The pendulum continues to swing away from the traditional sales and rental models preferred by the studios and towards the cheapness and convenience of Redbox and company. According to the Digital Entertainment Group, DVD sales plummeted 13.5% during the first half of 2009, while, DVD rentals rose by 8.3%.
“We fear that the industry will be trading sell-through dollars for rental pennies from here on out,” said Michael Nathanson, analyst at Sanford C. Bernstein, in a note to clients last week.
And as we all know, it’s not just declining sales that have the movie studios playing nasty with Redbox. Consumers are demonstrating their preference for cheaper, more convenient rentals more strongly than ever.
“Within physical rental, we think the advances of Redbox and Netflix are potentially understated by the data,” Nathanson of Bernstein wrote. “A bottoms-up view of the first half of 2009 underscores the continued shift away from traditional, in-store rental and toward Redbox and Netflix.”
Even with the sales numbers in their supple, moist hands, I don’t think most studio execs are going to embrace the new zeitgeist and look for innovative ways to take advantage of it. I do need to add that there are, thankfully, still one or two clear thinkers in Hollywood.
Burying your head in the sand and clinging to a dying business model is exactly what happened to the music industry earlier this decade. Hollywood execs should ask their buddies in the record business how well resisting change and ignoring customer trends worked out for them. I believe many of them can now be found working at McDonald’s stores that contain a—wait for it—Redbox. See how life serves up such tasty little ironies sometimes, Insiders? Your comments below, please.
[via The Wall Street Journal]