Video Rentals Outsell Purchases, but What Does That Indicate?

· Joanthan Poritsky

Ben Fritz for the [L.A. Times]( /consumers-now-spending-more-renting-movies-than-buying-them.html):

New data released Friday by the Digital Entertainment Group, an industry trade association, showed that people spent $4.2 billion renting movies in the first six months of 2011, compared with $4.1 billion buying them on disc or via digital download.

Most of the data cited in the article shows that people are more likely to subscribe to services like Netflix than they are to purchase a physical disc or a digital download. Sneaked in at the end of the article, however, is this tidbit:

Total spending on Blu-ray increased 10% in the first half of this year.

Also, in the DEG’s report ([PDF]( EG_MID_YEAR_2011_REPORT.pdf)):

In the second quarter, the number of Blu-ray homes grew 16 percent over 2010 (inclusive of [Blu-ray Disc] set-tops, PS3s and [Home Theaters in a Box],) bringing the total household penetration of all Blu-ray compatible devices to more than 31.6 million U.S. homes.

All of this put together leads me to believe that the L.A. Times’ headline, “Consumers now spending more renting movies than buying them,” is only half the story. Viewers are making it clear that they prefer the convenience of subscription services, but they are also showing a willingness to embrace higher quality distribution. This suggests that people only want to own movies that look incredible on their HDTVs. While Netflix’s HD streaming looks good, Blu-rays look better. Plus, subscription streaming services still have paltry HD offerings.

What I don’t understand is why Hollywood has been biding its time with Blu- ray. The format war ended in 2008, yet I have only found a single store (the Upper East Side Barnes & Noble) that actually keeps Blu-rays organized by genre instead of alphabetically. Best Buy even still keeps them segregated from the well organized DVD selection, tucked away like some kind of second class disc. Consumers have gone not just to the better deal, but the more fun experience. Looking for what to watch on Netflix is enjoyable, especially given the company’s varied categories.1 That layer of discovery has been removed from picking out Blu-ray discs.

Finally, I’d like to answer the question “Who cares about any of this besides studio executives?”2 The main thing everyone should be on the lookout for is giving away a good thing. The other day I wrote that I feel like [filmmakers rushed into digital moviemaking]( star/) at the expense of celluloid film. It’s extremely difficult to revive a format once it’s gone3 and DVD and Blu-ray will go the way of the dodo if consumers aren’t supporting it. We should always be looking to the future and embracing new technologies, but when the quality is lower and the selection more scant, we might find ourselves without a way to find great looking home video at some point. Blu-ray may be the last physical format we ever welcome into our homes. Here’s hoping that whatever succeeds it doesn’t do so at the cost of quality.4

  1. Apparently I like “Mind-bending Independent Thrillers” and “Violent Foreign Sci-Fi & Fantasy”. ↩︎

  2. The reason this is new is because movie studios care. Subscription deals are far less lucrative than DVD/Blu-ray sales. But no one really cares if poor Hollywood is counting beans on an $8+ billion industry. That’s their problem. ↩︎

  3. Just look at Polaroid↩︎

  4. It probably will. When it finally comes down to cost versus quality, I think we know which direction consumers lean. ↩︎