Disc Revenues Collapse 21.3% In Fourth Quarter

DHD reports more trouble on the home video front:

Consumers spent $5.65B renting DVDs and Blu-ray discs in 2011, Rentrak says this morning citing data from its Home Video Essentials tracking service. That’s down 3.4% from 2010. But consumer defections from disc rentals appear to be accelerating. In the last three months of the year, rentals were -21.3% from the same period in 2010, as business at kiosks — including Redbox, which charges $1.20 a night — grew by 28%.

The language used above might be a little misleading. Do these numbers truly reflect consumer “defections from disc rentals,” or are we just refusing to pay the kind of rental feels an outlet like Blockbuster charges?

What dipped was overall rental revenues; what increased was Redbox business. Thanks to the Redbox rental price of $1.20 per, it’s possible people spent less but rented just as frequently. 

The real number to study here is the jaw-dropping 21.3% drop in rental revenue over the last three months of 2011 as compared to 2010. Which pretty much proves, especially through Redbox’s incredible growth spurt of 28%, that the studios imposing 28 to 56 day waiting periods on Redbox has had zero effect on consumer behavior.

People aren’t looking to rent specific titles anymore. Movies no longer capture our imaginations. They’ve become disposable, because too many of them are so awful. So what people are looking for is to rent from Redbox. Hollywood can delay when certain titles hit Redbox, but if the customers aren’t aware Blockbuster has it sooner (because they don’t shop there anymore), how will they know the title is available there? Besides, the quality of movies these days doesn’t create the kind of urgency and willingness to spend more to see it today.  

The real reason behind these misguided studio waiting periods is the hope that disc sales will increase, but there’s no evidence that’s working either.

Fifteen years ago, when Hollywood made better movies, you used to walk out of a film eager to own your own copy so you could experience it again and again. That’s the impulse that drives home video sales and the quality of too much of the product these days doesn’t even come close to hitting that impulsive sweet spot. 

Studios and their enablers in the entertainment media will blame the collapsing home video market on anything and everything, but the dirty little secret no on wants to speak out loud is that if your product sucks you will sell less of it. 

And now you know why Hollywood hates free market capitalism and loves them some Fidel and Hugo.