Optical disc replicator Cineram International announced yesterday it is lopping 300 more jobs from its Olyphant (PA) DVD pressing facility.
[url=http://www.hdtvmagazine.com/columns/2010/08/hdtv-expert-no-fizz-in-the-dvd-biz.php]Read Column[/url]
HDTV Expert - No Fizz In The DVD Biz
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720pete
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Rodolfo
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- Location: Lansdowne VA
"Apparently" missing supporting data
The original article you quote is mainly about migrating jobs (outsourcing for efficiency) not necessarily due to pre-packaged media dying, additionally, the numbers provided on your column are related to number of employees and revenue from the same company, not to the industry, or competitor industries, yet your conclusion of: “It’s apparent that distributors of packaged media have to cut costs drastically to fend off the threat of direct downloads and streaming, along with video on demand.” extends way beyond the specific data.
To properly substantiate the statement I would have provided comparative data with such industries, with other packaged and non-packaged media companies, and also the jobless situation of the country affecting these industries due to the economy, regardless of public’s preference of consuming content.
Ironically, recent reports from the cable industry indicated that VOD is not generating the revenue that was expected, and other reports a few months back showed that downloading and streaming was not as generalized as claimed by some journalism.
In one HDTV conference I attended late last year (link below, which you attended as well) it was reported by a panel of industry experts that IP content viewing was only 1.1% compared to conventional TV viewing; granted, packaged media is not 100% TV content and it may be safe to assume that people view less hours of DVD than TV content, although DVD is also part of the rental business of content consumption, not just for sale:
http://www.hdtvmagazine.com/articles/20 ... le-dtv.php
Your conclusion generalizes “packaged media” on a DVD type of article, but packaged media includes Blu-ray. There is no question that Internet content is a growing contender for content distribution, particularly lower quality image type of content, but an analysis should be made to determine how much Blu-ray as a growing competitor of packaged media is replacing what of the DVD business rather than just growing in a vacuum while DVD slows down for separate reasons. Perhaps Blu-ray is also importing the jobs that this and other DVD companies may have lost. In summary, there are many factors that have to be provided to sustain the conclusion statement even with the “apparent” qualifier in front, if you have such data please kindly provide it as part of the column.
Best Regards,
Rodolfo La Maestra
To properly substantiate the statement I would have provided comparative data with such industries, with other packaged and non-packaged media companies, and also the jobless situation of the country affecting these industries due to the economy, regardless of public’s preference of consuming content.
Ironically, recent reports from the cable industry indicated that VOD is not generating the revenue that was expected, and other reports a few months back showed that downloading and streaming was not as generalized as claimed by some journalism.
In one HDTV conference I attended late last year (link below, which you attended as well) it was reported by a panel of industry experts that IP content viewing was only 1.1% compared to conventional TV viewing; granted, packaged media is not 100% TV content and it may be safe to assume that people view less hours of DVD than TV content, although DVD is also part of the rental business of content consumption, not just for sale:
http://www.hdtvmagazine.com/articles/20 ... le-dtv.php
Your conclusion generalizes “packaged media” on a DVD type of article, but packaged media includes Blu-ray. There is no question that Internet content is a growing contender for content distribution, particularly lower quality image type of content, but an analysis should be made to determine how much Blu-ray as a growing competitor of packaged media is replacing what of the DVD business rather than just growing in a vacuum while DVD slows down for separate reasons. Perhaps Blu-ray is also importing the jobs that this and other DVD companies may have lost. In summary, there are many factors that have to be provided to sustain the conclusion statement even with the “apparent” qualifier in front, if you have such data please kindly provide it as part of the column.
Best Regards,
Rodolfo La Maestra
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720pete
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From M&E Daily
I'm posting this story as it came from Media and Entertainment Daily. Hopefully the links will hold up.
The tracking info comes from the Digital Entertainment Group, which is the industry advocate and biggest cheerleader for Blu-ray.
Also, you should check out Adams Media Research. They have done extensive measurements of DVD rentals and sales for years. The decline in DVD packaged media sales is real and measurable, and started back in 2005.
Note that the DEG info states that 77 million Blu-ray discs were shipped, but does not say how many units were sold or rented - only an overall dollar figure.
Also, the DEG report does not specify how many BD-equipped players and STBs are actually being used to watch Blu-ray discs.
As for the story, the point is that Warner Home Media is outsourcing DVD replication to Mexico. The logical conclusion is that manufacturing costs are too high. If you look at the decline in DVD rentals and sales in both units and total revenue, you can easily draw the conclusion that per-disc manufacturing costs must come down. When DVDs were selling for $20 a pop, none of this was an issue (as recently as 2005, Cinram was adding manufacturing staff).
Now that sales are in the tank and rental revenue is also declining (again, check Adams Media Research for solid numbers), and Blockbuster stores are closing left and right, and Redbox is cannibalizing the business with $1 per night rentals (and $1.50 per night Blu-ray rentals), there will be even greater pressure to drop manufacturing and distribution costs.
Reed Hastings of Netflix says they will be completely out of the physical disc rental business by the end of this decade, and much sooner if he can pull it off. They are moving to an all-streaming model.
The DEG numbers you see below support his course of action. It's pretty clear from Adams trends, DEG releases, and other news stories that the best days of optical media formats have passed, and that we are moving to all-digital content distribution, probably with a cloud-like architecture.
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Digital Distribution Edges Blu-ray In First Half of 2010
July 19, 2010 • Posted in M&E Daily, M&E Exclusive
Digital distribution platforms for home entertainment (including video-on-demand) outpaced Blu-ray Disc in consumer spending during the first half of 2010, passing the $1 billion mark for the first time, according to new figures released by DEG: The Digital Entertainment Group.
Electronic sell-through increased up 37% year-over-year to $285 million between January and June, as video-on-demand (VOD) rose 19% to $865 million, for a combined growth of 23% to $1.1 billion.
Sales and rentals of Blu-ray discs, reached a combined total of $982 million for the six-month period. Blu-ray sell-through increased 84% year-over-year to $733 million during the half.
Blu-ray disc shipments topped 77 million units in the first half of 2010, nearly double the number of the comparable period in 2009, according to figures compiled by Swicker & Associates on behalf of the DEG. Household penetration of all Blu-ray compatible devices, including set-top players, PC drives and PlayStation 3 consoles, has now reached 19.4 million U.S. homes.
Overall consumer spending for the first half of 2010 in the home entertainment window for pre-recorded entertainment — which includes DVD, Blu-ray Disc and digital distribution — reached $8.8 billion, off 3% compared to the same period in 2009. Yet consumer transactions for home entertainment products were up 2% for the first half of the year, DEG says.
Packaged media sell-through, which includes DVD and Blu-ray Disc, declined 7% year-over-year during the half. But the rate of decline slowed to 3% during the second quarter.
Rental spending was down nearly 5% to about $3 billion between January and June, says DEG (citing Rentrak Corp.’s Home Video Essentials). The trade group faults Movie Gallery store closures for the decline, while noting that kiosk revenues increased 55% during the six-month period.
The tracking info comes from the Digital Entertainment Group, which is the industry advocate and biggest cheerleader for Blu-ray.
Also, you should check out Adams Media Research. They have done extensive measurements of DVD rentals and sales for years. The decline in DVD packaged media sales is real and measurable, and started back in 2005.
Note that the DEG info states that 77 million Blu-ray discs were shipped, but does not say how many units were sold or rented - only an overall dollar figure.
Also, the DEG report does not specify how many BD-equipped players and STBs are actually being used to watch Blu-ray discs.
As for the story, the point is that Warner Home Media is outsourcing DVD replication to Mexico. The logical conclusion is that manufacturing costs are too high. If you look at the decline in DVD rentals and sales in both units and total revenue, you can easily draw the conclusion that per-disc manufacturing costs must come down. When DVDs were selling for $20 a pop, none of this was an issue (as recently as 2005, Cinram was adding manufacturing staff).
Now that sales are in the tank and rental revenue is also declining (again, check Adams Media Research for solid numbers), and Blockbuster stores are closing left and right, and Redbox is cannibalizing the business with $1 per night rentals (and $1.50 per night Blu-ray rentals), there will be even greater pressure to drop manufacturing and distribution costs.
Reed Hastings of Netflix says they will be completely out of the physical disc rental business by the end of this decade, and much sooner if he can pull it off. They are moving to an all-streaming model.
The DEG numbers you see below support his course of action. It's pretty clear from Adams trends, DEG releases, and other news stories that the best days of optical media formats have passed, and that we are moving to all-digital content distribution, probably with a cloud-like architecture.
****************************************************
Digital Distribution Edges Blu-ray In First Half of 2010
July 19, 2010 • Posted in M&E Daily, M&E Exclusive
Digital distribution platforms for home entertainment (including video-on-demand) outpaced Blu-ray Disc in consumer spending during the first half of 2010, passing the $1 billion mark for the first time, according to new figures released by DEG: The Digital Entertainment Group.
Electronic sell-through increased up 37% year-over-year to $285 million between January and June, as video-on-demand (VOD) rose 19% to $865 million, for a combined growth of 23% to $1.1 billion.
Sales and rentals of Blu-ray discs, reached a combined total of $982 million for the six-month period. Blu-ray sell-through increased 84% year-over-year to $733 million during the half.
Blu-ray disc shipments topped 77 million units in the first half of 2010, nearly double the number of the comparable period in 2009, according to figures compiled by Swicker & Associates on behalf of the DEG. Household penetration of all Blu-ray compatible devices, including set-top players, PC drives and PlayStation 3 consoles, has now reached 19.4 million U.S. homes.
Overall consumer spending for the first half of 2010 in the home entertainment window for pre-recorded entertainment — which includes DVD, Blu-ray Disc and digital distribution — reached $8.8 billion, off 3% compared to the same period in 2009. Yet consumer transactions for home entertainment products were up 2% for the first half of the year, DEG says.
Packaged media sell-through, which includes DVD and Blu-ray Disc, declined 7% year-over-year during the half. But the rate of decline slowed to 3% during the second quarter.
Rental spending was down nearly 5% to about $3 billion between January and June, says DEG (citing Rentrak Corp.’s Home Video Essentials). The trade group faults Movie Gallery store closures for the decline, while noting that kiosk revenues increased 55% during the six-month period.
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Rodolfo
- Author
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- Joined: Wed Sep 01, 2004 8:46 pm
- Location: Lansdowne VA
More data seems better than less, but not always
Thanks Pete for providing additional research data to help readers understand your column’s conclusion even when the text covered Cinram's outsourcing for efficiency, a DVD replicator company.
There are two options now:
1) Leave the original column as it is and assume the reader has the capability to make his/her own analysis making sense of the data added in the comments thread (if the reader gets to read the comments), or
2) Make a new column properly analyzing the relevant data to match (or not) with the original conclusion about general packaged media (not just DVD). Then adjust the conclusion of this original column to fit the actual problem of this company, perhaps to read like this: “although DVD revenue increased for this company, the company’s pricing turned to be unacceptable to Warner and the contract was awarded to other company with more efficient operation; although the decline of DVD sales could have contributed to this event, maximizing efficiency is business as usual on every company even with products in high consumer demand.”
Regarding the data from research companies and how it is used in journalism, the individual statistics lack inter-media comparative analysis:
The statistics are shown mostly isolated from each other. They individually count DVD sales, download sales, Blu-ray sales, etc. and report how each grew (or went down) compared to their past in $ and #. The statements generally lack the necessary comparative analysis to report how much the public actually shifted which purchases to a competing distribution method and how the economy of the country could have affected purchases in quantitative terms. Therefore, assumptions are made based on parallel behaviors that could not be necessarily connected 100%.
For example: DVDs efforts/markets/jobs/revenues may be shifting to Blu-ray’s +- $1 billion per semester (like laserdisc did to DVD) showing an 84% yearly growth (your numbers), but the shifting may not be affecting the overall packaged media business; or the shifting is to non-packaged media, or to both, in what proportion; or DVD is just declining in a vacuum regardless of the consumer preference of content distribution. Only then it could be substantiated how packaged media (or just DVD) is shifting toward online distribution, or not, and experiencing which trend.
To produce a useful comparative analysis for certain conclusions the right questions to the public or businesses must be asked by research firms, not only gather how many DVDs were distributed/purchased last year. For example: how many DVDs a consumer did NOT buy because it was preferred a Blu-ray or a download “instead” (and for what reason), or did not buy because no replacement was preferred (i.e. does not like/need/afford Blu-ray, is not comfortable/familiarized with downloaded media, etc.) and stopped buying DVDs, showing the shrinking of DVD in isolation without transferring the business opportunity to competitors, packaged or not. If that analysis is not provided punch lines based on a limited view of sample data give the appearance of personal choice, and journalism becomes less useful to the public.
Best Regards,
Rodolfo La Maestra
There are two options now:
1) Leave the original column as it is and assume the reader has the capability to make his/her own analysis making sense of the data added in the comments thread (if the reader gets to read the comments), or
2) Make a new column properly analyzing the relevant data to match (or not) with the original conclusion about general packaged media (not just DVD). Then adjust the conclusion of this original column to fit the actual problem of this company, perhaps to read like this: “although DVD revenue increased for this company, the company’s pricing turned to be unacceptable to Warner and the contract was awarded to other company with more efficient operation; although the decline of DVD sales could have contributed to this event, maximizing efficiency is business as usual on every company even with products in high consumer demand.”
Regarding the data from research companies and how it is used in journalism, the individual statistics lack inter-media comparative analysis:
The statistics are shown mostly isolated from each other. They individually count DVD sales, download sales, Blu-ray sales, etc. and report how each grew (or went down) compared to their past in $ and #. The statements generally lack the necessary comparative analysis to report how much the public actually shifted which purchases to a competing distribution method and how the economy of the country could have affected purchases in quantitative terms. Therefore, assumptions are made based on parallel behaviors that could not be necessarily connected 100%.
For example: DVDs efforts/markets/jobs/revenues may be shifting to Blu-ray’s +- $1 billion per semester (like laserdisc did to DVD) showing an 84% yearly growth (your numbers), but the shifting may not be affecting the overall packaged media business; or the shifting is to non-packaged media, or to both, in what proportion; or DVD is just declining in a vacuum regardless of the consumer preference of content distribution. Only then it could be substantiated how packaged media (or just DVD) is shifting toward online distribution, or not, and experiencing which trend.
To produce a useful comparative analysis for certain conclusions the right questions to the public or businesses must be asked by research firms, not only gather how many DVDs were distributed/purchased last year. For example: how many DVDs a consumer did NOT buy because it was preferred a Blu-ray or a download “instead” (and for what reason), or did not buy because no replacement was preferred (i.e. does not like/need/afford Blu-ray, is not comfortable/familiarized with downloaded media, etc.) and stopped buying DVDs, showing the shrinking of DVD in isolation without transferring the business opportunity to competitors, packaged or not. If that analysis is not provided punch lines based on a limited view of sample data give the appearance of personal choice, and journalism becomes less useful to the public.
Best Regards,
Rodolfo La Maestra