AfterDawn: News

Sorry digital downloads, physical media is still king

According to a new NPD Group study, physical media is still king despite the flat growth of standard definition DVD sales, and digital downloads will continue to lag behind.

The report says the average U.S. consumer will spend 80 percent of his entertainment budget on buying or renting physical media (DVD, Blu-ray) and that only 0.5% of the average American's entertainment budget is spent on digital downloads (full downloads, streaming of movies or TV).



The results were based on answers from 11,000 consumers and was presented yesterday at the DisplaySearch HDTV 2008 conference in LA.

“Everyone is guessing when video on demand (VOD) and digital downloads will spell the end for packaged media,” said Russ Crupnick, senior industry analyst for entertainment with The NPD Group. "At this point, digital video is still an extremely small part of overall consumer entertainment spending."

To get more specific, the report showed that of of money budgeted for movies and video, 41 percent was spent on purchasing DVDs/Blu-rays, 29 percent was spent on DVD rentals (most notably Netflix), 18 percent was spent on going out to the movie theaters, while the remaining percentage was spent on buying TV boxsets on DVD/Blu-ray.

How did the average consumer watch a full-length movie in the past three months? 67 percent watched a DVD/Blu-ray they already owned, 50 percent rented, and 18 percent opted for Video-on-Demand. Only 2 percent paid for a digital download from services such as iTunes or Amazon VOD.

Written by: Andre Yoskowitz @ 17 Sep 2008 15:31

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• 22 comments

• defgod

  Someones percentages are a little off because if you add them up you get %137.

  17.9.2008 16:21 #1

• snardos

  I think it is pretty obvious that physical media will be ahead of downloads for a long time to come. At present, affordable internet connections are just too slow and it seems that bandwidth caps keep getting lower and lower. Basic high speed now has a 2GB/month cap in Ontario. And high speed connections are only available if you live within 5 km of a large town, so that alone reduces the number of possible customers.

  17.9.2008 16:27 #2

• eatsushi

  Originally posted by defgod: Someones percentages are a little off because if you add them up you get %137.It's a survey question where you can have multiple answers.
  
  For example if you watched a DVD you owned and you also rented then you will be part of the 67% and the 50%.
  
  If you rented a movie on DVD and you also ordered from Amazon VOD then you'll be part of the 50% and the 2%.
  
  Some people just have multiple methods of watching movies so naturally the totals won't add up to 100%.

  17.9.2008 16:31 #3

• Pop_Smith

  As snardos mentioned, maybe if Comcrap and other ISPs wouldn't throw bandwidth caps at its customers than digital downloads could grow more.
  
  However, with "If you go over your cap twice you are gone for a year" threats made to customers it will be quite a while before digital downloads replace optical media.

  17.9.2008 17:09 #4

• 1bonehead

  Originally posted by Pop_Smith: As snardos mentioned, maybe if Comcrap and other ISPs wouldn't throw bandwidth caps at its customers than digital downloads could grow more.
  
  However, with "If you go over your cap twice you are gone for a year" threats made to customers it will be quite a while before digital downloads replace optical media.
  This will stifle downloads and make physical media king by default
  

  The BPI Are: SONY, UNIVERSAL, WARNER GROUP, EMI.
  The RIAA Soundexchange Are: SONY, UNIVERSAL, WARNER GROUP, EMI.
  The IFPI Are: The same anti consumer lot as listed above!
  The MPAA Are: SONY, UNIVERSAL, WARNER GROUP, DISNEY, PARAMOUNT, FOX.

  17.9.2008 17:41 #5

• windsong

  Steam is fine for people who dont mind being at the mercy of Valve's servers, but other people want to keep something physical, and have the ability to resell their item, not to mention having a physical box, manual, map, trinkets, etc.
  
  Then there are the mega-corporations with usage based billing and INSANE download caps.
  
  Digital downloads? Maybe in 2090.

  17.9.2008 18:43 #6

• DVDBack23

  Quote:Originally posted by defgod: Someones percentages are a little off because if you add them up you get %137.It's a survey question where you can have multiple answers.Correct.

  17.9.2008 18:46 #7

• 1bonehead

  Originally posted by windsong:
  Digital downloads? Maybe in 2090.
  That soon ???
  

  The BPI Are: SONY, UNIVERSAL, WARNER GROUP, EMI.
  The RIAA Soundexchange Are: SONY, UNIVERSAL, WARNER GROUP, EMI.
  The IFPI Are: The same anti consumer lot as listed above!
  The MPAA Are: SONY, UNIVERSAL, WARNER GROUP, DISNEY, PARAMOUNT, FOX.

  17.9.2008 18:48 #8

• craftyzan

  Physical media will be king. It will be king so long as DVD's are almost as cheap to mail as paper and blank spindles of CD's cost as much as high end paper.
  
  Broadband caps, slow connections, and choppy video streams will keep the DVD's flying around for decades to come. That goes for home movies too. Why bump a broadband cap or choke on a slow connection to send a high def home flick of the romping pooch when $0.45 can send a DVD across the country?

  17.9.2008 19:06 #9

• Leningrad

  F*uck digital downloads, why the hell did i buy a 40 GB HDD? So that i can burn the damn thing on a disk, rather than on the HDD? cuz it could always crash!!

  17.9.2008 19:19 #10

• pensfan12

  Originally posted by Pop_Smith: As snardos mentioned, maybe if Comcrap and other ISPs wouldn't throw bandwidth caps at its customers than digital downloads could grow more.
  
  However, with "If you go over your cap twice you are gone for a year" threats made to customers it will be quite a while before digital downloads replace optical media.
  Finally, a real advantage of Comcast's throttling!

  17.9.2008 20:30 #11

• fungyo

  Pirated movies are a popular digital download. Could be because you get DRM free files, no commercials and no misleading anti-piracy warnings.
  Consumers have spoken many times, we don't want DRM on our digital media.
  Legit download services fall short of what consumers want. If they continue to sell anti-consumer digital media, it will be rejected.
  
  PLus as has been said above, broadband sucks in a lot of countries. Australia doesn't have an option to download digital media, as most people are on Bigponds restrictive broadband services.
  For a lot of aussies, the affordable Bigpond broadband service only allows 400-500mb per month d/l. Both downloads and uploads are counted, so thats 200-250 each way.
  What the hell can you download on that?

  18.9.2008 00:01 #12

• kyo28

  I think digital downloads and physical media will always co-exist, but physical media will mostly likely be prefered choice of customers.

  18.9.2008 03:17 #13

• gallagher

  That is because you rarely have to worry about having codecs and drm and other trash with a dvd or other physical medium. The file of choice today is out the window tomorrow and the quality of these downloads mostly sucks.

  18.9.2008 03:32 #14

• lamain

  A few things:
  
  1:Quote:29 percent was spent on DVD rentals (most notably Netflix) I am part of this % but I use the Video-on-Demand more then the DVDs.
  
  2: the #1 reason I do not use Video-on-Demand every time is there is no place to do it for the right amount of money and selection. If netflix had every movie they have on DVD also on Video-on-Demand I would be in heaven. each night I could watch anything I wanted. No more planing on what to watch ahead of time or going on the late night drives to pick out a DVD.
  
  As long as places like Amozon, Hulu, and Netflix have a very limited selection of movies for Video-on-Demand then it is a given that DVDs will be king.

  18.9.2008 03:54 #15

• gallagher

  I agree. Nowadays, they should have these movies ready for download the moment they release the DVD. In fact, they should have it the moment the movie comes out, but no that would be taboo--who could ever think about taking away from the rip-off movie theaters' profits?
  
  The selection for Netflix does suck. I watch them sometimes, but it is hard to find one worth watching.

  18.9.2008 04:50 #16

• redux79

  Originally posted by gallagher: The selection for Netflix does suck. I watch them sometimes, but it is hard to find one worth watching.The watch now selection is rather small but it is steadily growing. I have about 100 movies in my netlix queue and in the past couple of months 5 of them have become available for streaming. 5 out of 100 isn't bad but they are mostly low budget movies.
  
  Think about it if they started streaming big budget new releases their servers would crash. They would then have to have a PPV streaming service in order to keep up with ever increasing demands on their servers.
  
  The streaming netflix movies are mostly b rate horror flicks that I wouldn't want to wait 3 days for only to find out how laughably bad they are. On the other hand streaming it for free with out taking up room in my queue is a much more tempting option. The other large bonus for me is the MS netflix partnership for streaming, all I have to do is run a cat5 cable to any tv in my house and I’ll have instant streaming through my 360. That’s much more convenient and cost effective than setting up even a low budget htpc.

  18.9.2008 08:34 #17

• gnovak1

  I like DVDs because you pay for them once and you can watch them again and again for the rest of your life.
  
  But digital downloads will cost us constant monthly fees.

  18.9.2008 09:51 #18

• BludRayne

  Pirates who care about quality prefer physical media.

  18.9.2008 12:51 #19

• Hunt720

  I have a "friend" who will download a DVD screener and if he likes it enough he will buy the DVD/bluray for the quality and ability to own forever. This friend also prefers to see films in the theater on matinée costs when there are less people in the theater. But this Is only for films he is waiting to see and not for Hollywood bullshit that is designed to suck your wallet dry and deliver shit at the same time.

  18.9.2008 15:40 #20

• Footie979

  I agree, I prefer Blu-rays and DVDs because there is no fussing with DRM, codecs, whether your PC is fast enough and hoping that one of your five media player programs will play a file correctly. I don't want to stream through a web browser. I don't want to deal with networking and the Internet for my movies, period. I streamed a Netflix movie and I couldn't rewind and fast-forward easily. I want a remote, I want a disc and I want to own it!

  18.9.2008 22:29 #21

• Vr0cK

  Quote:I agree, I prefer Blu-rays and DVDs because there is no fussing with DRM, codecs, whether your PC is fast enough and hoping that one of your five media player programs will play a file correctly. I don't want to stream through a web browser. I don't want to deal with networking and the Internet for my movies, period. I streamed a Netflix movie and I couldn't rewind and fast-forward easily. I want a remote, I want a disc and I want to own it!Agreed. Most people dont even know what DRM, or how to find proper codecs or even know that there's more than one media player other than WMP. Digital downloads can requires some knowledge of computers that many find difficult. People want it easy, just pop it in and play. Simple. I as well like to own a physical object, if i bought it i want to see it.

  19.9.2008 09:35 #22