DVDs Still Rule Supreme For Paid Video Content

DVDs Still Rule Supreme For Paid Video Content

There should be no doubt that streaming video is quickly gaining in popularity. Recent studies shows that about 20 percent of U.S. households are watching TV online. Hulu has quickly grown to be the eighth-largest video site in the U.S., and it is even hosting a number of TV season premiers before the shows' officially broadcast dates. A new video search site, VideoSurf has recently sprung up, leveraging the mounting mountain of disparate online videos. Even Internet veteran, IMDb.com, has finally embraced streaming video and added the ability to view of 6,000 movies and TV shows.

 
 Credit: HDTV on the Dish
If there is one constant to be found among these online video sources, it is that the video content is free. (Albeit, one might argue that the "price" to watch this free content is having to sit though commercials.) When it comes to paying for video content, America's preference is still overwhelming to keep it offline. A study of 11,000 consumers recently conducted by market research company, NPD Group, found that less than one percent of the money U.S. consumers spent on paid movie and TV content was used towards online-based content. When it comes to plunking down cash for watching movies and TV shows, "U.S. consumers spend $8 out of every $10 of their budgets buying or renting DVDs."

As to how U.S. consumers are divvying up their movie and TV show purchases, the NDP study breaks it down like this:
  • DVD movie purchases: 41 percent
  • DVD rentals (including video-subscription services, such as Netflix): 29 percent
  • DVD TV show purchases: 11 percent
  • Movie tickets: 18 percent
  • Purchasing or renting digital movies or TV shows online: 0.5 percent

As to how U.S. consumers says they "watched a full-length movie in the past three months," the study indicates:
  • Watched a DVD they owned: 67 percent
  • Watched a rented DVD: 50 percent
  • Watched video-on-demand: 18 percent
  • Watched a movie on their portable media devices: 8 percent
  • "Downloaded a movie from a free file-sharing service and watched on a computer or television": 6 percent
  • "Paid for a digital video download from the Web": 2 percent

"Though the near-term talk of a digital revolution is probably overblown, as we've seen previously in the music industry, new content delivery sources can quickly take root among consumers. That's why many home video companies are aggressively pursuing digital strategies, because the inflection point will come – it's just not coming tomorrow." -- NPD Group Senior Industry Analyst for entertainment, Russ Crupnick

As to when this "inflection point" will come, is hard to say. It is difficult to beat the ease-of-use of popping a DVD into a potentially inexpensive DVD player and knowing that it will just work. Online video suffers from a bevy of incompatible formats, multiple codecs, and DRM issues that can make it a technical challenge getting videos to play back properly on a wide variety of potentially expensive computers and devices. And while more high definition content is becoming available online (such as TV shows in HD format on iTunes), often the quality of these "HD" videos still pale in comparison against what you get with good old DVD movies. The challenge is that as image quality increases, so does the size of the file being downloaded. Larger file sizes mean waiting longer for a download to reach a point where you can actually start watching a video uninterrupted. And with Internet service providers (ISPs) such as Comcast starting to put caps on how much data users can download, there might be some very physicals limit as to how much HD video content users can consume without facing the strong arm of their gigabyte-counting ISPs. Until this torrid mess can be worked it, DVD movies will continue to reign supreme.
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