Blockbuster a Bust, DVD Dead?


November 6, 2013 was the first day of the American Film Market for 2013 and on that day Dish Network announced that DVD is dead.

Really all they did was announce that they were closing all their corporate retail stores.  The franchised stores will remain open under the Blockbuster brand (at least until the licensing agreement for those franchise stores runs out).  They are also closing the doors on their DVD by mail operations this December.  They are going to continue offering their Blockbuster On-Demand video streaming service (20,000 or so titles) and Blockbuster Home service for Dish subscribers (basically low-tier pay TV).

“This is not an easy decision, yet consumer demand is clearly moving to digital distribution of video entertainment,” Dish President and CEO Joseph Clayton said in a statement. “Despite our closing of the physical distribution elements of the business, we continue to see value in the Blockbuster brand, and we expect to leverage that brand as we continue to expand our digital offerings.”

If you’ve followed the industry at all you can’t say this writing wasn’t on the wall.  DVD sales have been drying up for the better part of a decade.  Doom and gloom has been being preached about the death of DVD for more than 10 years, but this info graphic will show you when the fall began.  In one year sales of DVD dropped by a third and then continued to fall.historyofdvdYes, those numbers are in BILLIONS (sales figures provided by “The Numbers“).  In 2008 Netflix started offering its streaming service and by the end of that year sales dropped through the floor.  By the way, that year held some huge DVD sales titles.  Three family titles (Kung Fu Panda, WALL-E, and Alvin and the Chipmunks) as well as Iron Man and The Dark Knight.  Heck, the blockbuster juggernaut, Avatar, released on DVD in 2010 and you’ll notice that sales dropped off almost $1B that year as well.

Streaming is the new frontier, but Netflix licensing deals aren’t all they are cracked up to be.  A low budget, no name, indie license to Netflix streaming for two years is approximately the same as four to five thousand units of DVD sales.  Well, I’m hear to tell you that 4-5K DVD units is A LOT.  No, that’s not $20 per unit retail, that’s the wholesale price (what you are actually getting as the producer).  So, honestly, its an equivalent trade.  The problem is that people banked on both of these windows and now, there’s really just one.

Is the DVD dead?  Absolutely not.  Not even in the United States where blockbuster just closed its doors.  The fact is that internet bandwidth just isn’t good enough yet and not proliferate enough to kill the DVD… but its getting there.  Five years from now will probably mark the official death of the DVD, but by then the market will have figured out how to make money elsewhere.

Netflix is only ONE of many streaming options, albeit the big boy on the block.  I’m sure there will be more offerings in the streaming world as bandwidth availability grows and more and more people become technically savy so that hooking up a streaming device in your home to your big screen TV becomes second nature.  We’re still at the equivalent stage of streaming as we were in the 80’s when kids had to set the clocks on their parent’s VCRs.  In the long run it will pay off even better as more and more opportunities for sales rise in this streaming window.

Also, the streaming window is way down the line from theatrical, VOD, and DVD releases… but there is already a lobbying effort to change that.  Netflix just recently announced it was going to start producing its own films for day and date release on streaming and theatrical.  It’s not a new concept but it had been theatrical and VOD day/date that was the controversy.  If Netflix has its way the concept of release windows may just be thrown out one.  That will make premiums on some windows less, but increase the premiums of others… and to me that screams sellers market (if the content is worthy that is).

Death of DVD? Maybe.  Rebirth of an industry? Definitely.