During that whole box office slump hype last year, studios weren't really worrying because they've been making most of their money on DVDs the past few years. Well, now it is time for them to start panicking, as the DVD market is experiencing a slow growth period. Because this also affects stores like Wal-Mart, Target and Best Buy, all of which depend on their discounted DVDs to lure in customers, the answer for the studios and the retailers is DVD kiosks. A year ago, such machines, which download movies and burn them onto discs while you wait or shop around the store, were being unveiled by DVD Station, and were being tested by Blockbuster Video, and I had also read somewhere about Wal-Mart's interest. McDonald's has also been experimenting in a partnership with MovieGallery.
Jim Wuthrich, a senior VP at Warner Bros. Home Entertainment who handles digital distribution (I wonder if all the studios have this division now) says the kiosks will likely appear in 2007, and the only delay is figuring out some licensing and technology issues. Presumably, the kiosks will feature older titles while new releases remain available on the shelf. The kiosks sound a tiny bit better than the movie download sites, which are building support from the studios, but the only way they could be a success is if they don't cost a lot. My feeling is that DVD sales are on the decrease because customers have suddenly realized that even at an average price of $20, buying movies just isn't worth it compared to renting.
The thing is, by next year, consumers may already be on the lookout for the next thing. With Blu-Ray and HD DVD now becoming available, the studios are doing a lot of research on consumer behavior, according to David Bishop at Sony Pictures Home Entertainment. Meanwhile, executives claim the Video-on-Demand download sites and services won't put a dent into packaged media for at least a decade.
I think the next year is going to be pretty interesting, regardless of what Hollywood decides to do, because there are so many transitions going on. ...