If I had a nickel for every time someone cried that the sky was falling due to technology, I would not only be fabulously wealthy, but the envy of every ex-analyst-come-strategist-product-developer.
I say this because while I sat this morning reading the paper (and will not disclose which, in an effort to protect the innocent), I came across an article that began, "The decade-old DVD moved
two small steps closer yesterday to technology's endangered-species list." Why? Because Wal-Mart announced that next year it will begin testing a video download service on its Web site. The other nail
in the coffin was the pre-announcement that BitTorrent will announce today that it has struck deals with eight media partners, including 20th Century Fox, Paramount and MTV Networks. Now, don't get
me wrong. I am not saying that this isn't news. What I am saying is that this isn't NEWS. Confused? Well, you shouldn't be. And here is why:
Further on in the article, the report
informs us that the downloads, at least the first promotion, will be tied to a physical buy--meaning that you will have to buy the DVD before you have the privilege of paying an extra $1.97 to $3.97
to download to various devices (yes, the cost is determined by where you want to download). Uh-huh . Since the tiered pricing strategy worked so well in music, why not try it with movies... Traditional packaged home entertainment is up for Q3 2006,tracking 1% higher with consumer spending at $14.7 billion for the first 9 months. Yes, that was billion--which is a rather large number
to place on the "endangered-revenue" list. For 2005, DVD sales were up 4.5% over 2004 to $15.73 billion. Yes, that was billion. According to research conducted by Nielsen
Entertainment/NRG, the majority (69%) of moviegoers feels that the theater offers the ultimate movie-watching experience versus home (31%). Moreover, four out of ten moviegoers plan to buy the
last movie they saw, with more than half of that group making the decision immediately after seeing the movie. Which means that roughly one quarter of all moviegoers leave the theater already knowing
that they want to buy the DVD. DVD penetration rate (as a percentage of TV households) is 76.2% or 84 million homes, up 28.4% over 2004. The number of broadband households at the end of
2005 was 36.3 million, up from 28.8 in 2004. Now, I am not saying that what Wal-Mart and other companies are doing to alter distribution channels isn't meaningful. It is. But I seriously
challenge every reader to question, question, question when stories begin with the demise of entire markets. Other elements that were not considered include important things like consumer sentiment
toward watching long form content on nontraditional devices, consumer experience, pricing strategies, target markets, DRM, regionalization, day-and-date, technology requirements, channel shift and
cannibalization... and the list goes on and on. Think I am wrong? Maybe just a little bit right? You tell me.
