iTunes movie rentals, unlimited Netflix downloads, Blu-ray finally pulling ahead—all this stuff has been making me think about the ways we'll get movies in the near future and what format may become the true heir of DVD. Especially the Netflix downloads. I've been really taking advantage of those.
It's not my aim to declare a winner or anything silly like that. There are wildly different price points and distribution permissions. But in the interest of better understanding the market as it is today, I've been talking to some companies as well as pulling some numbers out of press releases and news stories, trying to get some general state of the movie and television distribution market.
Here's how I worked up the numbers and let me warn you: many of these numbers are totally made up. I tried to come up with the numbers conservatively, but some companies do not make their numbers public, while others may have published figures that I just ended up missing. By all means, if you've got more solid numbers or criticisms of my formulae to add, please do so.
These were fairly easy. Jobs said at Macworld that they've sold 7 million movies and 125 million TV shows since they started selling in iTunes over two years ago. I'm going to presume an increasing number of video-capable iPods and more content on iTunes as well as a natural curve up for a new service would put, say, half of those numbers in 2007. I'm trying to just focus on movies, so we'll say 3.5 million.
Netflix confirmed to me that they had 5 million digital download views in June when they threw the doors to the service open to all customers. Six weeks later they had 10 million views. After that they wouldn't share any more data. So let's call it five million a month for the rest of the year, for a total of 30 million views.
(Interestingly, Netflix really wanted to underline that they make no distinction between the mailed discs and the streaming content now. "The service is Netflix. DVDs by mail and streaming are features of the Netflix service.")
• Microsoft Xbox
You can download HD movies and television on Xbox Live Marketplace, but Microsoft declined to share sales numbers with me.
• Comcast Video on Demand
According to this press release rewrite, Comcast's VOC had "1 billion hours of on-demand content watched this year alone, with 250 million views each month and 100 views each second." This included "205 million free movies; 376 million kids shows; 449 million music videos and programs; and 62 million sports and fitness programs." So, say, 3 billion views a year, but let's focus primarily on the movies, so 205 million.
Software sales were reported by the Blu-ray Disc Association as 5.6 million units.
• HD DVD
I couldn't get HD DVD unit sales back in time, but the Blu-ray camps says their discs sold 2:1 with HD DVD last year, so let's take half of the Blu-ray numbers and call HD DVD 2.8 million units.
Variety reported DVD sales at $16 billion, with rentals at $7.5 billion. Obviously DVD sales continue to be the dominant vector for movies in the home. Those numbers are solid, but I'm now going to extrapolate some unit sales out of those which will not be. Let's say $16 a disc for sales, $5 a disc for rentals. That gives us...1 billion DVD sales or so and 1.5 billion rentals.
I told you I wasn't going to make any! Fine.
Obviously, DVD is still the clear champion. And while it's not fair to compare the streaming services to disc or iTunes downloads, I'm surprised at how many Comcast customers are watching video on demand. That's sort of crazy.
Blu-ray sales should pick up now that HD DVD is on the way out, but it still looks like digital distribution services (even leaving out Comcast) are going to grow right alongside high definition disc sales. HD optical discs will probably do fine as a niche product this generation, augmenting DVD as the catalogs are updated over the next decade, but (and here comes some crazy-yet-obvious guessing) this generation is probably it for optical discs. After the transition to Blu-ray was handled so poorly for customers, I sort of doubt anyone is going to want to make another transition to a higher fidelity disc, even in ten years. And obviously people are fine watching content that is even lower quality than DVD if they can get it quickly and easily.