Hollywood Shifting To Online Movies As DVD Sales Fall
Hollywood is starting to move away from DVD and warming to putting content online. Bigger profits, lower overheads and costs along with other incentives tempting Hollywood to partner with online video sites such as YouTube or even set up their own media websites.
Video, TV and movie streaming via the net coupled with digital downloads will grow by two thirds to $753 million within the US in 5 years. This may be a small fraction (5%) of DVD for 2008. However DVD sales are falling whilst online tv watching is booming meaning they will at some point in the future meet.
Stephen Prough of Salem Partners who advise investors in the film industry said:- “I don’t think that studios are looking at online to save the home entertainment business, but I think they want to avoid what happened to the music business and try to come up with alternative modes of distribution before physical media goes away”
Walt Disney are in the throes of introducing a subscription based service that will provide premium content like movies and TV shows for a price. And YouTube has reportedly held talks with Lions Gate, Sony and Warner Bros about online movie rentals.
But some analysts argued that encouraging a migration online would put a strain on better profit DVD income, which now accounts for over half of any single film’s viewership revenue and the main way studios make money on their investment.
However advisers argue that the migration to online content will be inevitable as viewers move to a pc based entertainment setup as has happened to the music industry.
During the first six months of 2009, DVD and Blu-ray revenue dropped 13.5%, a decline that has made it harder to finance films.
Larry Gerbrandt of Media Valuation Partners consultancy said:- “What has driven a big part of the (DVD) market in the past has been people building their libraries. That phase seems to be over.”
As more people turn to online viewing, Hollywood stands to enrich itself, especially through rentals.
Studios get more than 70% of the price of an online rental at websites such as iTunes, compared with a third of that price in a store, said Tom Adams, founder of Adams Media Research.
And even though online sales of movies and TV shows bring studios some $15 on a typical title compared with about $18 for a physical sale, the Internet offers vastly lower overhead and distribution costs, Adams said.
In any deal between Hollywood studios and YouTube, YouTube would likely charge consumers $3.99 per rental, in line with Internet rental outlets like the iTunes and Amazon stores.
Mike Kelley of PricewaterhouseCoopers said:- “You can actually turn that $3.99 into much more value. It’s not just pulling them into the movie and streaming it, but forming a relationship that lasts a lot longer than that two-hour window.”
As an example, customers who love to watch sci-fi become marketing targets for other sci-fi related content and goods.
Disney’s chief executive Bob Iger recently said he was “pretty bullish” on direct Internet marketing to consumers.
In the next five years, online subscription rentals are expected to nearly double to 9 percent of overall revenue for the North American filmed entertainment sector, which include box office and DVD sales, PricewaterhouseCoopers said.
In contrast, for North American filmed entertainment sector, PricewaterhouseCoopers expects physical home entertainment video to account for 53 percent of overall revenue in 2013, compared to 70 percent in 2004.
Kelley continued:- “We’re in an accelerated period where technology and the consumer is outpacing the studios’ current business model.”
Come on Hollywood, this has been staring you in the face for at least five years. Online tv is the way to go, there is no stopping it and no turning back. I suppose its better they are figuring this out eventually.
Incoming TV searches:
youtub hooliwod move fqllRelated posts:
- Youtube and Hollywood getting online TV moving
- Google To Rent Movie Streams Online
- Apple Itunes renting and selling 50,000 movies daily online
- Youtube video watching improves DVD sales
- YouTube showing Full Length Movies soon?
[...] more from the original source: Hollywood Shifting To Online Movies As DVD Sales Fall Posted in Hollywood Movies | Tags: and-costs, and-warming, dvd, lower-overheads, move-away, [...]