Are DVDs on their way out as a way to distribute films, specials, TV shows and other video content? Although the early-adopter crowd says yes, I have my doubts. The value added into DVDs these days far outweighs the relative complexity many consumers must confront to get downloadable video content onto their living room televisions.
Alternate audio tracks, digital surround and a plethora of extra features movie producers add to most DVDs are prized by almost every DVD fan I know. On the other hand, downloading a movie for free can be a bit of a process for the technically challenged as well as being a pain to get on that television. There are products like the Apple, Inc. (NASDAQ: AAPL) Apple TV that takes care of this, but at a high cost. DVD players? $30 at a local retailer and you are ready to go.
The price of DVDs has continued to come down slowly but surely, which has to cause concern for movie studios who fear margins are being eroded at the same time movie downloads threaten to lower the revenue bar even further. In an age where DVD releases are meant to make up theater revenue letdowns, the dropping of DVD prices could be seen as a threat. But movie downloads? It's hard to find one solution offered by any company that even comes close to threatening the physical DVD as distribution medium for video content.
Why are retailers dropping the prices on DVDs so fast, then? For one, it's timing: like it or not, we're now in holiday shopping season now, and loss-leader prices like $3.99 get customers in stores and keep them there longer. Ever witness a shopper spending 10 minutes rifling through countless bargain DVD racks looking for that special movie at that great price?
Retailers need to keep feet coming in the doors, not clicking on a website to download a movie. The price drops keeps those feet coming in, but at the same time, angers movie studios who see vanishing margins. Who will win this? If the movie studios want to jettison the DVD for a download, there has to be an easier and better way to enjoy that content on the big TV in the house, complete with extra features and digital surround. Does that exist right now without a significant investment and some techno-geek know-how? Hardly.
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