More people renting DVD and Blu-ray Discs?

(Credit: AVSForum.com)

I just noticed a New York Times blog post about the sales trends of DVD and Blu-ray discs. While numbers for DVD and Blu-ray weren't broken out, overall sales for discs were down big in the fourth quarter of 2008.

Here's the key quote from the article:

In last year's fourth quarter, usually a big one for DVD sales...the studios' revenue from sell-through of conventional DVDs and Blu-ray discs fell 23.4 percent, to $2.6 billion from $3.4 billion. This drop of $800 million, Adams Research figures, shaved fully $500 million from the studios' operating profit because they have normally had a very high, 60 percent profit margin on sell-through revenue.

None of this is all that surprising, of course. First of all, the economy sucks, so people are trying to save more. Second, consumers are gradually transitioning from DVD to Blu-ray--or at least considering it--so there's less incentive to continue building that DVD collection. Put it all together, and you have people doing the smart thing: renting, not buying.

Unfortunately for studios, the trend toward renting vs. buying DVD and Blu-ray discs is probably only going to get more pronounced in the coming months--and maybe even years--especially when you consider the high cost of Blu-ray Discs.

As always, feel free to comment about your own personal situation.

[Tedders85]

I use netflix with the Blu-Ray option a lot. I like the freedom to keep it as long as I want. The nice thing is that if I want to watch something that comes to mind all of a sudden, I can have it in a couple days. No point in buying it when I can have it sent to me. All for 10 bucks a month. Can't beat it.

[shopkins82]

My wife and I are big Netflix users. I went through about 4 years of buying 4-5 DVDs per month, if not more, and built a collection of around 700 titles. During that time I'd tried Netflix a couple of times but it didn't compare to the allure of buying release titles every Tuesday. Then one day I realized how much I was spending on discs and how few titles I really watched more than a time or two. From then on I've been almost exclusive to Netflix. The cost of HD-DVD and then BD discs made Netflix an even better value and I now only purchase 3-4 important titles on BD or (rarely) DVD every year... and those purchases usually end up me buying for my wife or vice-versa.

[FCBarca]

Throw in the fact that media as a format is dying anyway and BluRay will be off life support soon enough

[BoManiac]

X-Box fanboy alert

[biobasement]

Agreed with OP, things like DVR's, piracy and legal downloading BR can't possibly have the glory DVD once had. Since both PS3 and XBOX are capable of playing movies/music that are on your computer through streaming or by playing movies you download directly from their networks(XBOX and Netlfix lovin' on another). Hard drive space is a simple commodity, broadband being much faster anyone with 12 mbit can have instant gratification.

[scaught78]

My buying has slowed to a crawl. My wife and I started to realize that many of our purchases had much replay value. That is why we just rent from Netflix. I get all the new titles in Blu Ray. And now when I buy, it is mainly 'have to have' titles that I know I will watch again and again. Like the Dark Knight, which I have already seen on Blu Ray four times!!

[spacemanspitt]

Want to know why their sales are going down? Look to the swapmeets. In almost all of the California Swap Meets, they have DVDs for sale. Some of them are the ones that are still in the theaters or not yet released to DVD yet. I hear about these kids that download movies off of Piratebay.org, ubergameguides.net, or other torrent sites and wonder why the DMCA is going after them, when they should be going after these swapmeet dvd sellers. If you think about it, it's millions out of their pockets each week.

Personally... I am still only using DVD, I have no plans in the near future to get a BlueRay player. The economy sucks, and DVD is good enough for me.

[Sausagebiscuit]

I tend to agree with this. I'd rather see enforcement go against people who are making money at swapmeets.

Either way, I bet they find a way to blame piracy for the lack of DVD sales. I am glad this article was posted.

[paulimusmaximus]

Yeah, I own a concession stand at a flea market, and there are always at least 2 to 3 people selling bootleg dvds. I have watched a bunch of them, and they are the movies still in theatres, and at worst the sound quality is bad, but usually they are just as good of a quality as regular dvds. And they're only $3-$5, so they're cheaper than buying one ticket to the movies.

And just a note, the people selling the bootlegs do get busted all the time. Like at least once a month. But the fine is so small (around $200) and they usually only keep a limited stock of dvds at their booth, so between the fine and what gets confiscated, it's worth them paying a small fine if they're making thousands of dollars every weekend.

[mickey918]

Someone loaned me a bootlegged copy of "The Curious Case of Benjamin Button" last week, and the quality of the picture was fair, to say the least, but the sound was awful. At the bottom of the screen, a message kept popping up saying that it was a "review release only". I took it right back. I'm a big fan of 5.1 surroundsound and DTS sound and I can't watch a movie that doesn't have it. I, too, resisted buying a blu ray player for a very long time, but found a really good deal on a Sony on Black Friday last year on Amazon and bought it. Needless to say, I've only purchased 3 titles in BD format. The rest I rent at our local Movie Gallery store.

[shopkins82]

I'd say downloads are having some smaller effect on DVD sales, and pirated media sales are having an even smaller effect... but neither are having anywhere near the effect that online rentals (Netflix & Blockbuster) are. People have the patience to download small music files that will play on nearly any digital music player, but far less patience for much larger video files that require at least a passing understanding of codecs, containers, and playback software and don't offer video player (portable or home) playback ubiquity.

[koolkankat]

I have a PS3 but I have only purchased one Blu-ray movie, The Dark Night. I have a Netflix account and I rent blu-ray movies. New movie releases cost $30 a pop on blu-ray in the stores, which I find too expensive. Unless there is a movie that I got to have, I will be keep renting from Netflix and very little buying.

[pbamma]

Great piece. It's good to read something correct about the Blu-ray business for once as opposed to those "Blu-ray is doomed, downloads are coming" pieces that are so popular. I have a feeling that it is a good time to by stock in Netflix or Blockbuster. I too have slowed my buying of discs, and know that I can always "re-rent" if I want to see it again. I would not want to watch anything but blu-ray as the bit rates are the best off disc as opposed to download, broadcast, over the air, or any other method of getting a picture on my beautiful Panasonic HDTV. The Blu-ray disc business will be supported by rentals.

[joe1172]

Maybe a chunk of those new title buyers are now renting then ripping to their HD.
The question is, will the studios start staggering release dates for buy vs rent, with rentals coming a couple of months after it's been out to buy.

[Sausagebiscuit]

This might just create another reason to obtain said material at a site of questionable legality.

[atomD21]

Yeah, punishing people for not buying the movies will only hurt the studios, as people will get the movie anyway for free.

[somone_else]

I don't think they could do that. I could be wrong, but I believe if someone buys a movie, they can rent it out. The only possibility I could see is that they will bump up the price when they are released, so that there is a "rental" price. so they can make more money from all the copies that netflix and blockbuster buy. then after it's out for a few months they could lower the price to a "purchase" price. They used to do this with VHS tapes. but it seemed to me that they stopped this when DVD's came out.

[zipityzap]

Lots of folks are discovering how easy and affordable it is to connect the Internet to your TV - no expensive box required. Just use your PC and a specialty PC to TV cable. It's no wonder disc sales are down.
[CNET editor's note: Prohibited spam deleted.]

[arj8138]

I have been with Netflix off and on for over three years. Im in college so when monies tight I just put my subscription on hold - otherwise its way more affordable and convenient that buying or renting from a brick and mortar store.

[tcr071]

You are either not very intelligent or have too much money if you have been amassing a blu-ray collection over the past 6 months.

I began renting as soon as HD-DVD called it quits and all the freebies suddenly ended.

[Silt524]

Right now Redbox is just too hard to beat. I was considering buying Australia on either Blu-ray or DVD when it comes out tomorrow because I really enjoyed it in theatres. However $1 compared to $28 or $18 (Best Buy's prices) is just a no brainer right now. I will eventually buy it once it is in the DVD bargain bin which will probably be around the holidays. I honestly don't see how Blockbuster has a chance as Redbox becomes more and more popular.

[john_boogie]

Simple. Make Blu-Ray discs cheaper.

Would you rather have 10 people buy at $30 for a $300 in sales or 20 people buy at $20 for a $400 in sales?

[atomD21]

It depends on their profit margin. If they are just eking out a profit at the $30 price point, lowering the price will only help them to bleed money. I don't know, maybe the studios are raking it in at $30.

[jtjt145]

Somehow this whole disc business leaves me cold and it seems to be waning anyways, if all I am hearing is correct. Too many legal threats, DRM and government hooha in it for my taste! If one just wants to get cheap entertainment, there is less hassle-some entertainment to be had from the web.
Keep looking and you will find...

[MrMurder]

Instead of buying Blu-ray Disc movies, I rent them. If there's a game for the PS3 I like, I buy it.

[simonsonjh]

"...economy sucks". What does a mouth vacuum have to do with economics. Do you think I should listen to writers with such unprofessional writing?

[ThatIsWhatSheSaid]

It's a tech blog, not The Economist. And I say this as one who often criticises David's columns.

[sciontcya]

How many movies are worth buying?
And while I love BR on my Bravia TV, I can't justify owning movies at the price they're at.
Sorry, but the cost is prohibitive, and my Netflix is great.
That and my Rocu box.

[vmv890]

I think these CEOs aren't idiots (despite are quick conclusions, from looking at what they're doing). But what can they do? They can't just switch from one medium to another or to a different price plan. So the young generation can't afford, doesn't want to own, or wants everything online. Older generation still has a blinking VCR. So the only people they can appeal two are people in the 40s who don't want to download and can afford 20-30/movie (plus those Dark Night fans :). The rest aren't able to pay, or don't care enough to pay. Plus, the entertainment quality of many of these movies is questionable at best. What they need is cheaper movies that appeal to niches, instead of expensive movies that appeal to a broad spectrum. If they don't increase entertainment per dollar value, soon DVDs/Movie Theaters will suffer the same fate as News Papers.

[ThatIsWhatSheSaid]

Newspapers...

[pghcraig1]

DVD was a $30 disc when it came out too. It was also a $6-7 rental at most chains, and the players were as much as BR players are now.

History is just repeating itself. The discs will get cheaper. Had HD-DVD one out, the disc woudl get cheaper faster. Unlike HD-DVD, BRD requires an entirely different process to manufacture and studios has to spend a good bit of money to produce the discs. As they recoup that investment, the discs prices will drop and as demand increases the prices will start to drop.

The biggest difference I think is that when DVD came out, it was this magical pixie dust coasted awe inspiring new tech. BRD is just a slight jump in the mind of the average consumer. A yawn of a tech.

If they want BRD to really leap, they'll have to start cutting back support of DVD as they did with VHS.

I am noticing shelf space in all the big box stores for BR getting larger and cutting into DVD space. The time shall come sooner than later.

[AaaKuu]

I think that's absolutely the wrong strategy. I think many younger folks like myself are not impressed by blu-ray and have no intention of spending two car payments on a blu-ray player for the dubious benefit of a marginally sharper picture. If it comes to that, I'll stop buying DVDs altogether first. I've got plenty of other ways to amuse myself.