Hollywood NEEDS To Revisit the Home Entertainment Business Model

by on March 26, 2012

in Entertainment

The other day I took notice of the fact that the movie Immortals, starring Henry Cavill, had sold around a million DVD/Blu-ray units. I had not understood the numbers of units that mega hits sell, but to see Immortals sell a million units raised my eyebrows!

And that number comes from a dwindling level of home entertainment sales of DVDs and such. Back when I bought the Iron Man DVD, in one of the extras, Jon Favreau made note of the weakening DVD sales back then. And recently CNN reported that in 2012, more people will be paying to watch streaming movie content than buy movies on DVD/Blu-ray Disc.

For a minute, I thought DVD sales were plummeting. They are, but not as I first thought.

As things stand, Hollywood needs to look towards their future business models of selling movies to the home entertainment sector. Or, in other words, they better start investing in server farms to deliver digital content. More so than they have probably already invested in…

The estimates say that online video transactions will be hitting the 3+ billion mark in 2012, versus the 2+ billion mark for the actual physical disc viewing. The 3.4 billion estimate is roughly 135% over last years parameter and the content delivery systems that account for over 90% of the streaming content is Netflix and Amazon Prime.

But even though the above numbers seem dire, they really aren’t because the revenue estimates for 2012 for physical formats is $11~ billion while online streaming content is estimated at just under $2 billion.

But here’s where the consumer’s eyebrows might go up: It’s the price per movie, per venue.

Despite the above dire-looking prediction, Hollywood will still be pulling in 17% of their home entertainment revenue via online resources by 2016, while the DVD/Blu-ray is still predicted to bring in 75% of their billions. Video On Demand is expected to fill the void there of.

Right now in 2012, movie fans will be paying an average of 51 cents per movie, online and just under $5 for each movie viewed on physical media. But what’s not accounted for with the online versus physical media content, is that the media we hold in our hands, has extras. I don’t believe that online content does… In other words, online content will be movie-only viewing while the media we buy and hold or rent comes with extras that sometimes can’t be beat. To see behind-the-scenes tidbits, or director voice-over mode or other such content more than makes up for the price for the physical media.

The other aspect of the consumer could also be how much “crap” do they want to own, or possess?

When I converted to a Kindle e-reader, part of my motivation was that I can dismantle my various bookcases in my place. And when I buy a book to read, I can read it, be done with it.. but know that at any point in time, I can re-download it to my Kindle reader for future reading.

I can see folks appreciating the lack of space that multiple DVD/BD packages can take up. And as the venue or medium changes, like say, to thumb-drives instead of big, bulky discs, the physical media medium can continue. But if I can buy myself The Hunger Games movie online, with all the extras, knowing that it will always be there for downloading anytime, like my e-books, then that’s when the online reality trend will probably shift pretty aggressively.

Because face it, right now, 1/2 my collection is in boxes, in the garage. And right now I am “jonesing” for my Iron Man 2-Disc DVD package. I would be very happy to be able to sit down and hook up somewhere online and have my movie and its extras on my TV within a few minutes, rather than a few hours of digging through my garage.

cnn: streaming-movie-sales

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