Daily Archives: July 19, 2008

The $20 billion dollar game

While the labor situation in Hollywood has focused everyone’s attention on the future new media environment, when it comes to cold hard cash, packaged media still rules the roost.
Here is a summary of some recent numbers:

“U.S. [c]onsumer spending on DVDs and Blu-ray in the first six months of the year for purchases and rentals was up 1.6 per cent from spending in the first half of 2007, according to Home Media Magazine’s market research department. The first half of 2008 tally: $10.77 billion U.S., compared with $10.6 billion U.S. a year ago.

“Spending on disc purchases rose 1.1 per cent, to $6.87 billion U.S. from $6.8 billion U.S.. Rental spending rose 2.6 per cent to $3.9 billion U.S. from $3.8 billion U.S., according to the trade publication.”
While it has become customary to assume that digital downloading will easily replace packaged media many analysts point out that most consumers have more time than technological savvy and so continue to choose packaged media, especially as the experience becomes stronger with Blu-Ray and HD.
Here is how one analyst put it:
“Most [Wall Street] analysts are techno-geeks with plenty of money and not much time, while most Americans are not technically savvy, and they have plenty of time but not much money,” said Adams, president of Adams Media Research.
“The fact is, despite what many on Wall Street seem to think, there is very little digital downloading going on. We’re talking about $118 million (U.S.) in 2007 spending, and about $254 million (U.S.) this year – so against a $24 billion (U.S.) packaged media market it’s really not making much of a dent at this point.”
So packaged media continues to outpace digital downloading by a factor of 100!
Concern about unionizing the new media environment is certainly understandable but the decision of the Guilds to drop the demand for a restructuring of DVD revenue sharing meant that the lion’s share of the digital world was off the table in this year’s bargaining.