the onslaught of new technologies. And who could lose - cable companies who depend on subscription revenue, DVRs who can be replaced by on-demand streams, premium networks that charge higher rates for newer movies, and TV networks that depend on eyeballs to charge high ad rates.

And while Hulu may lose eyeballs from restricting where its content can be streamed, customers are still seeking out alternatives to cable for their viewing pleasure. Why pull Hulu from Boxee? "One theory: Boxee makes watching video from sites like Hulu a lot like watching cable. As we noted a few hours ago, Boxee/Hulu means that paying $80 a month for cable TV is no longer necessary for some people. It also means we don't need to watch TV shows (and ads) live, or even fast-forward through them with our DVR." Comcast has already felt the effect of broadband viewing; while internet subs are growing, TV subscribers dropped in the fourth quarter.

Hulu may think it is stopping the drip from becoming a flood; today, the vast majority still watch content through cable or antenna. Boxee and devices like it that play video through the web onto the TV, are not going away. It may make it harder to watch Hulu on your TV set, but consumers are changing their viewing habits. I still believe that cable is the preferable way to watch content; cable companies need to step up and improve their set top box, their DVR and VOD functionality, and their access to web video so that its access to content remains most desirable.