Will movies downloaded from the Internet eliminate the global market for DVDs? As baseball great Yogi Berra might say, rumours of DVD's demise are highly exaggerated.
Global demand for DVDs should remain robust for at least five years.
Face it. People love a DVD's packaging as well as its extras and bonus features.
DVDs allow us to:
- Easily transport the content;
- Give tangible, relatively inexpensive gifts; and,
- Build our own DVD entertainment libraries.
With high-speed Internet access, users can download an average quality movie from the Web in about two hours. Often the movie files just stay on the computer's hard drive, unless the user owns a DVD burner. Downloading from the Internet involves risks including viruses, spyware and anti-piracy penalties.
Next-generation, high definition DVD formats (HD-DVD and Blu-ray) allow consumers to experience high-quality entertainment experiences on their high-definition televisions.
Besides, DVDs are the largest source of revenues for movie studios, driving over 56% of sales for a typical box-office movie. According to the Motion Picture Association of America, U.S. consumers spent $24 billion or nearly three times as much on home video products than at theatre box offices.
Think of the DVD ads and displays that WalMart uses to entice customers to visit their stores. DVDs are a significant source of profitability that drives traffic into big-box retailers. Behemoths like WalMart have considerable say in insuring that demand for DVD stays strong.
And The Winner Is... Headquartered in Toronto, Canada, Cinram International (CRW:TSX) is the world's largest independent provider of pre-recorded multimedia products. In 2005, 67% of Cinram's revenue originated in the U.S. and Mexico, with 26% generated in Europe and 7% in Canada. In 2005 Cinram's revenue exceeded US$2 billion. Cinram's clients include Warner Home Video, Twentieth Century Fox, Lions Gate Films and MGM.
Movies that Cinram published to DVD include A History of Violence, Wedding Crashers, Brokeback Mountain and Capote.
Cinram should be fine for the near future. It is highly unlikely that DVDs will go the way of vinyl records and eight-track cassettes any time soon.
