The basic idea is that Hollywood is suffering because of the loss of DVD sales. That DVD sales have dropped tremendously is believable. However, the DVD era couldn’t have stretched out past a decade. Twister was the first major film to be released on DVD, so we’re talking eleven or twelve years before the “bad” years mentioned in the article. That’s a bubble, not an established revenue source.
Before DVD came along, studios were only just beginning to explore selling video tapes directly to the consumer, divided between modern classics that people would want to watch again and again and underperformers that needed a little extra return squeezed out.
In my mind, this is the same issue as immigration reform. Hollywood’s reliance on a brand-new source of income is like relying on cheap labor that can only come from across the border: a fake picture of the industry. If prices are cheap because of illegal workers, then prices are artificially cheap. If a new revenue source has added 40% to your income in a couple of years, you’d better take a good look at it. It seems too good to be true.
What’s most pathetic about this sob story is that the movie industry had many years before consumers could transfer audio-visual media across the net. The Napster revolution was in 1999; I didn’t download my first film until late 2004. Films are encoded on DVDs just like music is encoded on CDs, only larger. Fair warning to figure out what their business is before the physical market disappeared.
Hollywood is in the business of developing and promoting content. Their money doesn’t come from DVD sales or ticket sales, exactly; it comes from selling content to warmed customers. It’s time for them to scale down their expectations; after all, a 10%--or even 6%--overall profit is really good. Supermarkets make about 1% and they’re patronized by everyone.
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