America wants to watch their entertainment at home and when they want to watch it. Those in Hollywood holding out had better get on the streaming bandwagon and figure out a way to monetize it accordingly, or they will be left behind. We as consumers are increasingly more willing to wait out theatrical and high-priced PPV/DVD rental price windows in order to pay a buck at a Redbox or, better yet, sit back and let it all conveniently stream directly into our home theatre.
Ominous news for Hollywod in today’s Incredible Shrinking L.A. Times:
Broad swaths of the entertainment business declined in 2010. DVD sales were off 13%. Music CD purchases plummeted 19%. Video game sales as well as concert and theater attendance also fell. Even the turnout for America’s favorite pastimes — baseball and NASCAR — was down. And swift changes in technology will make it difficult for Hollywood to capture pre-recession levels of revenue. …
Cable and satellite subscriptions, DVD sales and video rentals long have been the profit pillars that supported Hollywood. Although media executives continue to boast “content is king,” recently released year-end data suggest entertainment companies are vulnerable to the same disruptive forces that imperiled the music and newspaper industries. …
But perhaps most ominously, last summer the pay-television industry suffered an unprecedented net loss — for the first time — of customers, a yellow warning light that consumers may no longer regard cable TV as a must-have utility on par with electricity and phone service.
New content is no longer king because there’s so much of it already out there and available at a much cheaper price and in a more convenient way. Should we pay $10 a piece to drive to a theatre, get raped at the concession stand, and live with the frustration of all the rude talkers during a movie that kinda sucks? Or… Should we hunker down in the comfort of our own home and for the absurdly low Netflix price of $8 a month, stream a favorite movie we haven’t watched in a while or get lost in Season One of some television show we’ve been meaning to try?
I just got hooked up with Netflix Streaming and am absolutely in love with it. I’m also watching movies and television shows I never would’ve considered before, and am doing so based only on the convenience factor of pressing that single button. While waiting the three days between Netflix DVD arrivals in the mail, there’s this whole wide world of new content (to me) available at the push of a button. It is truly amazing…
And whether Hollywood likes it or not, streaming is the future. Personally, I’m sick of paying my cable company for a hundred lousy channels I don’t watch just to get Fox News, Turner Classic Movies, and Investigative Discovery; and everyday I get closer and closer to the realization that the money I would save canceling my cable is worth going to the Internet for my news. It also personally disgusts me that dishonest organizations such as NBC, CNN, and MSNBC profit from my cable payment. You sports fans can save money buying only the packages.
The other problem Hollywood has is that most consumers aren’t about to pay for a bunch of different streaming services anymore than we were willing to runaround town renting videos from a bunch of different stores. If Sony or Universal or Paramount think they can charge us $10 a month for access to their library, chances are most of us will again choose to wait them out until the inevitable deal is made with our own streaming provider.
The technological shift occurring in the entertainment world right now is seismic and moving faster than Hollywood can get a handle on.
More from the L.A. Times:
Broad swaths of the entertainment business declined in 2010. DVD sales were off 13%. Music CD purchases plummeted 19%. Video game sales as well as concert and theater attendance also fell. Even the turnout for America’s favorite pastimes — baseball and NASCAR — was down. And swift changes in technology will make it difficult for Hollywood to capture pre-recession levels of revenue. …
Cable and satellite subscriptions, DVD sales and video rentals long have been the profit pillars that supported Hollywood. Although media executives continue to boast “content is king,” recently released year-end data suggest entertainment companies are vulnerable to the same disruptive forces that imperiled the music and newspaper industries. …
The most profound shift among consumers has been toward renting movies and away from buying them, which has enormous financial consequences for Hollywood.
Thanks to the proliferation of Redbox kiosks, which offer $1-a-night movie rentals, cost-conscious consumers have an inexpensive alternative to buying the DVD for $19.99 — representing a significant blow in revenue to the studios. Blu-ray high-definition discs were expected to pick up the slack, but consumers have been slow to embrace the more expensive format.
High-speed broadband access, now available to two-thirds of all homes, is also helping to cap the onetime home video gusher.
Services such as Netflix Inc. are able to pump a carousel of movies instantly into the home via the Internet for only $8 a month. The popularity of the company’s streaming service has skyrocketed: 66% of Netflix’s 17 million subscribers use it, eliminating the need to receive DVDs in the mail through Netflix’s trademark red envelopes or to run out to the corner video store.
Studio revenue from home video rentals amounted to less than $1.7 billion in each of the last two years, compared with $2.97 billion in 2001 — more than a billion-dollar drop in less than a decade, according to market researcher Screen Digest.
Read the whole thing.
COMMENTS
Please let us know if you're having issues with commenting.