Instead of disappearing, the DVD has assumed the new role of springboard to streaming and downloading services.
In a perfect world, all home entertainment would be at your fingertips. You wouldn’t have to wait for the parcel containing your precious DVD or Blu-Ray, or spend hours in line awaiting the release of the newest PlayStation console.
In a perfect world, you’d be able to download every film, sports programme, game or video and watch it in perfect HD quality.
For now, Blu-ray still offers the highest quality viewing experience. Even the best HD downloads can’t offer the contrast, brightness, and vividness of colours that Blu-ray does. What’s more, as opposed to streaming, watching your favourite films using this format requires no broadband.
Does this mean that DVD and Blu-Ray will be able to keep their heads above water for now, or are we witnessing the end of the DVD era?
The Life of the DVD
In the years following the peak of DVD sales in 2004, everyone thought this piece of technology would soon go the way of the videocassette. Technical changes such as faster download speeds and the launch of services like Netflix promised to change the home entertainment industry beyond recognition.
And yet, in the face of huge competition in the form of access services, the DVD seems likely here to stay.
According to a 2014 report by the British Video Association, as many as 22 million British people still buy DVDs and Blu-ray discs (in addition to the six million renting them via Netflix mail rental service and the millions of subscribers to Amazon LOVEFiLM by Post).
The number of VOD subscribers to services such as Netflix and Amazon Prime Instant video amounts to a mere 3.3 million.
Surprising as it might seem, despite the increase of digital sales, the physical discs sales and rentals constitute as much as 73% of the total video market, with Blu-ray sales on the rise. Experts attribute this phenomenon to a strong tradition of family viewing in the UK.
For a more balanced picture, however, these figures should be seen in the light of increasing digital sales: according to the Entertainment Retailers Association, “access models” such as streaming services of digital video and purchases of digital games grew by 40.2% and 16.4%, respectively, to account for a quarter of total entertainment revenues.
Why is this so? Because digital costs much less than physical.
But it also Brings Less Revenue.
With the introduction of digital streaming services, companies need some time to pick up speed and start gaining revenues. Paradoxically, these new models depend on their predecessor, the DVD.
So, if digital services like NowTV and on-demand movie streaming services such as Netflix are to sink the DVD ship, they need to try hard and invest where their audience is. Yes, you got it right – online, and more specifically, in PPC.
Engaged in a battle over the digital download market (growing about 17% annually, as Bloomberg reports), companies are quickly shifting focus from brick-and-mortar sales and mail rental services.
NowTV is indisputably the biggest local competitor, with a significant portion of content, a loyal clientele, and an ability to compete with such American giants as Netflix and Amazon.
Despite their primacy, these home-grown companies are not as aggressive or persistent in their PPC efforts as their foreign competitors due to their large existing customer bases.
By creating a competitor report, Adthena’s tool can provide a clear picture of the access model service landscape. Companies offering VOD services clearly invest in sponsored SOV in order to promote their products among current subscribers and to reach new customers.
Netflix and Amazon dominate the market, with Amazon.co.uk leapfrogging its competitiors at the beginning of Q2.
This shakeup can be attributed to the American giant’s shedding of the film and TV rental arm of its Prime subscription service. Sky’s NowTV ranks relatively lower, with its share of voice well below an average of 30%.
We should mention that, in early April, Amazon expanded its keyword portfolio to include specific titles as well as competitor brand terms. As a result of Amazon’s fierce bidding on competitors’ pure brand terms, NowTV lost as much as a quarter of its share of voice.
The DVD market is much healthier than forecasted, especially in terms of revenue. Although fewer and fewer people buy or rent content on physical carriers, the DVD business is still a cash cow for companies such as Netflix. As a result, we seem to be far from reaching the obsolescence of the DVD industry.
There are millions of film buffs who are equally interested in content in digital as well as DVD or Blu-ray format, even though they spend more on DVDs than on subscription services. As more and more consumers fail to recognise the value-added sides of DVDs, such as collectibility, sales will in all likelihood decline.
Still, we have a ways to go before digital services completely replace physical entertainment mediums. In the meantime, we look forward to seeing new web-based services that will come close to the quality of Blu-ray!
(Main image credit: PublicDomainPictures/Pixabay)