CONSUMED BY MEDIA

Studios changed tune when DVD sales plummeted

Posted in digital media, DVD, LAT, Netflix, recession, Redbox, rentals, studios by Diane on August 17, 2009

redboxPatrick Goldstein makes many good points about studios’ uphill quest to slow the resurgence of rental, and preserve their profit margins as DVD sales fade. The Napster parallels are very instructive. But I would disagree with him on several points:

1. DVD’s decline was not unexpected by studios, who have been trying to prepare for it for years. They knew that the product cycle for DVD was reaching its end, and did their best to nurture alternatives, first and foremost Blu-ray, but also Internet downloads and video-on-demand transactions.

2. Until the economy really took a dive, accelerating DVD’s sales decline, studios espoused the need for ubiquity, stressing that they would make their content available to consumers however they wanted. In fact they tended to state this as evidence how much they had learned from the misfortunes of the record biz.

3. With DVD sales down sharply, and kiosk companies like Redbox are exploding, certain studios are singing a different tune. It’s no coincidence that they are instituting these changes with the release of their biggest year-end releases. The fourth-quarter has always been a make or break period for home entertainment side of the biz.

“By trying to keep their product away from Redbox for as long as possible, the studios are doing what all businesses do when threatened by dramatic change — they’re trying to hang on to their business model for as long as possible,” Goldstein writes. But they delay at their own peril, he warns. Read the story.

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