Does Anyone Want to Own DVDs Anymore?

Lately, I've found myself staring irritatingly at the hundreds of CDs and DVDs that occupy numerous shelves in my living room. How can we get rid of all this clutter without investing in an uber-expensive media server? Sure, there are Media Center PCs that can store all this content, but that would mean having to sit down and rip one DVD after another, repeatedly, for hours on end. Even then, what happens if the system crashes? Sure, there's always back-up, and even a back-up for the back-up. But I wonder: are people really interested in owning all of this content, namely movies, or do we just want to enjoy it, then chuck it?

Case in point: popular U.S. video rental company Netflix has just announced that it will get out of the previously-viewed DVD sale market and focus on rentals and streaming video. Despite how much consumers might be upset at the change, it makes perfect sense. Why do I need to own a physical DVD movie? There are very few titles that are worth watching more than once, and often times when I have watched a movie for a second or third time, it's because it happened to have been broadcast on cable TV. If there's a particular movie that I want to watch at home on-the-fly, I'll grab it on-demand.

As I write this, I hear my former self yelling "hypocrit" at the top of her lungs. I used to be the one that argued passionately in favour of previously-viewed DVDs. Why would I pay $5 to rent a movie when I can just own it for a few bucks more? I would say to people. And there certainly are people who appreciate the full DVD experience, including the extra features and interviews, and love to admire the beautifully-created cover artwork. But now, looking at the hundreds of colourful cases unnecessarily taking up so much space at home, I don't quite feel the same way.

But before you're quick to call me out on predicting the end to a profitable after-theatre movie industry, that's not what I'm implying at all. Rather, the money will funnel itself through new channels. This could mean a cut of pay-per-view profits or specialty TV channels subscriptions, and probably the most lucrative option going forward: involvement in the streaming movie business. And hey, perhaps Blu-ray will take over as the only viable physical DVD format worthy of investing in and "collecting" because of its premium video and audio quality.

This, of course, is great news for cable/satellite TV providers and online distribution companies; not so good for DVD makers and distributors. But who knows: maybe in future, everyone will have a stab at the TV airwaves, and you'll be able to tap into services not from just one cable or satellite provider, but from a host of them, operating somewhat independently of one another. Sure, the idea might seem far-fetched to some; not to mention potentially confusing (and expensive!) for the customer. But if it means I can watch what I want, when I want, in high-definition quality, and take back a big portion of space in my living room that's now otherwise occupied, then I'm game.

Does Recession Mean Increased Interest in Technology?

I have said many times that, in a recession, consumer electronics is likely the one category that won't suffer as much as the others. Today, a study commissioned by Blockbuster reports the same. Why? When people don't have as much disposable income, they stay home. What do they do at home? Watch TV or movies, play videos game, and surf around on the 'net.

So while the restaurant, vacation, and other like recreational industries are suffering, consumer electronics are becoming more central to people's daily lives. Granted, while people are watching more TV at home (87% of survey respondents said they would be using their home theatre more often in the coming months) they aren't exactly spending more money: your cable/satellite bill doesn't go up if you watch more TV, unless you opt for pay channels. But this means that consumers might become more aware of new technologies as they place more focus on digital entertainment. They might learn about channels they don't have and look into subscribing (I'm saving hundreds of dollars by not eating out every Friday anymore, so what's another $5/mo. tacked onto my cable bill?)

As lagging consumers stare at the old clunker of a TV in the middle of the living room that they didn't spend so much time with before, they might even start thinking of upgrading. If you're watching it more now, that justifies the purchase, right?

Of course Blockbuster hopes that this increased interest in "staying home" will also amount to lots and lots of movie rentals. It probably will. And hopefully once the recession has passed, consumers will look to invest in a fancy new home theatre so that they can enjoy these movies, as well as regular TV programming, and even video games, in all their glory.

Blockbuster Won't Give in; Bids for Circuit City

For years, it seemed like the writing was on the wall for movie rental outlets like Blockbuster. First, there was on-demand TV through cable services that essentially let you order a movie right from your couch. Then, there was nifty inventions like TiVo that made it really easy to record a movie at 4 a.m., then watch it whenever you felt like it. As if that weren't enough to put pressure on the traditional DVD rental business, out came Netflix, a company that let you order a movie online, and they'd deliver it right to your door!

Lately, however, it seems like Blockbuster is pulling out all the stops to ensure that the company isn't left in the dust as technology continues to move forward. We've already seen what happened to music retailers like Music World and Sam The Record Man that refused to change their business plans to keep up with the changing ways of music distribution. Blockbuster obviously wants no part in that when it comes to its business, and is making sure the company stays on the cusp of development.

The strangest move came today, when Blockbuster Inc. put in a bid to buy U.S. consumer electronics retailer Circuit City. Huh? You'd think that, if anything, it would be the other way around! But Blockbuster is offering more than US$1-billion for the mammoth CE retailer, stating that a combined company (worth approx. US$18-billion) would be "uniquely positioned to capitalize on the growing convergence of media content and electronic devices." Could we see Blockbuster stores now not only renting DVDs and video games, but also the devices needed to watch or play them? Or perhaps creating promotions whereby you receive a free movie rental with the purchase of a Blu-ray player from Circuit City? It might even be more than that.

Reports all over the 'net claim that Blockbuster is planning to launch its own set-top box that would allows users to stream movies to a connected TV, a la Apple TV. Content would reportedly come from Movielink's massive library, a company that Blockbuster purchased last year.

It looks like Blockbuster has finally bitten the bullet and realized that it needs to make bold moves in order to remain competitive, and not be eaten up by all the new players. In addition to its attempt to buy Circuit City and the rumoured set-top box device, Blockbuster has also been ramping up its Blu-ray DVD offerings to keep in line with consumer demands. It's even putting dedicated Blu-ray kiosks in store, demonstrating the quality of Blu-ray versus standard DVD.

Most people seem puzzled by Blockbuster's moves, but it's better than sitting back and watching other companies take over an area where you were once king. Kudos to Blockbuster for taking steps to improve, and for attempting to find interesting synergies that will add further value to its business. Sure, a consumer electronics retailer is very different from a DVD rental company, as many reports have pointed out. But maybe there's more synergy between the two than we realize. If, as I've argued many times, the content drives the hardware, it makes perfect sense for Blockbuster to grab a piece of the hardware pie to complement its diverse software offerings.