BusinessWeek of July 18, 2005 (online version) reports “The End of Hollywood’s DVD party?” (premium content, I think).
For many years, Hollywood studios have been able to reap in many years’ worth of royalties and income from the sale of their movies on video and DVD (quite ironic, really, when you consider that it was those studios that sued Sony and others a few decades back over the introduction of the home VCR. They eventually lost, but I’m having deja vu experiences in their response to Internet downloads – see last week’s post). But, it seems that this is now tailing off (no doubt, partly due to Internet downloads and easy ripping).
“On June 30, Pixar Animation Studios cut its earnings-per-share estimate for the second quarter to 10 cents from 15 cents, due to slower-than-expected DVD sales of its blockbuster The Incredibles. The stock of Dreamworks Animation dropped sharply in mid-May, after the studio reported that returns of its own blockbuster Shrek 2 left sales 5 million short of its forecasts.”
Why is this happening?
More “block busters” more often
“In 1998, moving a film from theater to DVD took an average of 200 days, nearly seven months. Today that’s about 137 days — or around 4.5 months, according to industry newsletter DVD Release Report. Looking for Sandra Bullock’s flick Miss Congeniality 2: Armed and Fabulous? Warner Brothers put that less-than-stellar box-office performer onto DVD in a lightning-quick 88 days. In addition to movies, studios have been pushing out DVDs of classic TV shows such as old Seinfeld episodes and the X-Files, further filling those aisles with content. That means folks may be staying home from the movie theater to watch DVDs, but it also makes DVD sales just another marquee business. Like at your neighborhood theater, a hot new release seems to be coming out every week.
Result: Retailers increasingly are shipping back unsold DVDs — even those as hotly anticipated as Shrek 2 or The Incredibles — because they don’t have enough shelf space to keep all those titles, figure several analysts.”
More competition from other products
“Then there’s all the additional competition for viewers. Folks are watching more TV, according to a recent report by Turner Broadcasting, as well as playing more video games and surfing the Net. On top of that, cable and satellite operators are pushing nearly free digital video recorders, giving TV viewers the opportunity to record their own shows instead of buying DVDs in the stores.”
Pricing
A rip off. A new DVD player costs as little as $40, but you still have to fork out about $20 for a DVD!! If they reduced their costs, we could buy more for less, with greater returns for them – Economics 101. AND, they would stave off the effects of the growing market in pirated goods.
Internet
OK, we’ve talked about this before, but doesn’t anyone get it. The Internet has changed everything!! Cheap/free downloads at broadcast quality speeds! No more need be said.
Not so cool anymore
When DVDs first came out, with their add ons (games, director’s cuts, background info), we all thought it was way cool. But now, its passe. And who has the time to watch all that extra stuff anyway. Only the cult classics will ever get cult status anyway, and only a few devotees will really care about the extra stuff available on a DVD. In other words, one of the early competitive differentiators of DVDs has now been commoditised and adds no extra value.
The Entertainment Industry malaise
Its not just DVDs. Just this week, another professional soccer player was transferred for a mind numbing figure – 30 million pounds I think it was. Mariah Carey is now back with a hip-hop type sound, after taking a “well earned” rest of a few years, in which her previous bosses paid her something like $ 30 million NOT to sing (to get out of the contract they had with her). Tom Cruise earned $ 75 million dollars for Mission Impossible 2 (salary and percentage of income). Are they really worth it?
I think the average fan is starting to wonder about this. Not at a conscious level, necessarily – but deep down inside, we know its out of control. Especially those of us from the “Global South” or from parts of the world where people live on less than $1 a day (hey, wake up industralised world, that means over 2/3rds of the planet!!) – it doesn’t sit well in the psyche.
Signs like the ones we talk about under “Ripping and Burning” seem to indicate that there are cracks in the dam.
If the Entertainment Industry as a whole doesn’t get on board the “Connection Economy” bus, they too will be hit hard. It may seem self evident that this industry is part of the emotion economy, or the experience economy, given their end product. THAT IS NOT TRUE. The Connection Economy is not JUST about the product, it is about the way in which the product is sold. And in Hollywood, there is a stark contrast between the art of entertainment and the business of entertainment. The latter is in the process of killing the former.
(PS – for all fans of DiscWorld, the invention of best selling author, Terry Pratchett, get your hands on a copy of “Moving Pictures” and see a singularly brilliant expose of what I am talking about – get it at Amazon.com or Kalahari.net).
The DVD party is coming to an end
