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Digital Moves Complement Disc

27 Apr, 2009 By: Thomas K. Arnold

thomas k arnold

There was a most interesting story in The Hollywood Reporter last week, predicting we are going to see a lot more motion pictures aimed at young people instead of adults.

“Pricey, star-driven thrillers and dramas will struggle for profitability as the recession intensifies,” the story read.

Its conclusion was based on surprisingly soft openings for a string of recent adult-oriented releases, most recently the Russell Crowe starrer State of Play, which grossed just $14.1 million its first weekend of release.

So it appears that kids, rather than adults, are driving the strong box office we’re seeing, which the last time we checked was up about 12% from the same time last year.

If this is, in fact, a trend, home entertainment could be one of the leading beneficiaries. Studies have shown that young people spend a higher percentage of their disposable income on entertainment.

So it’s not a stretch to suggest that once these youth-oriented films hit DVD and Blu-ray Disc, we’re likely to see higher sales than from, say, “pricey, star-driven thrillers and dramas.”

But wait — young people don’t buy packaged media. They download everything, right?

Wrong. In fact, the digital-downloading juggernaut that’s supposed to kill DVD and Blu-ray Disc seems to be faring no better than packaged media in the current recession. In fact, as senior editor Erik Gruenwedel notes in a story on our Web site, ongoing concerns about the economy are expected to lead to a 15% drop in consumer spending on subscription TV, broadband and mobile services, according to In-Stat.

That’s even more pronounced than the 11% spending drop on packaged media in the first quarter of 2009.

Now, none of this will matter to those who continue to beat the drum for digital downloading, boosted when word broke that Best Buy would launch a digital download service.

TMCnet called it a “concession to digital technology’s growing popularity among consumers seeking entertainment.”

Hogwash. Has anyone thought that maybe Best Buy and other retailers who have launched digital initiatives are merely hedging their bets and eyeing digital not as a replacement for DVD/Blu-ray sales but as a complement, a chance to give customers more choices and at the same time maybe generate some incremental revenue?

Best Buy isn’t jumping ship. It’s being a smart retailer.

Read Thomas K. Arnold's blog, TK's Take, here.

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