DVD still popular despite growth in VOD, DVR use
HOME MEDIA EXPO: Panelists say home entertainment pie will grow
By Susanne Ault -- Video Business, 6/24/2008
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JUNE 24 | LAS VEGAS—DVD retailers must learn how to co-exist with competing media, such as video-on-demand and digital video recorders, as researchers explained that such emerging technology is here to stay during a Tuesday Home Media Expo presentation here.
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2008 Home Media Expo
Rentrak and Centris participants stressed that traditional physical media will remain a popular way to view content. But they noted that people will be more divided than ever with choices, spanning DVD, pay-per-view, VOD, DVRs and online downloads.
“You will see more players vying for a piece of the entertainment pie, but the pie will get bigger,” said David Klein, Centris executive VP. “You can see that with the exception of the VHS, platforms are not really going away.”
DVD is tops in terms of home entertainment, with penetration at 90 million households in the U.S. by March. Blu-ray Disc is in 7 million households.
Panelists noted that DVD is vulnerable to VOD content, however, as the distribution method can offer consumers more immediate gratification than a trip to a local video store. Currently, 28 million households have VOD accessibility.
Chris Roberts, senior VP of home entertainment at Rentrak, noted growing VOD usage, as cable operators increasingly make more titles available.
Between first-quarter 2007 and first-quarter 2008, total VOD playtime increased by 185 million hours, representing a 59% jump between the three-month frames. Also between those quarters, the number of featured VOD titles hiked from 52,000 to 70,500.
Elsewhere within the 2008 entertainment pie, Centris’ Klein said there are 80 million pay-per-view households, 40 million pay-TV households (HBO and/or Showtime subscribers), 27 million DVR households and 57 households capable of receiving broadband-delivered content.
There are limitations with many of the above options, said Klein. In regards to VOD, for example, cable operators have not developed standard operating procedures, which can be frustrating for consumers. The cable companies enforce different terms for when films can be accessed.
“It’s considered the killer app for cable, but it’s severely being held back by the cable operators themselves,” said Klein. “People will get VOD and like it and then come back and find that the content isn’t available for them to watch anymore. There’s a lot of experimentation with VOD.”
Blu-ray represents a physical media growth opportunity for retailers. But the format is not yet being marketed entirely effectively, added Rentrak’s Roberts. Currently, 7% to 9% of DVD sales are in the Blu-ray format, and the percentage is much less in rentals.
“The overall problem with Blu-ray is that the consumer still needs to be educated,” said Roberts. “I’ve gone to Circuit City and Best Buy and asked clerks about Blu-ray, and about half of them understand the technology.”
Also problematic is that Blu-ray still represents an expensive fantasy toy for many consumers, said Roberts.
“The average consumer doesn’t have a 42-inch plasma; the average consumer has a 27-inch TV that they still need to switch for HDTV,” he said. “So Blu-ray is not yet a compelling choice for them.”
Similarly, studios are rallying around digital copy as a way to infuse physical media with online benefits. But its appeal is currently limited to a tech-savvy niche consumer group, believes Roberts.
