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Forever Changes

19 Dec, 2014 By: Thomas K. Arnold

It’s been quite a year, but one without any really big, transformational changes.

Netflix and streaming are still the way most people “rent” movies. Blu-ray Disc and DVD remain home entertainment’s cash cow. Electronic sellthrough, despite its fancy new “Digital HD” name, remains a small part of the overall business. And UltraViolet, in the minds of most people, still refers to those rays from the sun you want to avoid.

What’s in store for 2015? To echo those immortal words from the Beach Boys, God only knows.

The No. 1 goal among the content providers — the studios — is the same as it’s always been: to maximize profits from movies after they finish their run on the big screen. Streaming, much like its predecessor, physical movie rental, doesn’t really accomplish that, particularly under the subscription model — which is why Netflix, the king of the streamers, has so many old and little-known movies the studios don’t really care about.

The studios, of course, would like nothing more than to give up the hassles of manufacturing and distributing physical product — and, of course, dealing with returns — but the fact remains that selling discs to consumers continues to generate the most money, by far. EST promises incredible margins, but if we take off the rose-colored glasses I think we will realize that EST sales will never approach the magnitude of Blu-ray Disc, much less DVD. When DVD first came out consumers bought and collected movies and TV shows because they had never been able to do so before, at least not in an affordable, easy-to-store way; by the time Blu-ray Disc came around we collectively realized we don’t necessarily need to own every movie ever made, no matter how good the quality or how small the package. And buying a download just doesn’t have the same appeal as buying a physical product, particularly among the impulse shopper.

Which leaves us with streaming, of the subscription kind pioneered, and dominated, by Netflix. The studios, in their quest to sell movies to consumers, would like very much to put the streaming genie back into the proverbial bottle, but we all know that’s not going to happen.
This is not to say, however, that subscription streaming, and Netflix, will remain the dominant way consumers consume entertainment indefinitely. Just as MySpace was done in by Facebook, someone, somewhere, is going to eventually come up with an even more convenient way to bring entertainment into the home — and whether that someone is the studios or a savvy third-party player like Netflix is anyone’s guess.

If Amazon does, in fact, introduced a free video service, supported by advertising, as the New York Post reported last month, Netflix could be in store for serious challenge — or not. One reason home video took off in the first place is that we wanted to enjoy our favorite movies and TV shows without those incessant commercials. We didn’t mind paying for commercial-free programming then, and I don’t see that changing.

The only really big change I see in the not-too-distant future is the emergence of 4K Ultra-HD, which at last promises to bring a true theatrical movie-watching experience to the home. But, again, we don’t know how fast or how slow it will happen — or whether it will be a boom, like DVD, or a bust, like 3D (although I personally believe we may be on to something big, really big).

Changes, forever changes. That’s just how this business rolls.

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