When a Lehman Brothers analyst downgrades your whole industry, it kind of makes you sit up and take notice. You’d think an announcement like that would ripple through the internet knee jerk mechanism called the Stock Market. Especially hit might be stocks like The Walt Disney Co., News Corp., CBS Corp., Time Warner Inc. and Viacom Inc..
Oh, wait – that did happen. Earlier this week, Lehman Brothers analyst Anthony DiClemente predicted that digital technology, ie: digital media, will have an impact on DVD sales, and hence, the profits that the TV and movie industry tends to rely on. Just like it did the music industry. It’s noted that profits have already dropped ~12% per Blu-ray disc products that are offered as iTunes downloads.
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Part of the issue is the attitude of the younger generation to not want to keep movies they watch. Disposable entertainment in this age of iTunes and Netflix.
And sadly, DVD sales are on the decline which may seem to back up his observation, or it could just be the economy, so I don’t want to give that stat too much credit.
DiClemente added that DVR’s are also hurting the advertising revenue that the TV industry has become accustomed to.
Media Format and Ratings
Of course, earlier I touched on the dangers that television programs face in the relevance of the soon to be antiquated Nielsen system as more and more shows are DVR’d and downloaded from iTunes, as Jericho showed. After Jericho got trashed in the ratings for it’s beleaugered 2nd season, it was the most downloaded show on iTunes. The math (logic) just doesn’t add up, but the advertising dollars do, as far as network execs are concerned, and their fat paychecks are dependent on!
Despite the disparities that we, the viewers are suffering when quality content gets dumped, they say that studios are trying to get ahead of this technological deficit. (Great, then bring back Jericho and Journeyman!)
Despite putting shows online with limited advertising, the revenue from those efforts is only a small fraction of what they make. They say it’s due to the smaller internet audience, and that might be true.
(Continued…)
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11 Comments
I have a question. CBS knew how much money they made from the advertising which aired with Jericho when it was aired. They know right now how much they’ve made from iTunes downloads and from advertising on internet streaming. They know how much they made last year from DVD sales of the first season.
Do you think if all of these revenues made Jericho as profitable as the average show on CBS that they would still have cancelled it?
What difference would it make if Nielsen knew the iTunes and streaming data as well?
I enjoyed Jericho, but I think CBS would have kept the show on the air if it made enough money. It didn’t. And sadly, I doubt that it even came close in the second season.
It sucks, I love purchasing DVD’s, its probably my most bought item.
It is more than likely that eventually most things will be digital media, such as movies etc etc. It is already happening big time with music, but there is just something cool with buying a DVD.
Really, really sucks.
Vic, we did have a voice of what we wanted in terms of the next-gen disc wars, the people dominantly chose Blu-Ray, and thats how the Borg, I mean Microsoft lost some of its supporters for HD and got knocked into the spiral to defeat. And then there’s the dumbest decision of all time by Microsoft to sell the HD drive separate from the xbox360 whereas the PS3 included the blu-ray, and was hundres of dollars cheaper than a standalone blu-ray player
As for TV-like ads, if they start doing that with more and more digital property, the pirated and torrented versions will become ever more popular and it will hurt them in the end.
I think DVD sales deserve to fall bigtime. There’s no excuse for screwing fans over by charging $100+ for a 6 disc TV season of Star Trek or Sopranos…those shows have already been made, the costs sunk and the profits made. Then we have Blu-Ray, selling the same crap we all already bought into with DVD (and even VHS before), but for $40 for a movie. Can you imagine how much it costs for a movie library of blu-ray at that price? I will not buy any blu-ray discs. I’m keeping DVD and downloading digitally.
In the long-run, the entertainment industry will have to re-shape themselves. When we see movies have $100 mill budgets bringing in a third, half or even more of a billion dollars, there’s really not much to complain about in terms of piracy, I think with the increased pickiness of the internet generation of people, people are not gonna give a damn about pirating if actors make millions and millions of dollars, but they have to pay $40 for a disc, $10-12 to see it in theatre ($20 for Harry Potter 7). Its also crazy how much TV-on-DVD cost, since it was free on TV and already made its money and had its run. Those should be way cheaper. All DVDs should be cheaper.
GingerAle: The issue is that though Jericho season 2 was one of the most popular iTunes download, and like you said, it didn’t make the money it needed to make on TV because everyone is watching it via alternative methods that don’t make the money that TV needs.
Baker2d: No kidding… REMEMBER: It’s just a prediction on my part that advertising is coming down the pike. And I’m going out on another limb and saying we’ll be buying USB movies or something like that down the pike too.
I find it ironic that Hollywood would hate the decline of DVD sales since they are on a mission to save the earth. How much resource does it take to create, package, and ship DVDs? Digital media would mean less waste to produce and less fuel costs. Less in the landfill too. If people tire of a movie they can just delete it instead of trashing it. Hollywood hates small companies who sell used CDs and DVDs, right? There is no reselling digital media.
Think about it…
Rob,
First, I didn’t write this article.
Second, I don’t think consumers chose Blu-Ray over HD-DVD so much as it was snuck into the homes of the majority via the PS3 player. People didn’t consciously decide to go with Blu-Ray – it just happened to be packaged with a game console.
If it had been flipped around and HD-DVD had been built into PS3 boxes it would have gone completely the other way, so I’ve gotta disagree with your “choice” comment.
Vic
“It is more than likely that eventually most things will be digital media, such as movies etc etc. It is already happening big time with music, but there is just something cool with buying a DVD.”
Unfortunately, that also means, in my experience, that watching movies or TV shows will become a solo activity instead of a family activity. While the music can usually, if not always, be made into an audio CD, I’ve yet to see that kind of option for purchased videos.
Not that that matters much since the resolution on those videos doesn’t seem to even come close to the resolution needed for a standard 4:3 TV set, much less the HD sets that are coming out now. All of this essentially ties viewers of these videos to watching them on their computer display, which I find is usually a sized for a single user.
Personally, I prefer being able to watch a video with friends and family, and I like being able to put it on my shelf when I’m done watching something I’ve purchased. Until these various problems are solved, I don’t believe DVDs, or their successors, are all that endangered, though I obviously don’t know for certain. One thing I do know for certain, though, it that until those issues are resolved, I’ll not be relying on digital videos as my primary means of watching TV shows or movies.
lol, excuse my stupidity. I’m putting whiteout (blackout?) on my screen as we speak and writing in Bruce with pen.
Vic, I partially agree. Before these Discs came out, I thought HD would win because of Sony’s track record with Beta tapes and those PSP movies but the blu-ray product was more marketable. It looked more pleasant, had a better name, and better cases. Alot of the reason Blu-Ray won is because of Sony’s crazy digital protection (DRM) which production companies really loved so I’m sure there were alot of deals done for that. And more to your point, you’re right, alot of consumers wanted HD over blu-ray because blu-ray had resolution issues and wasn’t as compatabile with HD TVs.
Two points for you (one for correction who i directed the first message to)
Ginger Ale, I think Jericho was cancelled because of the subject matter.
Rob,on MCSFT not putting a HD drive in the Xbox-360 was due to the fact Microsoft had allready finished designing the 360 and could not afford to redesign it with the HDD inside it.
Sony’s PS3 is basically a Blu-Ray player that also plays games.
The XBox 360 is a game console first and a media center second.
Sony rushed the PS3 onto the market for just that reason, they wanted to sell Blu-ray discs.
Sony ultimatly lost major money on the PS3 because sales topped off after the buzz wore down.
I’m with you Rob, I’m never buying a Bluray player. Its a temporary medium anyway, and nothing more than a way to make more money off the same product.
Zipper, yeah the Go Green movement is a scam.
(You have to observe what they DO not what they SAY).
Rock On,,,, ladies and gentlemen.!!!
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