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Opportunities and Challenges of the Digital Era

7 Sep, 2003 By: Kurt Indvik

The industry is enjoying another record year, on pace to grow total revenue to some $23 billion, and last week's announcement of Buena Vista Home Entertainment's Dec. 2 bow of Pirates of the Caribbean: Curse of the Black Pearl to an already burgeoning holiday bag of home video hits means the fourth quarter closes with a huge volley of retail cannon fire.

Yet, even as packaged home entertainment continues to have stellar sales and rentals, digital technology is allowing companies to continue to explore new delivery options that may have an impact on the future of home video rentailing and retailing.

On the same cover page as our coverage of Pirates in this week's edition of Video Store Magazine is the story of the rollout this week of Buena Vista's test of the Flexplay self-destructing DVD technology in four markets. Buena Vista is going to be taking a close look at variations in packaging, pricing, genre and retail location, among other issues, to see if the so-called EZ-D can be another digital delivery platform for entertainment. I suppose you can still call it packaged home entertainment, it's just that it's temporary (once the package is open).

On this very same cover we also report on the newest version released last week of Movielink's digital delivery service. The studio-backed effort is steadily upgrading its service and title offerings to broaden its audience and will be more aggressively expanding its marketing to both the business traveler and the college student markets especially this year.

Of course, we've been hearing for years that video-on-demand would eventually lead to the demise of the video store, and while the cries of imminent doom have quieted down, the story continues to be pushed by media analysts, with Forrester Research adding to the chorus in this week's issue on page 11. “Studio executives are very rational about distribution. They are willing to support cable and VOD. I think you will see the VOD window become day-and-date with the rental window,” said Josh Bernoff, principal analyst and author of the report “From Discs to Downloads.”

While Bernoff still gives DVD five years of happy life, he predicts VOD will whittle down the packaged media business after that.

Meanwhile, the world continues to collect an ever-growing library of packaged home video.

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