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Savings Experiment: Snow RemovalThe DVD market continues to disappoint. There's an article over at The Hollywood Reporter discussing the industry and its sorry state. According to the piece, sales of discs are down 13% at the end of the third quarter.
Interestingly enough, the article goes on to give a positive spin to the news by pointing out that the Blu-ray format is gaining traction, and that digital distribution and rental of discs are also acting as offsetting elements. While that may be true, I'm not so sure I can be as positive, because I still believe that the studios have a long way to go in terms of answering the DVD issue.
Media companies such as The Walt Disney Company (DIS), Time Warner (TWX), Viacom (VIA), News Corp. (NWS), and NBC Universal, the latter of which was recently involved in a transaction between General Electric Company (GE) and Comcast (CMCSA), should not necessarily rest on their laurels just because other formats are helping out.
Personally, I don't see the kind of marketing blitz that should be there for Blu-ray. I know, there's a lot of advertising for the trademark, certainly, but, maybe it's just me, I don't believe the message to consumers is as cohesive and as enticing as it should be. On an anecdotal basis, I still perceive resistance to the process of replacing a DVD library with the new format. People aren't as impressed by the technology as they probably ought to be.
Also, even though the Reporter injected the context of the recession into the discussion (a valid move, by the way), investors in the media must keep in mind that consumers will never like paying premium prices for home entertainment. Fighting deflation must be a priority. Studios should perhaps consider making less copies of new releases and try charging higher prices. In addition, further experimentation with collapsing release windows should be explored (although that takes guts, since theater owners hate the concept, for obvious reasons).
No, I'm afraid I'm not confident at this point about home video's prospects in the new year. Execs have to address this ancillary channel because it's a great way to hedge the risk of big movie budgets. I'm not a huge fan of the execs in Hollywood; hopefully, they'll make moves in 2010 that will cause me to change my opinion.
Disclosure: I own Disney, GE; positions can change without notice.
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