An article in the New York Times today documents the huge profits that movie studios are generating from the rental and sale of DVDs. According to the article:
Not since the advent of the videocassette in the mid-1980’s has the movie industry enjoyed such a windfall from a new product. And just as video caused a seismic shift two decades ago, the success of the DVD is altering priorities and the balance of power in the making of popular culture. And industry players, starting with the Writers Guild, are lining up to claim their share.
There’s good cause. Between January and mid-March this year, Americans spent $1.78 billion at the box office. But in the same period they spent $4.8 billion– more than $3 billion more– to buy and rent DVD’s and videocassettes.
The article cites as an example, the 1999 movie from 20th Century Fox called Office Space. This movie made only $10 million in theatrical release, but is said to be a hit on DVD. At this writing, Office Space has a DVD sales rank of 98 on Amazon.com , meaning that only 97 DVDs sell are selling more quickly than it is.
It’s hard to reconcile the picture that the Times paints of a movie industry awash in profits with their stance on DVD burner deployment in home theater systems. A couple of weeks ago, Operation Gadget reported on movie and TV industry opposition to DVD burners in settop boxes and the effort these industries are making to cripple any devices that actually ship to cable and satellite TV customers.
My view is that people will continue to buy DVDs as gifts for friends and family as long as prices are low, titles remain available, and a steady stream of entertaining programming continues to be produced. In the next few months, I’d like to pick up copies of Miracle and The Apprentice TV Series. I’d also like to replace some of my favorite movies that I have previously purchased on VHS. So, I imagine I am going to spend $100 or more on DVDs in the next two or three months. That represents a lot of money when you extrapolate to the revenue that will be produced across the country.
I think there are major differences between the movie and TV industries and commercial software and popular music, where piracy is thought to be widespread. The movie and TV industries need to focus on filling the distribution channel with innovative products, including entire series of episodes of popular TV programs. If they emphasize this and back off on the notion that the average TV watcher is a pirate waiting for network attached storage prices to come down, they will make more money than they know how to use.