Putting Perceptions in Perspective22 Sep, 2017 By: Thomas K. Arnold
When it comes to home entertainment sales, victories are not what they once were, but that shouldn’t diminish a win. That’s why it is so important that we temper our perceptions with perspective.
The sales business, both digital and physical, is competing with an almost unbeatable proposition, from a consumer standpoint: gobs of movies, TV shows and original content for about $10 a month. First-run movies may be conspicuously absent from Netflix’s all-you-can-eat entertainment buffet, but consumers don’t seem to mind, particularly now that Netflix has ramped up its game with compelling original content that is so addicting that “binge watching,” with apologies to baseball, appears to be America’s new greatest national pastime.
I’m saying this as an introduction of sorts to our annual report on Ultra HD Blu-ray Disc, which all the studios are now supporting. Walt Disney Studios made the circle complete with its July announcement that Guardians of the Galaxy Vol. 2 would be its first release in the better-than-high-def format. But for those who are wondering why sales of Ultra HD Blu-ray Discs, 18 months after the format officially launched, still represent a tiny fraction of overall disc sales — the first-week record for a theatrical new release is 14%, set by Fox’s Alien: Covenant in August — let’s put things in perspective.
We’re in a different world than we were 20 years ago, when DVD first hit the market. Even then, DVD didn’t really gather traction until two years after its launch — and we need to keep in mind that DVD was the first format to make movie and TV show ownership both feasible and affordable. The novelty of being able to buy a movie for less than $20 just three months after it bowed on the big screen was a revolutionary thing; by the time Blu-ray Disc came around in 2006 the novelty of movie ownership, and collecting, had worn off, and even then-Disney home entertainment chief Bob Chapek opined that Blu-ray was evolutionary rather than revolutionary.
Since then, we’ve seen the rise of streaming and the emergence of digital ownership. In their first few months, Ultra HD Blu-ray Disc sales may have exceeded Blu-ray Disc sales, in the comparable period, but that simply isn’t sustainable. There are too many other entertainment options, most of them tied to the Internet, for disc sales to ever approach the magnitude of what they were in DVD’s heyday. The decline in overall disc sales over the past decade is somewhat misleading — in most quarters, Blu-ray Disc sales have held steady or even gained — but the total amount of money consumers are allocating to buying physical home entertainment continues to decline, and that’s a trend that will not only continue, but also accelerate.
Similarly, digital sales are making impressive gains, percentage-wise, but it is unlikely they will ever surpass, or even come close, to the money consumers spend on streaming, chiefly through Netflix. Subscription streaming plays into those two hallowed temples of consumer wants: simple and cheap.
But that’s OK. As an industry, we need to temper our expectations and celebrate our victories, no matter how small. When digital sales go up 10% in a quarter, we should be happy — and not moan and groan because the actual dollars are a fraction of what consumers spend that quarter on Netflix. Similarly, when the DEG releases its quarterly sales estimates, we don’t have to sulk because disc sales went down another 12%. Break those numbers apart and you’ll most likely see Blu-ray Disc sales numbers holding steady and Ultra HD Blu-ray Disc numbers soaring, compared to prior quarters.
For those of us who grew up with VHS rentals and then DVD sales, there’s no question that we’re living in a strange world, a changed world. We just have to adapt, both with our business models and with our perceptions.