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Is Another Analyst Crying Wolf?

8 Sep, 2003 By: Stephanie Prange

If there is one thing that is a constant in this business (other than retailers complaining about the studios) it's the drumbeat of a potential video-on-demand threat.

My first week at the magazine in 1993, Bell Atlantic chairman and CEO and VOD proponent Raymond Smith said in our pages that the video store model was “no longer viable.” In 2003, his multibillion-dollar merger with TCI is long dead, and the video rental market is still here.

Again last week, a Forrester Research analyst predicted VOD would begin to take a bite out of video revenue in the coming years. Josh Bernoff, principal analyst at Forrester, was a bit more cautious than Smith, but he still predicted a significant impact from VOD. He said, “We're not talking about DVDs becoming obsolete in five years, but we're talking about seeing the beginning of the end in five years.” The report went on to predict a DVD and tape revenue decline of 10 percent between 2006 and 2008 as VOD takes a bite out of the home entertainment pie.

What is it about the five-year prediction? When I got to the magazine in the early 1990s, many others were touting the five-year plan. Here I am 10 years later and VOD has yet to make a dent in the home entertainment market.

I hate to sound like an impediment to progress, but honestly, when will VOD make good on that five-year promise.

A colleague of mine likes to note that most five-year plans he's ever prepared or seen usually prove wrong in the end. Maybe VOD proponents would be better off preparing for the future rather than predicting it.

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