Sales, rentals slowing as digital disc turns 8

[tomdkat]

The article is here. It basically talks about DVD sales and rentals slowing.

Peace...

[Dilmo]

I heard just the opposite. More people are buying and renting, and less people are going to the theaters.

[tomdkat]

Originally Posted by Dilmo

I heard just the opposite. More people are buying and renting, and less people are going to the theaters.

I think the difference is the amount of sales growth is slowing down.

Originally Posted by Article

According to the Digital Entertainment Group, sales of DVD software grew by 9.8 percent for the 12 months ending March 2005, with revenue up by $2.2 billion.

This shows there still is growth in DVD sales but not in the double-digit range previous trending demonstrated.

Peace...

[MooglePorn]

Uh... common sense?

[Bananaslug79]

Yeah, I have to wonder sometimes if people that are in sales and marketing actually are in...sales and marketing. They don't seem to know what they're talking about when they say stuff like this. If one year is really great for sales, chances are the next year and maybe the next year after that may go down as well. It's not that things aren't selling, but the giant paces probably aren't being met year after year. I think that's normal and makes sense; you can't have great explosions in growth and sales every year or quarter.

[tomdkat]

Originally Posted by Bananaslug79

you can't have great explosions in growth and sales every year or quarter.

That's the thing, though. DVD sales were the exception to this which probably reset expectations. Think of it like the "dot com bubble" that eventually burst. It didn't burst immediately but it did eventually.

Peace...

[limacharliewhiskey]

I don't think of the industry as a bubble bursting, but it's more like the market is maturing. It's like the auto industry, where sales as a whole aren't gonna really jump greatly. There will be individual vehicles that are new that may have fantastic sales, but most everyone has a car, and people will buy new vehicles every 5-to-8 years.

Same thing with DVDs. People will upgrade players as new features are added, but the explosive growth in the market has already past.

DVD titles are selling well, but people may now be more selective in what titles to buy. I know I'm not buying as much in quantity as I did when I first started. With a collection approaching 400 now, and many of my wishlist movies like the original Star Wars trilogy and Indiana Jones movies coming out in the last couple of years, my list of must-buys in not as big anymore.

[tomdkat]

Originally Posted by limacharliewhis

I don't think of the industry as a bubble bursting, but it's more like the market is maturing.

I just used that as an example of how unexpected market behavior can impact future planning and speculation when making business decisions.

In the case of DVD sales, it's clear to me sales maintained an unprecedented growth trend that has caused industry insiders to take note of the growth numbers slowly shrinking. Previously, this would be no big deal since an initial interest spike would be expected. In this case, no one would have predicted the explosion that actually took place, hence the article above.

In reality, I agree with you that the market is simply maturing.

Peace...

[Bananaslug79]

Originally Posted by limacharliewhis

DVD titles are selling well, but people may now be more selective in what titles to buy. I know I'm not buying as much in quantity as I did when I first started. With a collection approaching 400 now, and many of my wishlist movies like the original Star Wars trilogy and Indiana Jones movies coming out in the last couple of years, my list of must-buys in not as big anymore.

I totally agree with this. This is where I think the market needs to reset its expectations to, back from where it has become as you say, Tom.

Plus, a large majority of DVD sales has to have come from catalog titles. Movies that don't have a DVD release are still coming out today, so the growth must have been impacted by this in some way. It's probably as much of "I already have that" mentality that slows sales, much like what Lima said above.

[Slanter]

Lets not forget, almost all of the big money maker films of the past have come to DVD. Many of them in the last two years or so. There aren't that may titles yet to come that will have people standing in front of Best Buy at dawn.

Plus, people are figuring out hopefully, that they watch these once and have no desire to watch them again afterwards. Why spend the money?

[reapersaurus]

umm.. who gives a crap about a RELATIVE term like "growth"?
Let's talk turkey, and stick with ABSOLUTE numbers if we want to get a picture of an industry.

Anyone got sales figures for DVD's the past 3 years?

I'll bet it'll show the DVD market is not hurting.

I really can't stand when industry reps misinform people with inapplicable statistics just to be negative/scary.

[Bananaslug79]

Originally Posted by reapersaurus

umm.. who gives a crap about a RELATIVE term like "growth"?
Let's talk turkey, and stick with ABSOLUTE numbers if we want to get a picture of an industry.

I agree with you, but I don't think the marketers do. They see what things were, and expect all the time to be like that just because of the label "DVD."

[plissken99]

Yeah what do they expect? Whats happening makes perfect sense to me. DVD sales in players and titles have had record growth every year. I know DVD player sales are down, naturally since most everyone has one. And as you guys say, most all catalog titles are out now, all there is, is new releases, which still sell very well.

Did they expect it to just keep growing? Naturally it had to level out as some point. For the first time this year, I can walk into my DVD store or Best Buy, and walk out without buying anything! Now I may go 2 or 3 weeks without buying anything new. Unlike all previous years where I was spending $50 to $80 a week.

They screwed up with DVD players. These things last to long . My Dad still uses the Sony player I got for Xmas 97, and it still works like a champ. Where, we were replacing our VCRs every six months to a year.

[hoff812]

i dont know about all you guys

but i still somehow buy $30 to $50 a week still....when nothing new comes out that i am interested in...i pick up a catalog title or something that is on a good sale....just today i picked up the Live Aid set which was on sale....and picked the transporter and rocky horror picture show on another sale

this should show the studios to make really good catalog releases like the 2 disc warner SEs in order to make us keep buying them

[Drexl]

Originally Posted by hoff812

this should show the studios to make really good catalog releases like the 2 disc warner SEs in order to make us keep buying them

That's what it seems like they're doing. Now that they've run out of big catalog titles (except for TV shows, which are getting released faster now than before), they're re-releasing titles. This year in particular has been filled with quality rereleases.

I know there are many films that have yet to make it to DVD, but I'm talking big titles which appeal to a lot of people.

[Bananaslug79]

I wonder how much TV on DVD impacts the sales figures. I know for one that even if I loved every TV show I could get now on DVD, there's no way I could afford them. I think you have to be pretty hardcore about a show to want every (or nearly every) episode, and for the prices they sell most sets for you could re-buy your DVD player a few times over. Maybe they're over-doing the whole TV thing? Whether it's too many shows (saturation) or just too expensive for most folks.

[Slanter]

Originally Posted by Bananaslug79

I wonder how much TV on DVD impacts the sales figures. I know for one that even if I loved every TV show I could get now on DVD, there's no way I could afford them. I think you have to be pretty hardcore about a show to want every (or nearly every) episode, and for the prices they sell most sets for you could re-buy your DVD player a few times over. Maybe they're over-doing the whole TV thing? Whether it's too many shows (saturation) or just too expensive for most folks.

Good observation. Movies are kinda, par for the course now. Owning a season, is what makes DVDs so great. So hell yeah studios will put out every motherlovin show in history on DVD and charge a lot. Everything from Lost to Buck Rogers. Hell, I'm interested in owning Knight Rider.

[tomdkat]

Originally Posted by reapersaurus

umm.. who gives a crap about a RELATIVE term like "growth"?
Let's talk turkey, and stick with ABSOLUTE numbers if we want to get a picture of an industry.

Anyone got sales figures for DVD's the past 3 years?

I'll bet it'll show the DVD market is not hurting.

I really can't stand when industry reps misinform people with inapplicable statistics just to be negative/scary.

It's not about how "healthy" the market actually is, it's about how healthy it will be in the future to support future revenue projections. Here is an article that kinda shows this.

Originally Posted by Reuters

DreamWorks sees loss, says SEC launches probe

NEW YORK (Reuters) - Film studio DreamWorks Animation SKG Inc. (DWA.N: Quote, Profile, Research) on Monday said it would post a quarterly loss due to disappointing sales of home videos, canceled a stock offering, and said it is the target of a federal securities probe.

Shares of DreamWorks Animation, the producer of animated films like "Shrek," fell 14 percent to their lowest level since it went public in October. It had previously expected to be at break-even for the quarter.

The company went public last year in a hugely popular spinoff from the DreamWorks movie studio started by entertainment moguls Steven Spielberg, Jeffrey Katzenberg and David Geffen.

But since the initial euphoria on Wall Street, the studio had disappointing sales of DVDs of "Shrek 2" in the first quarter and weaker-than-expected box office performance of "Madagascar," which opened over the Memorial Day weekend.

Late last month, DreamWorks rival Pixar Animation Studios Inc. (PIXR.O: Quote, Profile, Research) cut its earnings forecast, citing weaker-than-expected DVD sales for its hit film "The Incredibles."

DreamWorks said it expects a second-quarter loss in the range of 7 cents to 9 cents per share, down from a previous forecast of "no profit." It cut its full-year outlook to a profit of 80 cents to 90 cents a share, down from $1.00 to $1.25 a share previously.

The outlook marked DreamWork's second profit warning in two months. In May, it said full-year results would be hurt by poor video sales of "Shrek 2."

Some analysts believe there is a fundamental change in the way that DVDs are sold at retail stores. Although overall DVD sales have risen, studios are releasing more and more titles, raising the competition for shelf space in stores.

As a result, retailers are quicker to return unsold videos to the studios.

DreamWorks said it reviewing home video sales, retail inventory levels and returns.

"It's too early to come to any conclusions," said DreamWorks Animation Chief Executive Katzenberg in a conference call. "There is a tremendous amount of product in the marketplace. It's obviously much more crowded than it has been before. We don't know if this is a short-term issue of if some larger shift is going on."

JPMorgan analyst Spencer Wang in a research note said that the large Hollywood studios tend to be insulated from the new trend because they can offset the lower sales of individual titles with a greater number of video releases.

Sanders Morris Harris analyst David Miller noted the changing climate for home videos.

"The downward revision underscores how much of an event DVD releases of hit theatrical product have become of late, as any unsold product is immediately returned, rather than marked down at retail and sold at a discount," he said in a note.

DreamWorks also said it will not proceed at this time with a proposed secondary offering of $500 million of its Class A common stock, citing its current share price.

Shares of DreamWorks were down $3.79 at $23.02 in afternoon trade on the New York Stock Exchange, after earlier hitting a record low of $22.90. DreamWorks went public last October at $28 a share and hit a record high of $42.60 in early December.

The planned stock offering was to have involved the sale of shares held by principal shareholders, and would not raise any money for DreamWorks.

DreamWorks also said it has received a request from the Securities and Exchange Commission and is voluntarily complying with an informal inquiry concerning trading in its securities and the disclosure of its financial results on May 10, 2005.

The SEC said the informal investigation should not be construed as an indication that any violations of law have occurred, and DreamWorks said it intends to cooperate fully with the inquiry.

The company has been sued by investors who accused it of artificially inflating the outlook for sales of "Shrek 2" to pump up the share price ahead of the secondary offering.

The name of the game is keeping the stock holders happy and the only way to do that is to keep the stock price up and rising. Given the above, I don't see any "scare tactics" at work. I do see supposedly upset stock holders and a definite need for the studios to revisit and adjust their business strategy when it comes to DVD release of movies.

Peace...

[tomdkat]

Originally Posted by Slanter

Good observation. Movies are kinda, par for the course now. Owning a season, is what makes DVDs so great.

That's just one aspect that makes DVD a "great" phenomenon. There are many others we can't forget or lose sight of.

Peace...

[furthest1]

Originally Posted by Bananaslug79

. I think you have to be pretty hardcore about a show to want every (or nearly every) episode,

I think it also depends on how many season have taken place. For something like 24, with only 3 seasons on DVD now (a fourth coming in august) I can buy that. For somethign like Band of Brothers or Lost (only one) I can also. Something like the simpsons (After 13 I beleive) despite how much I love it, I would have to to pick and choose. When a show is getting above 5 seasons, and each on is about 50-75 dollars, you need to be quite hardcore to be picking up all of them.

[Slanter]

Originally Posted by tomdkat

That's just one aspect that makes DVD a "great" phenomenon. There are many others we can't forget or lose sight of.

Of course. But if you can drop hundreds of bucks or eat up a lot of bandwidth over a period of weeks ( ), then you can own an entire series! I mean, I'd give my left _ to own all seven seasons of Star Trek: TNG and DS9. In my book, thats the most attractive aspect. I mean, go to Best Buy or Planet Replay and view the endlessness.

[JeffHanawalt]

I know my buying habits have levelled off. I just reached 600 titles
on DVD recently, and I would be shocked to see my collection reach
700 titles. I have most of what I really want in my collection, and
now my money situation won't allow me to just go out and buy
something just to buy something (I'm in the process of changing
jobs).

I agree with most of the posters who say that the level off is
logical. Most of the people who would have gotten into DVDs
have done so, players are reliable so you don't have to keep
buying new ones, the "big name" releases are already available,
and I think that high gas prices these days may be a small
factor in this also.

[Iguana Man]

It's very simple actually.....everyone is coming over to my place.

Duhhh!