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Analyst predicts beginning of the end for DVD

27 December 2007 1:10 by Rich "vurbal" Fiscus | 46 comments

Michael Nathanson, analyst for Bernstein Research, is predicting the demise of the DVD as the dominant vehicle for consumer video. His prediction comes as DVD sales are down more than 4% for the year according to data from Nielsen VideoScan. Nathanson believes retailers will soon start reducing shelf space dedicated to DVDs as a vacuum is created which will need to be filled by the winner of the HD DVD / Blu-ray format war.

In addition he's not predicting a particularly rosy future for the victor between the two HD formats. He doesn't expect a rush to replace a lot of titles consumers already own on DVD, noting that �few standard def titles will be worthy of replacement.�

Perhaps a more pressing problem for the movie industry is consumers' increasing preference for watching movies through Video on Demand (VoD) services. Besides more traditional cable VoD services, a number of companies are offering movie downloads, some in hi-def, either for purchase or rental. Services like Vudu and Amazon Unbox can be used with set-top boxes. Unbox is particularly appealling for some TiVo owners who can use it with their existing hardware. In addition, Xbox Live has had some success with video offerings. Netflix and Blockbuster have both gotten into the online video business as well, with Netflix offering Streaming video as a standard feature of their rental plans and Blockbuster buying download service Movie Link earlier this year.

Another development of note to Nathanson is the popularity of game consoles. �Media investors take note,� he writes. �As if we don�t have enough to worry about already, the growth of next generation video gaming poses a new and legitimate risk to traditional media consumption on many fronts.�

�The rising interest of next-generation gaming presents traditional media with a basic core problem - my kids (and millions of other kids) are now opting to play their Wiis rather than watch TV,� he writes. �While the TV viewing data does not bore this out, the observational evidence is obvious (to me)�the level of consumer interactivity and engagement that these next-generation game platforms offer fulfills my children in a way that TV cannot. And while I am not complaining about that, the media analyst in me winces about this future generation�s use of traditional media.�

Source: BARRON'S

Permalink to this article

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Netflix expands Internet viewing option (13 January 2008)

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Despite Blu-ray's sales lead analysts predict a stalemate (4 December 2007)

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tester22 (Newbie) 28 December 2007 10:38
*Originally posted by shemmer:* I'm weighing in to voice my opinion. I believe DVDs have quite some life left in them yet. My reasoning is as follows. It had been (guess/estimation on my part) 20 years since VHS video had set the home movie scene. DVD was a great jump forward. Now there's HDDVD and BluRay - but they've been released too soon since DVD. It's only been a few years since people have purchased DVD players and amassed DVD collections - unlike the 20 odd years it took people to upgrade from VHS to DVD. --Ummmmmmmm...............the DVD was invented in 1995 and took off nicely from the start so it's been 13 YEARS. Too soon my ass.-- But, in my opinion, and I know I will be strongly disagreed with on this, while the jump in quality from VHS video to DVD was massive, the jump in quality from DVD to HDDVD and Bluray isn't nearly as large. --As for not nearly as large....Is your head up your ass when you're watching these because if so then I can see why you DON"T SEE a huge difference. Basically the difference from VHS to DVD is like standard Directv to HD over the air. C'Mon buddy..........pull it out of there. It's awfully dark and you just may suffocate. [ + quote]
ematrix (Junior Member) 28 December 2007 11:12
Don't forget that this is one more of hundreds inacurate predictions made without considering all the factors, since his statement is based on an alleged 4% decline in DVD sales for this year, and increasing preference for watching movies through VoD services, even the growth of next generation video gaming, but he never considered overpricing and lack of appealing titles, which are direct factors for the decline... "Never underestimate your audience. They're generally sensitive, intelligent people who respond positively to quality entertainment." (Quote from Mitchell in Stargate SG-1 episode's 200) Personally i don't find appealing VoD services as a replacement to actually watching (and owning) movies on DVD, since is much easier to buy or rent the movie at the nearest store, specially with current internet connection speeds. Also the growth of next generation video gaming isn't enough to worry about it already. First of all, any disc will deteriorate even if unplayed if not handle and stored properly, such as exposing them to heat, dust, grease, sunlight and humidity. Secondly pressed original discs (CD, DVD) most likely will endure for decades, but low quality recordable media (CD-R, DVD-R) most likely will deteriorate on its own, even a few months after you burned them. I still have some DVD titles from the first batch that Warner released in 1997, even CD albums that i got in the early 90's, as well as high quality CD-R and DVD-R i burned years ago, and all play with no problems. Not so long ago, i got some LG CD-R and DVD-R, which i thought then was a reliable brand, but a few months later they began to deteriorate on their own, i searched for some information and it turn out that they were crappy media, therefore it's just a matter of choosing wisely before purchasing blank discs. Storing movies on hard drives seems guaranteed reliability and redundancy, but after a few years is recommended to migrate the content to new hard drives, and also must avoid exposure to magnetic fields, electric shocks, static, overheating, dust, grease, sunlight and humidity, even maintance is required and must be spun periodically to keep the moving parts working. SD flash cards and USB drives may look as an excelent choice for the new format to follow, since currently you can find them with large storage capacity in a compact size, which would be much easier to handle and store properly, since they are nearly impervious to scratches and dust, even survive casual abuse. But like all memory devices, they can sustain only a limited number of write and erase cycles before failure, and damage could occur if exposed to magnetic fields, electric shocks, static, overheating, grease, sunlight and humidity, also DRM is embedded in them, and the reality is that currently it would be expensive for them to manufacture and us to purchase, just a blank 8 GB SD card or USB drive (which would be enough to put one DVD movie in it) is priced up to $150 SRP ($60 at discount price) [ + quote]
ematrix (Junior Member) 28 December 2007 12:10
*Quote:* --Ummmmmmmm...............the DVD was invented in 1995 and took off nicely from the start so it's been 13 YEARS. Too soon my ass.-- In 1993, two high-density optical storage standards were being developed; one was the MultiMedia Compact Disc, backed by Philips and Sony, and the other was the Super Density disc, supported by Toshiba, Time Warner, Matsushita Electric, Hitachi, Mitsubishi Electric, Pioneer, Thomson, and JVC. Due an effort to unite the two camps behind a single standard, in order to avoid a format war like the one between VHS and Betamax in the 1980s, Philips and Sony abandoned their MultiMedia Compact Disc and fully agreed upon Toshiba's SuperDensity Disc, which led to the development of DVD, which finalized in December 1995, but it was until Spring 1997 when the first DVD players and the first batch of WB titles were availible (since WB supported DVD from the start) therefore it has been only 10 YEARS since the launch of DVD. Maryjayne and Shemmer, i completely agree with your thoughts and point of view, there's no case for me to repeat what you have so eloquently expressed. Tester22... I don't see the purpose of you expresing in such manner, simply because others don't share your preference or point of view, if you're willing to pay even higher prices for a HD DVD / Blu-Ray movie, that's fine... but not everybody share your sentiments in the matter, and that doesn't justify you being disrespectful to others. [ + quote] This message has been edited since posting. Last time this message was edited on 28 December 2007 12:20
tester22 (Newbie) 28 December 2007 13:17
*Quote:* *Quote:* --Ummmmmmmm...............the DVD was invented in 1995 and took off nicely from the start so it's been 13 YEARS. Too soon my ass.-- In 1993, two high-density optical storage standards were being developed; one was the MultiMedia Compact Disc, backed by Philips and Sony, and the other was the Super Density disc, supported by Toshiba, Time Warner, Matsushita Electric, Hitachi, Mitsubishi Electric, Pioneer, Thomson, and JVC. Due an effort to unite the two camps behind a single standard, in order to avoid a format war like the one between VHS and Betamax in the 1980s, Philips and Sony abandoned their MultiMedia Compact Disc and fully agreed upon Toshiba's SuperDensity Disc, which led to the development of DVD, which finalized in December 1995, but it was until Spring 1997 when the first DVD players and the first batch of WB titles were availible (since WB supported DVD from the start) therefore it has been only 10 YEARS since the launch of DVD. Maryjayne and Shemmer, i completely agree with your thoughts and point of view, there's no case for me to repeat what you have so eloquently expressed. Tester22... I don't see the purpose of you expresing in such manner, simply because others don't share your preference or point of view, if you're willing to pay even higher prices for a HD DVD / Blu-Ray movie, that's fine... but not everybody share your sentiments in the matter, and that doesn't justify you being disrespectful to others. It's not a matter of preference that's being referred to so PIPE DOWN! It's a matter of fact. Perhaps if you had the numerical scale of quality and comparison broken down to you, you would then see it's a fact. Whether you ENJOY or APPRECIATE the difference is opinion BUT there is a substantially HUGE difference in quality. And..........if you've ever seen a DVD on a 1080i,p LCD or Plasma then you understand so once again.......PIPE DOWN Mr. or Miss "my opinion should be counted even when it has no merit." [ + quote]
tester22 (Newbie) 28 December 2007 13:26
*Quote:* *Quote:* --Ummmmmmmm...............the DVD was invented in 1995 and took off nicely from the start so it's been 13 YEARS. Too soon my ass.-- In 1993, two high-density optical storage standards were being developed; one was the MultiMedia Compact Disc, backed by Philips and Sony, and the other was the Super Density disc, supported by Toshiba, Time Warner, Matsushita Electric, Hitachi, Mitsubishi Electric, Pioneer, Thomson, and JVC. Due an effort to unite the two camps behind a single standard, in order to avoid a format war like the one between VHS and Betamax in the 1980s, Philips and Sony abandoned their MultiMedia Compact Disc and fully agreed upon Toshiba's SuperDensity Disc, which led to the development of DVD, which finalized in December 1995, but it was until Spring 1997 when the first DVD players and the first batch of WB titles were availible (since WB supported DVD from the start) therefore it has been only 10 YEARS since the launch of DVD. Maryjayne and Shemmer, i completely agree with your thoughts and point of view, there's no case for me to repeat what you have so eloquently expressed. Tester22... I don't see the purpose of you expresing in such manner, simply because others don't share your preference or point of view, if you're willing to pay even higher prices for a HD DVD / Blu-Ray movie, that's fine... but not everybody share your sentiments in the matter, and that doesn't justify you being disrespectful to others. Yeah ten years but VHS did not take off immediately (respective to DVD) after invention. 2 years is nitpicking and not everyone can be expected to know the time and date of invention without looking it up like you just did. [ + quote]
usndoc (Newbie) 28 December 2007 13:27
I think we need to separate two concepts: 1. New MEDIA format 2. New VIDEO format. DVD -> HD/BluRay is a VIDEO FORMAT conversion. Whether that change will spell the doom of DVD (VIDEO FORMAT) is to be seen, depending on customer demand. HOWEVER: I think we should consider MEDIA format changes. To say "DVDs are on their way out" do we mean MEDIA or VIDEO? I think that if there is a more durable MEDIA then DVDs (MEDIA) will expire. BLURAY and HD are pretty much on the same TYPE of medium. So if the MEDIA will deteriorate in 10 years, then HD and BLURAY will follow. Anyone want to chime in on the new possible FORMATS? Yes, LASERDISC was a FORMAT and a VIDEO change, both at the same time. (Anyone want to buy a bunch of Laserdiscs?) [ + quote] This message has been edited since posting. Last time this message was edited on 28 December 2007 13:28
varnull (Inactive) 28 December 2007 14:23
Actually Laserdisk was only a media change. The output was standard pal/ntsc a/v output the same as the philips vcr's of the era. Fair enough it had optional subtitles/audio choices and stillframe, but the output was either UHF rf or composite video and audio. Some ntsc models also had RGB output, which was useful if you wanted to play North American disks in Europe and had a monitor which had the inputs (some grundig and philips tv's) The same can actually be said of dvd. Most low end models only output composite video/audio and will directly replace a vcr. The change is with HD setups, where the output is actually different and requires different viewing hardware as well. More expense for consumers who are facing the onset of a depression. I think dvd will be with us for many years to come, and these 2 HD formats will probably never gain the major market share before they are replaced with "the next new thing" So enough of this "analysts predict" BS.. vhs tape is still with us and regardless of the years the CD has been around you can still buy audio cassettes on the high street. Millions of people have a large investment in the dvd format and are not going to rush out to spend �1000 on a completely new setup on a whim. [ + quote]
OhCrap (Inactive) 28 December 2007 14:59
*Originally posted by tester22:* And standard DVD is here to stay! Granted that the production of the DVDs will eventually cease, players are sure to stick around for the obvious reason. I love DVD and don't and won't plan on replacing many of my DVDs with an HD version. Oh............Blu-ray AND HD-DVD are here to stay boys and girls. There will NOT be a winner. The outcome will absolutely be dual-format players. It's amazing that so many dilute themselves into thinking that "yeah, sure, if HD-DVD prevails then Sony will just stop manufacturing and start making ALL the movies they've already made in blu-ray, in HD-DVD" Yeah right. Anyone who believes this...........please...........stay out of the driver's seat of a car because your sensibility can't be trusted. I agree with that 100%, that's is one of the smartest things I've heard on this site. Honestly all this bickering over a format winner is crap. [ + quote]
OhCrap (Inactive) 28 December 2007 15:12
*Quote:* *Originally posted by tester22:* "yeah, sure, if HD-DVD prevails then Sony will just stop manufacturing and start making ALL the movies they've already made in blu-ray, in HD-DVD" I can't imagine how you can think this. Imagine if format-X's sales skyrocketed. The remaining studios who are supporting format-Y or are dual format would most definitely jump to make format-Xs, it only makes sense to make a product that sells. Well in reality, one is not out selling the other by a large margin. So your point is pointless. The only reason people get into heated conversations about these formats is because they feel like they have invested heavily in one or the other and no one likes to see their team lose. [ + quote]
varnull (Inactive) 28 December 2007 15:16
I have a sony vhs recorder. (hahaha) The thing is.. Sony haven't had one domestic media format adopted by consumers and manufacturers across the board. They are way too greedy with manufacturing licenses... We will all be sitting here in 10 years watching out streamed HD content wondering what all the fuss about disk formats was all about. (don't say U-Matic.. it was 1. professional.. 2. invented by Grundig.) Anybody remember the competitor for Laserdisk? Also disk based... both lost out to tape, even though the quality was lower.. you could record whatever you wanted on it.. The only good thing coming out of this disk format madness is the price of standalone dvd recorders is falling rapidly. As more people are able to record from broadcast on dvd they will.. and reject the HD playback only formats. [ + quote]
usndoc (Newbie) 28 December 2007 16:09
All I can say is the folks on the Laserdisc side didn't copy protect (nor should they have). I have transferred all of my Laserdiscs to DVD media (by playing the S video into a video capture board. Granted its just NTSC but the quality was entirely acceptable. I just had to edit out the "change sides" notice. There should be no reason we cannot perpetuate what we own. Cassette tapes were the first medium to allow LPs and other records to be mixed and copied. PS In case any one wants to know, Toshiba makes one heck of a PAL DVD player that generates excellent NTSC quality. I found this more acceptable than the software that was supposed to change formats, but did so less acceptably. Bottom line is: eventually we will distribute video as we now do music to everyone who wants to buy it. (And.. no silly workarounds for something like DRM that is kindergarten easy to bypass). And there will be no computers/TVs. Going all digital in 2009 will promote the possibility of the "file" and the "playing device." The media will be moot. [ + quote]
oracle (Member) 28 December 2007 16:30
I don't know why a decrease of 4% during this period is a milestone for the end of the dvd era. Maths and probability theories don't are in conjuction with this item. They try to convince us that we're insains. Perosnally after readind the post in question I'm going once a while to the toilet and see if in my face there' s a sign stating jackass. On the oher hand there's no reference about the dvd players to be incorporated to other devices excep stand alone dvd playres. Finaly nobody feels that in this moment families own more than two or three stand alone players except those who are part of pc's, laptops, cars, camcorders, etc. How many a house has to own? I doubt the provided numbers. Somebody want to put deep his hands in our pockets. That's why I' ll stick to DVD industry for the next seven years. Punto e basta! [ + quote]
duke8888 (Junior Member) 28 December 2007 20:08
Its going to take about two years before they decide a winner on the format so that they can drain the consumer of his money. [ + quote]
ematrix (Junior Member) 28 December 2007 20:34
Tester22... it's not that your opinion has no merit, which actually has since you offer valid statements, and nobody is disputing nor rejecting them, the point is that you're being disrespectful to others in the process without any provocation nor reason to do so. Back to the subject, nobody is disputing that HD DVD / Blu-Ray offers an improvement in audiovisual quality compared to DVD, but what we're saying is that such improvement isn't enough to justify buying the same movies again at even higher prices than we did (and still do) for them in DVD format, specially when you can achieve similar results (not equal) viewing current DVD titles throw upscaling DVD players. Finally and to my defense it really doesn't matter if i looked up this information, the fact is that it doesn't matter the time and date of invention of every format, but what matters it the time and date in which such formats became availible to consumers, per example development of Blu-Ray and HD DVD began in the early 2000s (2000-2002) but it wasn't until spring 2006 that both HD DVD / Blu-Ray players and titles became availible to consumers, therefore both formats have been around publicly for a year. [ + quote]
sciascia (Junior Member) 28 December 2007 23:39
Think of this, if there were going to be no clear winner, there would be no sides taken by major movie studios, they'd just produce the same movies for both formats. This is not the case, and eventually it is completely realistic to believe that one will become the standard format over the other. It is too expensive to press the same movie on two different formats, eventually the movie studios will stick to one format, and the other will die off. Think VHS vs. Betamax, or more recently, DVD versus DIVX. Also, try not to be so rude with your retorts, it really compromises the validity of your opinions when you reply with such anger and self justification. [ + quote] This message has been edited since posting. Last time this message was edited on 28 December 2007 23:44
red2tango (Inactive) 29 December 2007 4:14
*Originally posted by edlonwlf:* Blu - Ray vs HD DVD huh ..... that sounds like a similiar "war" that happened a while back between Sony (of course) and everyone else. Beta vs VHS ...... Guess sony didn't learn. learn what?they're winning...your point? [ + quote]
JRude (Junior Member) 29 December 2007 16:32
FIRST! I am not market driven. I watch movies! Old ones, new ones, documentaries. I have 10+ year old DVD's that work fine. I have VHS tapes over 20 years old that play fine. I have Backup discs YEARS old that play fine. I think some of you people read too much fluff and believe new technology is always the answer. It's a CHOICE! I can embrace them all. But I sure don't want to invest in thousands of $$$'s to ''upgrade'' either my media format or or my PC. Too much control comes with each new ''upgrade''. It is intended. DOWNLOAD a DRM flic or music that plays on one platform? NOT! I can bypass the controls, but why should I have to? It's going to get worse. Guaranteed. I have THOUSANDS of DVD's...they ain't dead yet! If I'm watching a DVD or fossil VHS I do not notice the resolution once into the content. As it should be. A crap flic in Blu-Ray or HD is a crap film. Only thing dead is the minds of too many consumers. So all you young bucks clamor and spout. But watch your back with with each new ''upgrade''! Have a reasonable day. It's all we can expect. The rest is a gift. [ + quote]
borhan9 (AfterDawn Addict) 29 December 2007 18:08
The fact is that DVD sales are going down but not just because consumers are not buying them the fact is that the copy protection is easy to break so people copy these things. Which means the cost of DVD's actually gone down to buy but people rather spend less than $5 to rent go home burn and then take back and watch at their own pleasure. HD DVD and BLU-Ray will see the same trends as well simple and sad but true. My 2cents. [ + quote]
ematrix (Junior Member) 29 December 2007 19:38
WELL SAID JRUDE! Borhan9... adding to what I said before, that's also why the best would be to make a significant reduction on retail prices for DVD / HD DVD / Blu-Ray movies, which would allow consumers to buy more movies rather than rip them, bacause ripping and burning DVD movies is cheap, fast and easy, and for those who care only for the main movie, just need to rent it and make a copy. Not so with HD discs, which can sometimes be difficult (specially if contains BD+) and indeed it's time consuming to rip and burn them, since takes much more gigs to store them on a hard drive, and finally place the content on a blank disc. Currently the prices for HD burners and media is very expensive, granted that in the future such prices will lower, but for the time being you better off buying the original stuff rather than ripping and burning HD films. Consider that they haven't surpass 56x for CD-R and 20x for DVD-R, and even those burning speeds aren't ideal if you wish reliable results, because even technology has its limitations, and in the case of discs they can only achieve a maximum velocity, before reaching an unstable performance, even to the point of risking permanent damage to your equipment. Also is easy and not much time consuming to convert a ripped DVD into a version that fits on a portable media player like iPod. No emerging format, be it a video store like Amazon's Unbox, or Xbox Live, or Netflix's streaming rental service, or HD DVD or Blu-ray, not even VHS on its 2 decades of life had such vast catalogue of films and TV shows like DVD does currently... which leads to my final observation. HD DVD / Blu-Ray is merely an upgrade from DVD, not a new media and video format like DVD was against VHS. Everybody surely has their own DVD movies and TV series collection, which could go from hundreds to thousands of titles, no wonder why most consumers don't feel the rush to replace their DVD titles to even more overpriced HD DVD / Blu-Ray titles, nor spending thousands of $$$'s to upgrade all their equipment, merely because of an audiovisual improvement, there should be more than that, specially when they expect us to pay full price again for a movie we already own. [ + quote]
CKhaleel (Senior Member) 30 December 2007 12:51
Maybe sales are down because of piracy... [ + quote]
laddyboy (AfterDawn Addict) 30 December 2007 13:23
Cinema movie theater ticket sales were stagnant this year. Theater revenues were up only because ticket prices were inceased. Actual tickets sold were the same over last year. Is this due to theater viewing being on the decline as a technology/way of life or due to the fact that there was little available for viewing this year that moviegoers wanted to see? Also what's happened to DVD rentals? Could it be more people are just using BBO and NF for movie watching and not purchasing? I know I only buy titles that I want to keep to view repeatedly and those are mostly HD DVD now. That doesn't include many films of the ones released over the year. I pick up a lot of used ones for $3 - $4 at BB and Hollywood. Are those included as sales, or are just new DVDs counted as sales? [ + quote]
nopcbs (Newbie) 30 December 2007 19:43
I suppose you can say that this is the begining of the end for the DVD format, but it is going to be a very lingering death. Look at the prices of DVD movies and look at the prices of cooresponding HD-DVD or Blu-ray versions. Then look at the quality of most ports of recent to older movies from DVD to HD-DVD or Blu-Ray. The roughly 2X price differential is simply not worth it. With newer films, especially those shot in HD, the differential is much more justified, but the cost is still simply too high for people to buy as many HD format movies as the buy in DVD format. When the price comes down to very near that of the DVD format for new movies, then you will see the HD formats supplant the DVD. Not until. The HD-DVD disks that are DVD on one side are a great idea making the buy sorta future proof. Wish all the HD-DVD disks were like that. I don't buy the video on demand supplanting disk-based distribution in the near term. The bandwidth is simply not there and the interface is clunky. [ + quote]
hermes_vb (Senior Member) 31 December 2007 0:23
Analysts predict...Blah Blah Blah. Who cares what so called expterts say nowadays. They are often wrong or not 100% sure about their predictions. So what's the point? [ + quote] This message has been edited since posting. Last time this message was edited on 31 December 2007 12:35
Yoohoo2G (Junior Member) 31 December 2007 2:27
I agree with #1 & #2. This prediction is kinda bullcrap. First of all, not even 90% of American household own a HDTV yet (I talked to this video rental store owner in my area, he's just started to have Blu-Ray DVD for rent and he told me that 80% of his customers was not even aware what Blu-Ray is) Secondly, the quality of Blu-Ray or HD DVD is not a big leap over DVD. Thirdly, the price of these 2 is still expensive. And finally, if you own either one player, the movie you like might not come out on the format of the DVD player that you own but come out on the format of the other. [ + quote]
Mez (Senior Member) 31 December 2007 15:52
Oh yhea! The guy made a prediction! He was cleaver enough not to put in any meaningful details. I guess you start to die the day you are born. What will hasten the death will be fair prices on the product. Right now only people that don't mind paying double for the same movie will buy them. The great predictor didn't take into account the fact the US is in a mild recession and the movie industry put out mostly junk this year. Only new tiny growing markets like the MP3 and HD DVD industry showed a gain this year. [ + quote]
Sazaziel (Junior Member) 1 January 2008 10:51
DVD sales are down because most people prefer to watch movies through download able services or on the internet. We have to realize that they aren't talking about DVD sales as a whole. They are really talking about the purchases of a new release etc. Other than that many people still buy lower priced or used DVDs at $10 or less on a daily basis. My guess is that due to the lower or budget price that those sales don't count as a whole because they consider it a loss of profit. [ + quote]