An Unpredictable Year3 Jan, 2012 By: Stephanie Prange
A few years ago, I made predictions about what would happen in the home entertainment business based on past experience. But, as have the past few years, 2011 has proved hard to fathom.
Who could have predicted the spectacular fall of Net-flix from Wall Street darling and cutting-edge digital delivery visionary to its present status in the financial pundits’ doghouse? Heck, CEO Reed Hastings — who just months before had been the subject of glowing profiles — was counted by some among the worst chief executives of the year for mishandling a price increase and upsetting subscribers with an ill-conceived (and quickly rescinded) split of the company into streaming and disc businesses. Who would have predicted an analyst would call Netflix a “broken model” for the future of home entertainment?
And what of Redbox’s much-telegraphed move into the digital realm? There’s a lot of telegraphing (i.e. a rumored deal with Verizon) but not much action.
About the only thing that has been true to form is the studios’ reaction to the devaluation of content via cheap rentals. Content owners have fought back, and, as evidenced by Netflix’s fall from grace as it had to raise prices to pay for content, have succeeded in reasserting that content is king.
Meanwhile, sales of Blu-ray Disc have continued to grow, despite the headwinds of a terrible economy and competition from digital delivery and its star predecessor, DVD. As an indicator of the format’s reach, my dad, who was happy with VHS, has asked for a Blu-ray player for the holidays.
We gave this year’s analysis headline a question mark at the end, and that about sums up 2011. There are a lot of questions about the future direction of the business.
In addition to the developments at Netflix and Redbox, this year saw the launch of the UltraViolet cloud service, supported by several of the studios, whereby consumers can buy a disc and access a digital copy online. It seems very much a work in progress, but a promising one. Indications are that at the International Consumer Electronics Show in January, we’ll get more details.
But, as for 2011, it’s remained unpredictable.