Physical & Digital EST: The Future of Home Video Discussion Thread

[Steedeel]

Originally Posted by Zu Nim

The trend is worldwide. Digital grows while physical collapses. Here is some data from Europe in 2014 (PDF). Europe physical sales have declined even faster than the U.S., although Europe digital hasn't caught up to U.S. consumers. I imagine that will change now that we're seeing Netflix roll out in more countries.





Netflix and Amazon absolutely should be there if you want a fair comparison, much like Spotify and Apple Music should be there when comparing music spending. There was a similar discussion about albums vs. singles the way you seem to be debating features vs. episodic, but the focus should be on the video market.

There's not much point comparing physical sales vs. EST if consumers stop buying. What we are seeing is consumer preference for digital and annual double-digit declines in physical. We're also seeing growth in subscriptions and declines in ownership (combining physical and digital).

But I wouldn't make too much out of a single quarter of lackluster EST, especially with this quote: "DEG said digital sales were impacted by a smaller new-release slate, but continues to see strong growth in catalog titles." I'd focus on the collapse of physical and not worry too much about whether EST is growing fast enough.

No, I will focus on Digital HD thanks. Bluray is a given for me. Next up 4K Blu-Ray!

[Krizzle1]

Im afraid of more and more things being subscription only, but I actually wouldnt mind paying a monthly fee for access to ALL iTunes movies/tv shows, any other service, i'd easily say its a no-no

[V40LLY]

Originally Posted by Steedeel

No, I will focus on Digital HD thanks. Bluray is a given for me. Next up 4K Blu-Ray!

Doesn't it bother you that 4K Blu-ray, will offer far less catalog titles in the long run, than the (already long established-10 years) regular Blu-ray has, so far?

Or, are you not bothered about uniformity on your shelves?

[Steedeel]

Originally Posted by V40LLY

Doesn't it bother you that 4K Blu-ray, will offer far less catalog titles in the long run, than the (already long established-10 years) regular Blu-ray has, so far?

Or, are you not bothered about uniformity on your shelves?

Nope, not in the slightest. I have bought buckets of excellent catalogue titles on Bluray and there are few films left I actually need. Plus with Criterion, Arrow, BFI etc.. I am well covered. 4K titles will be reserved for big blockbusters. Oh and they will have their own display cabinet thanks!

[V40LLY]

It's the older stuff that could do with the 4K UHD upgrade; more so, than the latest, expensive blockbusters we see today. I think the 1080 resolution is perfectly acceptable for them, anyway (I'm sure you'll also, disagree with me on that one). But, when you look at movies on Blu-ray, from the 60s, 70s and 80s, you'll notice grain and dirt in the print etc. It depends on how much effort, if any, has gone into restoring them.

Obviously, the only movies, that will get the 4K UHD Blu-ray release treatment, besides the modern blockbusters, are the iconic stuff from yesteryear. Certainly not the old B movies! Having said that; I'm surprised from time to time, what does get released on Blu-ray and what does not!

In my opinion, the only reason why the Ghostbusters movies are getting the upgrade, is because of the new one being released in the summer. If it wasn't for that, I don't think Sony would have bothered.

[Canada]

Physical media always, it offer better audio and better video.

[Zu Nim]

Originally Posted by Steedeel

But false claims are being made IMO. The thread title is the clue? Your dramatic 'collapse' phrase stinks of Digital fanboy IMO. Let's see how Digital HD does in the next couple of years. If Bluray dies in several years, so does Digital HD. we are heading for a rental/subscription market.

What exactly is Netflix? It isn't new releases is it?

No false claims. I'm sorry that the news is hard for you to hear. Whenever the news continues to be bad for physical, the response is "let's see in a couple of years". Well, we've seen and it's the same every year. At this point the burden is on physical supporters to show that somehow it will rise again. Physical won't disappear but it's decline might affect pricing or title availability. At least Blu-ray is becoming a larger slice of a shrinking physical pie. It could be worse.

It's very likely that EST continues to play second fiddle to subscription. Acceptance of subscription and rejection of ownership will dictate EST's future, not physical sales. Regardless, it's much easier to release EST products than physical ones so EST won't disappear either. No manufacturing, no shelf space required, and agency pricing.

If a market shrinks 50% in a decade, is there a better term than 'collapse'? I think not. In the U.S., the drop was 30% in three years. The decline is accelerating in both markets. My description was accurate, even if uncomfortable for you. When I was looking for European physical numbers, I ran into this report from 2014 (PDF) that has a lovely chart on page 9 (actually the 3rd page!). From 2004-2013, all physical video spending dropped from €12B to just over €6B (and below that in 2014). And the majority of that spending is still on DVDs, not Blu-rays.

Netflix doesn't do new releases. Are you suggesting that studios won't be able to adapt to a shifting market? If consumer preference goes against ownership, they'll find a way to get their product into consumer's hands. Maybe others streamers arise. Maybe the studios themselves offer a new-release subscription service. Maybe it becomes mostly VOD. But they'll go where the money is, and it's fleeing physical. Sorry.

[veritas]

Originally Posted by Zu Nim

Digital has already won. Growth is still growth. In 2012, physical revenue was $8.5B and digital revenue was $5.2B ($800M in sales, $2B in VOD, and $2.4B in subscriptions). In 2015, physical revenue was $6.1B and digital revenue was $8.9B ($1.9B in sales, $1.9B in VOD, and $5.1B in subscriptions).

Physical sales have lost $2.4B while digital has gained $3.7B. In three years. There's no indication that trend is changing.

Is that looking at gross or net revenue? I have a feeling the average profit on streaming is quite a bit lower then any other method of media distribution. just looking at revenue vs the cost of revenue on netflix 2015 financial report the international streaming has cost them more money then its made from 2013 to 2015 for pretty much every quarter. They did make a pretty fair profit in 2015 domestically though.

I do not really think its fair to look at subscriptions as they are rather murky (like prime videos value could easily be inflated). The other thing to look at is that massive growth in subscription services came from cable almost entirely I would guess. Studios did not see a 5 billion increase in revenue that money simply went from digital cable to a digital subscription. yes cable subscriptions have always made more money then physical sales they just are not normally looked at since that has always been the case (assuming).

Anyway physical blu ray sales being compared to digital sales is a fair comparison. vod being compared to rental of physical media is a fair comparison but comparing digital subscription services to physical media is like comparing apples to oranges. Its much more apt to compare cable and dish to subscription services.

Also do you have a link to those statistics? It would be interesting to look at how they got some figures.

[Zu Nim]

Originally Posted by veritas

I have a feeling the average profit on streaming is quite a bit lower then any other method of media distribution. just looking at revenue vs the cost of revenue on netflix 2015 financial report the international streaming has cost them more money then its made from 2013 to 2015 for pretty much every quarter.

You're looking at the supply side which is completely separate from the demand side. Consumers are choosing subscription hand over fist. It's up to the suppliers to figure out how to profit from it. What we can tell from the numbers is that dollars have shifted from physical to digital.

The other thing to look at is that massive growth in subscription services came from cable almost entirely I would guess. Studios did not see a 5 billion increase in revenue that money simply went from digital cable to a digital subscription.

We know that home entertainment spending in the U.S. grew by 1% to $18.1B (PDF). We also know that physical sales and rental dropped by about 10% but was offset by growth in digital sales and rental - plus it also took all of last year's home entertainment growth. The studios didn't see a big revenue bump because revenue was mostly shifted inside the home entertainment complex - not from cable.

Its much more apt to compare cable and dish to subscription services.

I disagree. It's relevant to cord-cutters, but that's not what we're looking at. My Netflix subscription is an addition to, not a substitute for, cable. Netflix has almost 47M subscribers in the U.S. and cable is losing something like 1.5M subscribers per year. It will be 30 years before those two numbers line up.

People are spending on subscriptions and that revenue is being taken out of physical sales and rentals.

[Steedeel]

Originally Posted by Zu Nim

No false claims. I'm sorry that the news is hard for you to hear. Whenever the news continues to be bad for physical, the response is "let's see in a couple of years". Well, we've seen and it's the same every year. At this point the burden is on physical supporters to show that somehow it will rise again. Physical won't disappear but it's decline might affect pricing or title availability. At least Blu-ray is becoming a larger slice of a shrinking physical pie. It could be worse.

It's very likely that EST continues to play second fiddle to subscription. Acceptance of subscription and rejection of ownership will dictate EST's future, not physical sales. Regardless, it's much easier to release EST products than physical ones so EST won't disappear either. No manufacturing, no shelf space required, and agency pricing.

If a market shrinks 50% in a decade, is there a better term than 'collapse'? I think not. In the U.S., the drop was 30% in three years. The decline is accelerating in both markets. My description was accurate, even if uncomfortable for you. When I was looking for European physical numbers, I ran into this report from 2014 (PDF) that has a lovely chart on page 9 (actually the 3rd page!). From 2004-2013, all physical video spending dropped from €12B to just over €6B (and below that in 2014). And the majority of that spending is still on DVDs, not Blu-rays.

Netflix doesn't do new releases. Are you suggesting that studios won't be able to adapt to a shifting market? If consumer preference goes against ownership, they'll find a way to get their product into consumer's hands. Maybe others streamers arise. Maybe the studios themselves offer a new-release subscription service. Maybe it becomes mostly VOD. But they'll go where the money is, and it's fleeing physical. Sorry.

It's just a natural thing. DVD was always going to dive after the huge rise it had. That is just part of the way things work. Bluray is for collectors but also AV purists so that was never going to the success of DVD.

By the way, you have nothing to be sorry about. I feel sorry for folk who don't experience films in the best possible way at home. I really do. As long as their are Blurays I wil buy them. Now, what will die first Digital HD or Blu-Ray? Don't be so sure you know the answer to that. Optical discs still earn studios a big chunk of money and collectors will be around for a long time.

[Steedeel]

Originally Posted by veritas

Is that looking at gross or net revenue? I have a feeling the average profit on streaming is quite a bit lower then any other method of media distribution. just looking at revenue vs the cost of revenue on netflix 2015 financial report the international streaming has cost them more money then its made from 2013 to 2015 for pretty much every quarter. They did make a pretty fair profit in 2015 domestically though.

I do not really think its fair to look at subscriptions as they are rather murky (like prime videos value could easily be inflated). The other thing to look at is that massive growth in subscription services came from cable almost entirely I would guess. Studios did not see a 5 billion increase in revenue that money simply went from digital cable to a digital subscription. yes cable subscriptions have always made more money then physical sales they just are not normally looked at since that has always been the case (assuming).

Anyway physical blu ray sales being compared to digital sales is a fair comparison. vod being compared to rental of physical media is a fair comparison but comparing digital subscription services to physical media is like comparing apples to oranges. Its much more apt to compare cable and dish to subscription services.

Also do you have a link to those statistics? It would be interesting to look at how they got some figures.

it sure looks good as headlines though, right?

[Steedeel]

Originally Posted by V40LLY

It's the older stuff that could do with the 4K UHD upgrade; more so, than the latest, expensive blockbusters we see today. I think the 1080 resolution is perfectly acceptable for them, anyway (I'm sure you'll also, disagree with me on that one). But, when you look at movies on Blu-ray, from the 60s, 70s and 80s, you'll notice grain and dirt in the print etc. It depends on how much effort, if any, has gone into restoring them.

Obviously, the only movies, that will get the 4K UHD Blu-ray release treatment, besides the modern blockbusters, are the iconic stuff from yesteryear. Certainly not the old B movies! Having said that; I'm surprised from time to time, what does get released on Blu-ray and what does not!

In my opinion, the only reason why the Ghostbusters movies are getting the upgrade, is because of the new one being released in the summer. If it wasn't for that, I don't think Sony would have bothered.

Yeah, I disagree!

[Steedeel]

Originally Posted by Zu Nim

You're looking at the supply side which is completely separate from the demand side. Consumers are choosing subscription hand over fist. It's up to the suppliers to figure out how to profit from it. What we can tell from the numbers is that dollars have shifted from physical to digital.



We know that home entertainment spending in the U.S. grew by 1% to $18.1B (PDF). We also know that physical sales and rental dropped by about 10% but was offset by growth in digital sales and rental - plus it also took all of last year's home entertainment growth. The studios didn't see a big revenue bump because revenue was mostly shifted inside the home entertainment complex - not from cable.



I disagree. It's relevant to cord-cutters, but that's not what we're looking at. My Netflix subscription is an addition to, not a substitute for, cable. Netflix has almost 47M subscribers in the U.S. and cable is losing something like 1.5M subscribers per year. It will be 30 years before those two numbers line up.

People are spending on subscriptions and that revenue is being taken out of physical sales and rentals.

What happens to all those Digital HD films once people stop buying? When people don't use Digital stores, they shut down. It will probably go the same way as ITunes. People with thousands of MP3s paid for but not used because they are just being streamed for free from the likes of Spotify. I know iTunes still exists but not all stores will.

[Zu Nim]

Originally Posted by Steedeel

It's just a natural thing. DVD was always going to dive after the huge rise it had. That is just part of the way things work. Bluray is for collectors but also AV purists so that was never going to the success of DVD.

By the way, you have nothing to be sorry about. I feel sorry for folk who don't experience films in the best possible way at home. I really do. As long as their are Blurays I wil buy them. Now, what will die first Digital HD or Blu-Ray? Don't be so sure you know the answer to that. Optical discs still earn studios a big chunk of money and collectors will be around for a long time.

Of course DVD would begin to shrink as the next format took over. But Blu-ray being for collectors is a bit revisionist, don't you think? Sony and Toshiba certainly felt that their next gen formats would take the consumer mantle from DVD. That (unfortunately) never came to pass. As much as I (and you, presumably) find DVD quality atrocious, it's still quite acceptable to most and I think that has surprised the industry.

What defines "die"? There will probably be Blu-rays for another decade and more. But digital HD will around even longer. It's not a fixed format. iTunes, or VUDU, or any number of successors will be around. But if subscription revenue trends continue, they'll both end up minor products.

Originally Posted by Steedeel

What happens to all those Digital HD films once people stop buying? When people don't use Digital stores, they shut down. It will probably go the same way as ITunes. People with thousands of MP3s paid for but not used because they are just being streamed for free from the likes of Spotify. I know iTunes still exists but not all stores will.

A good question, but we know what happens when UV retailers shut down. They have to support your library for at least five years. In practice we've seen UV retailers shut down and they sold their responsibilities to another retailer. So in the case of UV, you might need to ask what happens when the last UV retailer shuts down. I don't see that happening any time soon - and then add five years to that.

When I buy movies on iTunes, I download and un-DRM the content. I'll have those indefinitely, and as a bonus, I can usually copy them to any device for viewing.

Disney Movies Anywhere movies are probably fairly well protected. I don't see Disney closing their doors or giving consumers no alternative to watch their purchases.

I don't understand the issue with iTunes music. You can still listen to all the music you bought after you go the subscription route. Is it not the same as when formats changed from VHS to DVD to Blu-ray? In this case, the 'format' changed from ownership to subscription.

[Leslie Dame]

Just some insight on sales of physical media and streaming (not including Netflix and Amazon) in Germany, for those interested.

While revenues from sales and rentals dropped 2% (mostly in rentals) Blu-ray sales continues to climb in Germany (2014: 405m Euro, 2015: 418m Euro)
DVD sales are shrinking (2014: 899m Euro, 2015: 829m Euro)

Streaming is on the rise and pulled in 101m Euro in 2015 but physical media remains dominant in Germany with a 92% market share (2014: 95%)

Looks like physical media is in for the long haul in Germany.

In einer Pressemitteilung des Bundesverband Audiovisuelle Medien (BVV) gab die Filmförderungsanstalt (FFA) in der vergangenen Woche die Umsatzzahlen des deutschen Videomarktes für 2015 bekannt. Diese wurden mit Hilfe des GfK Panel Services Deutschland ermittelt. Ingesamt gingen die Einnahmen im Verkauf- und Verleihgeschäft leicht um zwei Prozent von 1,642 auf 1,608 Milliarden Euro zurück.

Der Kaufumsatz ging mit 1,349 Millarden Euro nach 1,370 Milliarden Euro im Vorjahr um zwei Prozent zurück. Deutlicher abwärts ging es erneut im Verleihmarkt, welcher von 272 auf 259 Euro um fünf Prozent fiel. Die Zahlen beinhalten sowohl physische als auch digitale Vertriebsformen, jedoch keine Erlöse aus Aboangeboten wie Netflix oder Amazon Prime Video.

Die Blu-ray Disc konnte 2015 erneut zulegen. 418 Millionen Euro wurden durch das HD-Format generiert. Im Vorjahr waren es 405 Millionen Euro. Die Einnahmen aus DVD-Veräußerungen gingen dafür um 70 Millionen Euro zurück und betrugen im Jahr 2015 829 Millionen Euro.

Der digitale Online-Verkauf (EST: Electronic Sell Through) erreichte mit 101 Millionen Euro Umsatz erstmalig die 100 Millionen Euro-Schwelle und somit einen neuen Rekord. Trotz des rasanten EST-Aufschwungs ist der Absatz physischer Formate (DVD, Blu-ray) weiterhin dominierend. Der Marktanteil physischer Verkäufe liegt bei 92 Prozent im Kaufmarkt (in 2014 waren es 95 Prozent).

source: blog.dms-berlin.com

[Zu Nim]

Originally Posted by Leslie Dame

Looks like physical media is in for the long haul in Germany.

Those numbers seem very much in line with this (PDF). And the same story as the U.S. and elsewhere: Blu-rays are a larger slice of a smaller pie.

As you noted, Germany doesn't have much of a digital market. The only UV retailer I can find is Videociety.de. Despite that, EST grew by over 50% and is now 1/4 the size of the Blu-ray market. Although I have no idea if UV will expand in Germany, my guess is that subscriptions and EST will make a significant impact within three years.

The poster for the movie "Youth" is very different between the U.S. and Germany. ("Ewige Jugend" in Germany)

[knight17]

Originally Posted by Dynamo of Eternia

As nice as the portability factor is, that to me is the purpose in redeeming digital copies when they come with discs... whether they be UV, iTunes, or whatever.

Even though not every title in my physical collection has come with a digital version, enough of them have that I have more than enough to keep me entertained when and if I am traveling. I don't necessarily need EVERY title in my physical collection to come with me.

I couldn't agree more. I have purchased around 150 titles for which I received about 26 digital copies. These copies would suffice, if I badly have to see something, when I travel etc.

Besides that, I really don't see the point in digital copies over physical media.

[Dynamo of Eternia]

Originally Posted by Zu Nim

Netflix and Amazon absolutely should be there if you want a fair comparison, much like Spotify and Apple Music should be there when comparing music spending. There was a similar discussion about albums vs. singles the way you seem to be debating features vs. episodic, but the focus should be on the video market.

Originally Posted by Zu Nim

I disagree. It's relevant to cord-cutters, but that's not what we're looking at. My Netflix subscription is an addition to, not a substitute for, cable. Netflix has almost 47M subscribers in the U.S. and cable is losing something like 1.5M subscribers per year. It will be 30 years before those two numbers line up.

People are spending on subscriptions and that revenue is being taken out of physical sales and rentals.

While I see the argument for including the likes of Netflix in the numbers, it's still a HUGE gray area.

I can see where having something like a Netflix subscription may make some people less inclined to go out and purchase physical media (or even buy downloads), especially for catalog titles since Netflix isn't exactly known for getting the latest titles in a timely manner, but it isn't as black and white as you are making it out to be.

In some respects, especially given the amount of original content that they now offer, Netflix is sort of like a premium cable channel like HBO, which many people also subscribe to for both original content and access to movies (and have for years). And these days you can access a lot of the content of a premium channel that you subscribe to on demand any time you want (and you aren't restricted to the next time the channel happens to show a particular movie or show).

Generally speaking, you don't see the revenue from premium cable channel subscriptions being included in the digital vs. physical comparison, but streaming services like Netflix are included, despite them having far more in common with a premium cable channel with on demand options than the sale of physical media in which people are buying specific individual titles.

Personally, my wife and I have cable, HBO included with it, and we also have a Netflix and Hulu subscription.

None of this has slowed me down or made me less inclined from buying physical media. If anything ever does slow me down for a time, it's simply a lack of content that I want to purchase being released. That's often made up for later when a ton of content that I want is released on a short time frame.

I'm not claiming that my personal habits represent the majority. But the point is that the lines between these things are getting much more blurry than they once were. In some cases, having Netflix is resulting in some people buying less physical media. In some cases they ARE "cutting the cord" and using streaming services INSTEAD of cable. And in other cases, people are subscribing to Netflix as an additional supplement to their existing media-consuming habits, and see it more like subscribing to cable (or a premium cable channel).

So on the one hand, to not take Netflix subscriptions into consideration when comparing digital vs physical revenue would not be entirely accurate... but at the same time to assume that EVERY SINGLE Netflix subscription is by default a very specific and calculated "win" for digital over physical media isn't accurate either. The only data that we actually have is the total revenue from Netflix subscriptions and other similar services... NOT what each person's reason was for signing up and if/how it has impacted their consumption of and money spent on other forms of media. These comparisons don't even attempt to take these variables into consideration or mention them as something that could possibly skew the numbers. It's all just "lumped" together in digital's favor.



Furthermore, companies like Comcast have actually gotten into the "selling" of digital content. In addition to the free on demand content that comes with your cable (and premium channel) subscriptions as well as any on demand rental options, they now offer the option to "buy" movies where once you buy them, you can access them on demand any time you want.

Now, why in God's name anyone would actually want to "buy" content through Comcast... in which you forever have to keep paying for cable just to access the content that you've already paid for... is beyond me, but none the less the option is there.

So the lines become even more blurry. I don't know if these sales through Comcast and the like are being included with the digital revenue numbers, but odds are the cable subscriptions, themselves, are not despite the fact that the on demand offerings are akin to being able to watch anything on Netflix any time you want up until any given piece of content is removed.


While I don't deny that all of these things (Netflix/streaming, cable with on demand options, etc) have their impact on physical media sales, personally I'm far more interested and concerned about physical sell through vs. digital sell through as that IMO is a more accurate comparison. I'm more concerned with the habits of people buying specific content that they want to "keep" and have access to indefinitely rather than comparing how many people buy specific content on physical media to keep vs subscribe to some general, ever-changing amount of content through some service.... let alone lumping specific digital sales in with digital subscriptions (the reasons for which people subscribe to could vary) and calling it all a collective "win" over physical media purchases.

[Rocket Richard]

Originally Posted by Rocket Richard

But even 3rd world countries are moving into the modern age. Instead of land lines, they all have cell phones now. So now they don't use land lines for internet, so they are starting to get good speeds and it will only get faster.

Originally Posted by Steedeel

But that is mobile viewing you are talking about. You have inadvertently backed up my argument about Digital accelerating the move to movies on mobile phones becoming the norm. That is some horrible nasty shit future right there.

I'm talking about streaming to a TV, never said anything about streaming movies to a Phone.

[Dynamo of Eternia]

Originally Posted by V40LLY

It's the older stuff that could do with the 4K UHD upgrade; more so, than the latest, expensive blockbusters we see today. I think the 1080 resolution is perfectly acceptable for them, anyway (I'm sure you'll also, disagree with me on that one). But, when you look at movies on Blu-ray, from the 60s, 70s and 80s, you'll notice grain and dirt in the print etc. It depends on how much effort, if any, has gone into restoring them.

True, but likewise had a proper restoration been done in the first place, the existing 1080p versions would look much better than they do in the cases of older films that have been released on Blu-Ray that didn't get a proper restoration to begin with.

And unfortunately the only way that most studios are going to give films that proper restoration is if it is financially viable for them to do so.

Are enough people who have already bought those movies in some form (whether it be on physical or digital media) going to be willing to buy them again in 4K for the studio to make enough money? If not, will the money that the studio makes through a given movie airing on a cable/TV channel, being available on a streaming service, etc. make up the difference enough to justify the cost? If they don't think it's worth it, they likely won't make such a restoration.

Though I am making the transition to 4K UHD discs (I don't have the set up yet, but I'm opting for those combo packs going forward since they include the standard Blu-Ray as well), I'm going to be selective on titles that I upgrade from regular BD to 4K.

I'm only going to upgrade certain favorites, not my whole collection. And the only way that I would make an exception to those that don't fall under the "favorites" is if the existing version had a sub-par transfer and a new release get a better transfer and is also released in 4K.

Otherwise, it is a go-forward format for me, in which I'll mainly buy titles that I don't own already on Blu-Ray.