Oh noes teh sky is falling!

[Neild]

Originally Posted by Anthony P

actually it is more based on ignorance than anything else

Anthony P, you make a number of good points and fact corrections, however it's unfortunately diluted by unnecessary personal shots at another member. Your own post is sprinkled with grammar and spelling errors, so demeaning someone else as ignorant doesn't come across well either.

Originally Posted by Anthony P

simple not all movies can come out at once so they are dispersed over the life of the movie.

I agree there is a distribution cycle to be supported. But the issue then is why haven't certain films already made it to the schedule, and in some key examples it is indeed some egotist owner or silly legal obstacle.

Since you agree that the film distribution schedule is a cause of restriction, that would seem to indicate agreement that physical media does have at least one important type of encumbrance which could threaten its future.

Though you (seem to?) make the solid point that digital media is also held back and subject to a distribution cycle, suggesting that media type - physical or digital - wouldn't have any bearing on when films would become available anyway.

I do agree with your point that the actual cost of manufacturing discs and packages is even lower than GreatGreg implied. But even at the low costs of manufacturing, transportation, inventory, handling, salvage and holding costs need to be considered. And the numbers are such that digital distribution is vastly more profitable.

To me the issue is that the price of digital downloads is insanely high relative to the costs.

If a CD has a total chain cost of $8 and sells for $10, that's something I can understand. I pay $10 knowing the $2 margin (25%) is shared across the various suppliers that brought it to market.

But when I know that a digital download costs $0.50 and they still charge $10 for it, I'm put off knowing that I'm getting a lower quality, less durable and more problematic product, while the other parties to the transaction are enjoying a 500% higher profit margin at my expense.

Now if the digital download of the album were $1, I'd consider that the suppliers still enjoy a healthy profit, and the consumer accepts the trade-off of the less product in exchange for a commensurate savings.

To an extent, that's a little how music piracy works. Pirates don't get their music for 'free', they pay for their internet, the discs to store it on, and so on. By their actions they've established that a monthly cost of say $50 for downloading say 10 albums is compelling for them. Braindead music corporations failed to see that their own insane overpricing was the true enemy. A $5/album digital download option would have caught fire. This is proven when you look at iTunes and Netflix where customers will open their wallets when they perceive the price/unit is worthwhile to them.

We do see a bit of capitulation on things like pay per view movies. It's $8 for a short-term quasi-HD movie rental versus around $16-24 to own the full blu-ray permanent copy. But that ratio still doesn't reflect the exponential difference in cost.

Personally I wish the mass market would reject the $10 album download and the $8 pay per view rental. That would force more normalized margins to be used and create a more obvious distinction between the relative merits of physical media versus digital streaming.

[Neild]

Originally Posted by John72953

By the very nature of our being we are collectors and have been for all time. We need to have physical objects of interest around us. Things we can touch, feel, see, discuss, manipulate, organize, trade for, etc., and these very facts will secure physical media for a very long time to come. There is no doubt that its digital counterpart will take away more and more marketshare over time, but with all of the complications standing in the way (bandwidth to name but one) you won't see that happening in the near future, maybe not even your lifetime.

What niche collectors want bears no relevance on what the mass market will supply. Corporations won't voluntarily accept radically smaller profits because you enjoy touching and holding a movie case.

Our less discerning mass market comrades surrendered the 'quality-versus-bandwidth' war years ago. That's the reason my 'HD' television channels look like DVD's played through a macroblocking codec, and why audio quality of CD's is now worse than when the format was introduced.

Unfortunately for every collector like you that appreciates a good looking blu-ray, there's 99 others who naively accept the cable company's claim that their version is equal or better. And there's millions of suckers who are more concerned that they could cram 4,000 songs on their mp3 player than they are about the fact all 4,000 sound like garbage.

[GreatGreg]

Originally Posted by Neild

What niche collectors want bears no relevance on what the mass market will supply. Corporations won't voluntarily accept radically smaller profits because you enjoy touching and holding a movie case.

Our less discerning mass market comrades surrendered the 'quality-versus-bandwidth' war years ago. That's the reason my 'HD' television channels look like DVD's played through a macroblocking codec, and why audio quality of CD's is now worse than when the format was introduced.

Unfortunately for every collector like you that appreciates a good looking blu-ray, there's 99 others who naively accept the cable company's claim that their version is equal or better. And there's millions of suckers who are more concerned that they could cram 4,000 songs on their mp3 player than they are about the fact all 4,000 sound like garbage.

Thanks for making this point so succinctly.

It is unfortunate that BD or even Hi-def lovers are in the minority.

Back when MP3s became prevalent (around 2000?) I remember thinking it was cool that you could fit all these songs on a 200 Meg hard drive (!) but that it sounded like garbage. Still, it was 'good enough' for the lab or the car or as background music.

Thanks to Mr. Jobs (RIP) iTunes brought large capacity storage to everyone's fingertips (available in many bright colours!) and essentially destroyed the music industry.

Movie studios saw this and feared the same would happen to their industry if the HD format war did not end. HD-DVD and BD were locked in a stalemate and no one (very few) were upgrading to HDTV.

I think it was Warner (or some other studio, it doesn't matter) who decided to flip from HD-DVD to BD and that signaled the end of the format war and the beginning of the BD Age.

Now, if you look, there is the demise of the home video rental market chains like Blockbuster. If rumour holds, Rogers is closing their rental outlets by the end of the year in order to bolster their PPV business.

Studios like Disney (of course) are some of the first ones to offer VOD directly from their website if you buy their physical media. I believe Warner is starting a similar service as well.

To address some of other previous posters' concerns over bandwidth and video quality, the truth of the matter is that
(1) most average consumers don't care about full BD quality/can't see a difference
(2) most people do not include their bandwidth costs when calculating how much it costs them to download a movie
(3) bandwidth and internet costs are constantly changing, as is coverage. I expect internet costs to lower and bandwidth rates to increase over the next 10 years or so in Canada. Many other G8 nations (US, UK, Japan) have much better costs and download rates than us here. We definitely get screwed on internet rates, but that is a different argument altogether.

Yes, I agree that this may still be a long ways off, but it could be sooner than you think.

If you are in your 30s or older, you probably still remember 8-tracks, records, VHS, Beta (had to throw that in!), laserdiscs and cassettes. (I am in this category, but Antoine I don't get your comment about VHS/laserdisc, although I will respect it.)

If you are in your 20s or younger, you probably don't buy CDs anymore and download your music to your iPhone/iPod/iWhatever. You probably download your games off Playstation Network, or Steam and download your movies and TV off Netflix or PVR it.

True, there are always exceptions. I would love to get my hands on an old Victrola, personally.

Soon we will have a generation who have never bought a CD. And they are okay with this because MP3s are 'good enough'.

Then they will wonder what the $&^% are these old coots arguing about prehistoric media for?

[Banjo]

Originally Posted by GreatGreg

If you are in your 30s or older, you probably still remember 8-tracks, records, VHS, Beta (had to throw that in!), laserdiscs and cassettes.

I'm 27 and I remember all of these formats very well. I also remember the LP records. My parents used to play LP records all of the times when I was a child.

If you are in your 20s or younger, you probably don't buy CDs anymore and download your music to your iPhone/iPod/iWhatever. You probably download your games off Playstation Network, or Steam and download your movies and TV off Netflix or PVR it.

I still buy quite a bit of movies on physical media formats including DVD and Blu-ray. I've never bought a downloadable movie, despite the fact that I'm quite tech-savvy. I do download softwares off the internet more than I buy them in store these days though. I guess I'm just picky about the video quality. I don't even subscribe to cable nor satellite. I watch TV in glorious HD using an OTA antenna.

True, there are always exceptions. I would love to get my hands on an old Victrola, personally.

I once knew someone who had one of these. It's amazing what that machine was capable of.

Soon we will have a generation who have never bought a CD. And they are okay with this because MP3s are 'good enough'.

I've never bought a CD... but that's probably due to the fact that I'm deaf. Hee.

Then they will wonder what the $&^% are these old coots arguing about prehistoric media for?

I imagine I'll be one of these.

[Clark Kent]

Studios follow the money, which comes from the tastes and whims of consumers. Physical media is dying because younger people are growing up learning to live without it. It's only a matter of time before the number of people willing to support physical releases dwindles down enough for it not to be a viable market for the larger studios.

The future is low-quality streams and VOD over the provider of your choice. BDs will hang around for several more years, but I would not be counting on it past five or six years from now.

[DoubleDownAgain]

Originally Posted by Neild

Anthony P, you make a number of good points and fact corrections, however it's unfortunately diluted by unnecessary personal shots at another member. Your own post is sprinkled with grammar and spelling errors, so demeaning someone else as ignorant doesn't come across well either.

Eh, the OP made a lot of assumptions, most of them bad. Wile spelling & grammatical errors do raise a red flag I don't think yo can dismiss an argument solely on those grounds.

Look at LPs, they are still around, albeit a very niche product. I do think mos to consumers don't really care about VQ/AQ, but it might change as technology advances. My dad might be on of those people. but ever since he got a HDTV he pretty much avoids all SD programming.

At some point I do think physical media won't be around. But iTunes didn't kill off CDs completely. They are still available to buy and not all that hard to find, although not as available as they were 15 years ago.

If anything it might be a combination of the two. I've noticed commercials for Horrible Bosses and The Green Lantern, both are advertising UV digital copies, where you have access to them on the 'cloud' at your convenience.

[Matt110189]

To those who keep arguing that physical media is still demanded, I don't think anyone that's said physical media is going to disappear is implying that it's going to happen anytime soon. Even though physical media has started to diminish I doubt it's really going to start impacting anyone until 10-15 years from now (guess obviously), and that will only be the beginning of the end.

Yes, the infrastructure costs are high right now (especially in Canada), but this will all change over time. The fact is that we're being gouged for some of the worst communication services available compared to any other developed nation. At some point we'll play catch-up, just a matter of time. Regardless, anyone who argues that its CHEAPER to distribute physical media is plain wrong. The start-up costs incurred for the infrastructure of digital media are higher, but the marginal revenue earned off of each digital movie is substantial, allowing distributors to reap huge gross profits even after paying fees to services like iTunes. And this will only become cheaper over time.

I love physical media, I still buy 30-40 LPs of newly released music per year because I collect that as well. So yea, it'll take ages for physical media to COMPLETELY disappear. But over the next few years we will see a strong shift towards digital media and in 10-15 years it will probably be a rarity. It's the only way that distributors will end up surviving in the long-run to compete with one another. Digital media is becoming cheaper to these distributors by the month, eventually they'll have to shift in order to compete.

[blurai]

i think the anger over netflix wanting to seperate digital and physical media price plans is a sign that people are not quire ready yet to go all digital (a decision that was just recently reversed).

another thing that doesn't help is the lower download limits that ISPs impose on people....that will also limit the quality/amount of content that can be downloaded

[Anthony P]

Originally Posted by Neild

Anthony P, you make a number of good points and fact corrections, however it's unfortunately diluted by unnecessary personal shots at another member. Your own post is sprinkled with grammar and spelling errors, so demeaning someone else as ignorant doesn't come across well either.

typos and mistakes will always happen, and I did not go to a thread on English grammer and spelling to tell people that is how they should write. That is the difference, this ignorant person decided that he wanted to share the "facts" when he is ompletely ignornat of them and has no idea how movie idistribution works be it physical media or digital.

I agree there is a distribution cycle to be supported. But the issue then is why haven't certain films already made it to the schedule, and in some key examples it is indeed some egotist owner or silly legal obstacle.

there are probably as many reasons as there are films, does it realy matter if the reason X was released is because someone with enough power said "I would like to have X in my collection" or "I have a master for X ready to go" or "sequel/remake tie-in".... and there are many reasons why a title can be delayed. The simple fact is that a studio can't release 100% of their catalogue movies in a day and so someone somewhere chose X, Y or Z instead of A, B or C. It does not make sense because for 1 there is work to be done and you can't hire millions of people to do the work just to fire them after the realease of all the movies and if someone is anctious for a title they might pay full price when it comes out, but they won't be willing to pay full price if it is a month or two or three later that they buy it, and no one can afford to buy all the catalogue titles they want in a day so many great titles will be sitting on the shelf while their value drops (most people either buy what is new or what is on special).

Since you agree that the film distribution schedule is a cause of restriction, that would seem to indicate agreement that physical media does have at least one important type of encumbrance which could threaten its future.

But that restriction is as bad or worst with digital. The studio still needs to do all the work related with physical, (you can't re-master 1M catalogue movies in a week be it for BD or digital release). But the most BDs I ever bought in a single purchase was 20 that I bought on-line, now buying BDs is simple, buy, receive, open plastic and put on "unwatched shelf". But lets say we where in an on-line world, unless I have a TB drive that is mostly (almost completely empty) I could not do that purchase. A second issue is that (obviously as can be seen from the example above) I buy films so that I have them for when I want to see them (I usualy have 30-50 unwatched), they are there and when I have the time and am in the mood for it I pick that movie. Now if we assume digital is relativly painless, what incentive do I have to buy it early and a higher price instead of waiting since for many I would be able to get them at a lower price when I want to see them. So in my opinion that makes digital even more perishable (price erosion) then physical.

I do agree with your point that the actual cost of manufacturing discs and packages is even lower than GreatGreg implied. But even at the low costs of manufacturing, transportation, inventory, handling, salvage and holding costs need to be considered. And the numbers are such that digital distribution is vastly more profitable.

but that is the problem, it cannot be vastlymore profitable since physical costs so little and probably is vastly [/b]less[/b] profitable because you are assuming the studio will make as much for each copy that is digitaly sold as they would with a BD. Did Starz pull their content from BD or digital distribution from Netflix?

here is the link (On music and why CD is much more profitable for a musician) http://thecynicalmusician.com/2010/0...uld-have-been/

To me the issue is that the price of digital downloads is insanely high relative to the costs.

but it is just as insanely high for BD or DVD (where cost is limited to the difference in distribution cost of the studio). I can go and buy green lantern for 35$ http://www.futureshop.ca/en-CA/produ...40da7c93d0en02 or an other title for possibly less then 5$. On both of those titles the studio and retailer make a profit. Do you think the difference in price is that the 3%$ comes with a gold plated BD? no you pay for the content. The 5$ title is 5$ because the studio says "it has been out for months, everyone that would pay 35$ has and making 1$ off of the title is better than nothing. The 35$ title is 35$ because it is brand new and the studio needs to make as much money as possible in order to pay all the expenses that it had making the movie and have enough capital in order to make the next movie (and bombs and movies that never make it to theatre as well as pay the studio staff).

[Anthony P]

Originally Posted by antoinedoinel

I imagine we'll see home video do the same thing as music. Digital takes over, yet physical formats still survive for those that want it. For a lot of people, quality was really never a big deal, and it peaked at dvd.

Only one issue, digital music has not taken over, Look at 2010 data, CD revenue was still higher than digital revenue.

[Anthony P]

Originally Posted by Neild

What niche collectors want bears no relevance on what the mass market will supply. Corporations won't voluntarily accept radically smaller profits because you enjoy touching and holding a movie case.

actually, it is the opposite. If you are a studio (interested in making money) would you care more for the person that is willing to spend 35$ to buy the movie (especially if it is not a big hit) or the guy that says "they are all greedy and so if it is not less then 1$ more than the distribution price I will pirate it instead and they get nothing. Think about it, that is why LD lasted for around 20 years until that niche wanting better than AV quality moved to something with better quality (i.e. DVD)

[antoinedoinel]

Originally Posted by Anthony P

Only one issue, digital music has not taken over, Look at 2011 data, CD revenue was still higher than digital revenue.

Actually, digital has taken over—just not in terms of revenue, since a large portion of it is still downloaded outside of legal means.

[Anthony P]

http://techland.time.com/2011/03/31/...ical-cd-sales/

Newsflash: Digital music sales will overtake CD sales in the US for the first time in 2012, according to a new study released by Strategy Analytics.

the only thing the article misses is that for the past few years there has always been someone that has predicted it will be next year or so here is an article from 2009 with the exact same assumption for 2010 http://arstechnica.com/media/news/20...al-by-2016.ars

Despite the popularity of digital music, from single-track purchases to subscriptions, physical media has continued to generate the most music revenue in (almost) every market in the world. According to data from the International Federation of the Phonographic Industry (IFPI), though, that will soon change: revenue from digital music sales worldwide are on track to equal that of physical sales as early as 2016, and by 2010 in the United States.

these predicyions are based on way over optemistic growth for digital music and pessimistic decline for CD.

here is an other article with a bit more info than the first with IFPI (world wide) 2010 and US http://www.guardian.co.uk/business/2...sic-sales-2010

The IFPI report found that digital music accounted for 29% of music companies' total revenues last year, up from 25% in 2009.

In the US, digital sales accounted for almost half of total music company revenues

[Anthony P]

Originally Posted by antoinedoinel

Actually, digital has taken over—just not in terms of revenue, since a large portion of it is still downloaded outside of legal means.

but revenue is all that counts. here is a test with a simple but extreme example
- 90% of music is pirated on-line (wanted a big number for the fun of it)
- 0% is purchased on-line (makes answering the question easy)
- 10% is bought on CD ( if you want you can use 5% or 15% and change the pirated % to make sense.
what do you think the studio will do when they are ready to release the next song

a)digital only, why go after 10% of market when 90% is digital
b) both 90% is digital and 10% is CD, CD is still worth going after
c) release it on CD only 10% is better than nothing and 0*90% and 0%*something is nothing.
d) not make it available and the only way to hear it is in concert or radio. 10% is just too niche

plus how do you measure pirating. If someone has the CD, makes an MP3 and puts it on-line so everyone can have it or gives copies (on a burnt CD or a flash drive that he gets back) to friends. Are all of those digital (DL) or CD or what

[Neild]

Originally Posted by Anthony P

Only one issue, digital music has not taken over, Look at 2010 data, CD revenue was still higher than digital revenue.

I heard a recent update that this year digital equaled and then surpassed CD. Someone else here posted that the change in top spot is imminent (2012).

And realize that revenue is not the same as profit, and that margin is much higher on digital which suggests digital is already well ahead.

But no matter who you believe or how you slice and present it, there's abundant proof that revenue scale is currently similar, and that CD is rapidly falling while digital is rising.

[Neild]

Originally Posted by Anthony P

but revenue is all that counts. here is a test with a simple but extreme example
- 90% of music is pirated on-line (wanted a big number for the fun of it)
- 0% is purchased on-line (makes answering the question easy)
- 10% is bought on CD ( if you want you can use 5% or 15% and change the pirated % to make sense.
what do you think the studio will do when they are ready to release the next song

That's totally incorrect, I think you are mixing up the word 'revenue' with 'profit'.

One movie brings in $100 million of revenue. And another one brings in only $200 million of revenue. By your logic the $200 million one is the 'winner'.

But now what if I told you the first movie was 'Saw' and cost $1 million to make, bringing in 100 times the in revenue?

And what if I told you that the second movie was Green Lantern, which cost over $200 million to make and will barely break even?

There's a reason studios put out Saw 2 through 7, and that Green Lantern won't be getting a sequel. There's a reason movies like Blair Witch Project and Paranormal Activity get pumped out, and it's not strictly revenue.

It's return on investment.

And even when ROI is a push, there's a massive bias towards projects where the amount being risked is lower.

[Neild]

Originally Posted by Anthony P

typos and mistakes will always happen, and I did not go to a thread on English grammer and spelling to tell people that is how they should write. That is the difference, this ignorant person decided that he wanted to share the "facts" when he is ompletely ignornat of them and has no idea how movie idistribution works be it physical media or digital.

Your error rate is skyrocketing while you are calling another member 'ignorant'.

Originally Posted by Anthony P

The simple fact is that a studio can't release 100% of their catalogue movies in a day

Actually they could. Some smaller studios with a limited catalog probably *have* done so. Those companies were probably most interested in getting the revenues re-started on their old titles.

Other bigger studios are more interested creating a steady long term stream and making best use of publicity schedules.

Originally Posted by Anthony P

it cannot be vastlymore profitable since physical costs so little and probably is vastly [/b]less[/b] profitable because you are assuming the studio will make as much for each copy that is digitaly sold as they would with a BD.

No, that is the opposite of what I'm saying. Digital distribution IS vastly cheaper.

Although mass production has lowered the cost of physical media, with digital there is no expensive oil needed to produce discs and cases, no paper and ink to print artwork, no labor to stuff cases, no fuel for trucks to ship product, no rent to warehouse goods, no refunds on defective materials, no spiffs to stores and salespeople, no liquidation of unsold titles.

Digital on the other hand is vastly more cost efficient. It has a small additional overhead to administer logins and servers. Data transfer is measured in pennies per GB. Refunds, liquidation, warehousing, transportation, manufacturing and disposal costs are zero.

Originally Posted by Anthony P

here is the link (On music and why CD is much more profitable for a musician) http://thecynicalmusician.com/2010/0...uld-have-been/

You're totally misunderstanding the chart. The most profitable case is a solo musician selling CD's out of his trunk after his show. Sure there's a great profit per unit, but when you've got 4 shows a month and you're selling 5 discs per show off your merch table, that's hardly viable.

[Neild]

Originally Posted by Clark Kent

Studios follow the money, which comes from the tastes and whims of consumers. Physical media is dying because younger people are growing up learning to live without it. It's only a matter of time before the number of people willing to support physical releases dwindles down enough for it not to be a viable market for the larger studios.

The future is low-quality streams and VOD over the provider of your choice. BDs will hang around for several more years, but I would not be counting on it past five or six years from now.

I think this is a reasonable and sober statement, although the reason is not consumer tastes asking for lower quality or less ownership, but a result of corporations pushing the much profitable digital over physical option.

We have evidence of how fast a physical format can disappear in the HD-DVD situation. When the blu-ray/HD-DVD war ended, releases dried up almost instantly, prices collapsed 10-fold, and retailer placement vanished instantly.

Yes I know there are various factors, and that flea markets and salvage stores still have a few HD-DVD's kicking around. But it does demonstrate how quickly a physical format can be wiped away. Not to say that blu-ray would vanish as quickly, but it does illustrate a benchmark of one possible scenario.

[Anthony P]

Originally Posted by Neild

I heard a recent update that this year digital equaled and then surpassed CD. Someone else here posted that the change in top spot is imminent (2012).

If you have a link that it happened this year post it. as for 2012 it was me but I also posted to some analyst saying in 2009 that it will be in 2010 for the past several years it has always been "next year" by people that don't realize DL music growth is slowing down and needs to be taken into consideration.

Will it be next year? maybe, is it this year, who knows. The point is that even if it gets to 50%+1$ that still means that 50%-1$ is CD so it is completely insane to act as if CD sales don't exist. Just as it would be insane to pretend no one is DL music. over 10 years after itunes the market is more or less 50-50

And realize that revenue is not the same as profit, and that margin is much higher on digital which suggests digital is already well ahead.

I agree, but realize this, several posts earlier I included a chart that shows your assumption (at least as it comes to music) is completely off. Have you released many songs on CDs and itunes (or others) to be able to say that guy that has is full of sh!t? or just talking out of you’re a$$ because you don’t like the real numbers

But no matter who you believe or how you slice and present it, there's abundant proof that revenue scale is currently similar, and that CD is rapidly falling while digital is rising.

but CD is not rapidly falling and DL is not really rising, that is why I linked to a 2009 article (and I am sure I can find older ones) thinking that DL would surpass CD in 2010. CD and DL have been real close for a long time,

[Anthony P]

Originally Posted by Neild

That's totally incorrect, I think you are mixing up the word 'revenue' with 'profit'.

One movie brings in $100 million of revenue. And another one brings in only $200 million of revenue. By your logic the $200 million one is the 'winner'.

But now what if I told you the first movie was 'Saw' and cost $1 million to make, bringing in 100 times the in revenue?

And what if I told you that the second movie was Green Lantern, which cost over $200 million to make and will barely break even?

There's a reason studios put out Saw 2 through 7, and that Green Lantern won't be getting a sequel. There's a reason movies like Blair Witch Project and Paranormal Activity get pumped out, and it's not strictly revenue.

It's return on investment.

And even when ROI is a push, there's a massive bias towards projects where the amount being risked is lower.

what the hell are you talking about. How is there revenue from the guy that got a pirated copy and how is there revenue from the guy that did not buy it. with 0 revenue there can obviously not be any talk of helping profit.

Antoine said it does not matter if more music is sold on CD there is also pirated music over the internet and the two together (legal and illigal) means more music is distributed through DL. Even though the point is valid. The issue is that pirated only matters when the discussion is "how to stop it" a record label or studio won't make the decision on it since there is no revenue, there is no profit and there is no ROI.


As for your comment, yes ROI is important, but a movie needs to be made first. So it is used in decidsions (i.e. do I make a Saw 2 or 3 or 4…..) but once it is made it is a sunk cost and it is all about bringing in as much revenue as possible.