Call it the curse of too much new technology too fast, too soon. Even while boxed TV DVD sets of such shows as ‘Lost’ continue to sell well, in 2006 sales of DVDs declined dramatically at retail giants like Best Buy and Circuit City. Richard Greenfield, a Pali Research analyst, recently raised concerns about the health of the home video market with a report titled “DVD Party is Over.” However, his dire predictions are not shared by all in the industry.
While a slowdown in DVD sales certainly will hurt the film industry that is already grappling with the issue of piracy, it may not have such a profound effect on television. The Big Three networks, along with most other cable channels, already offer a good deal of their programming online in the form of streaming content, and profit considerably from ad revenue as a result. For example, you can catch whole episodes of ‘Heroes’ on NBC.com. Not to mention YouTube contains a virtually bottomless treasure trove of clips from more shows and movies than you could possibly imagine.
Greenfield says he is, "increasingly confident that 2007 will be the first year that consumer spending on DVDs declines domestically." Even with the special capabilities of new technologies as next generation Blu-ray Disc and HD-DVDs, Greenfield is fearful that studios have warmed up to the concept of digital downloads too quickly that their overall DVD sales will suffer no matter what high-tech bells and whistles come with the package.
Meanwhile, others disagree with his assessment. According to TV.com, PricewatershouseCooper believes DVD sales will actually climb from the $24.1 billion this year to $24.8 in 2007.
But no matter to what degree either Greenfield or others are correct, it is true that DVDs will not survive forever. Right now the entertainment industry on the whole appears in need of a perfect way to balance all these rapidly developing technologies and its ever precarious bottom line. Says Greenfield, "We suspect the risk to expectations is increasingly to the downside, with downside risk growing into 2008 unless…a more attractive business model emerges for digital movie distribution"
