As Streaming Grows, Will Physical Media Be Important, or Not?

"Ultimately, it will be impossible for physical disc kiosks to compete with the in-home or in-store download-to-rent business model,” says Keith Nissen of In-Stat.

Broadly stated, it is hard to argue with the general thrust of the prediction.

In-Stat notes that the home-video market will shrink $4.6 billion from 2009 to 2014, which is consistent with other estimates of the revenue providers will make renting and selling DVDs, with the most-significant changes coming from DVD sales.

Meanwhile, revenue from broadband streaming and downloading is projected to climb by $4 billion over that same period.

One suspects most observers would be comfortable with changes of about that magnitude.

But it also is possible that the changes will be more complex than a simple substitution of streaming for DVD rental, for example. One might argue that Netflix is cannibalizing DVD sales; that Netflix is competing with HBO, Showtime and Starz; that gaming and web-based entertainment is competing with DVD rentals and sales or that users are shifting discretionary entertainment spending to devices, and away from movie rentals.

All of those trends likely are contributing. One might further hypothesize that Netflix and kiosk-based rental services such as Redbox also have changed consumer expectations about the value and price of a movie event, compared to buying or renting a DVD from a retail outlet.

"One dollar for one night" might simply have replaced "five dollars for one week" as the standard of value. To be sure, $6 for a pay-per-view viewing also seems to be a more-accepted part of the market.

Still, to a greater extent that we might believe, changes in consumer expectations about the "proper" price to view a movie in a catalog have changed. The important shift might be less a matter of technology or even convenience and more a matter of changing evaluations of "value."

With the caveat that the big change seems to be less appetite for "owning" movies, there probably is quite a lot more scope for distributing new releases and recent releases in a variety of formats, and physical media could well a role, and a substantial role, for quite some time.

That would especially be true if studios reevaluate the deals they are willing to entertain, with direct impact on the retail prices possible using any distribution format.

The installed base of devices able to easily display content on standard TV screens; possible emergence of new physical media methods and broadband pricing policies also will play important and key roles.

The easy call is "streaming wins." The harder call is determining where streaming wins, and where physical media still competes. Price always matters in the consumer market, and we are far from having exhausted all the ways value and price can be matched in the movie market.

Streaming As Kiosk Killer? Not So Fast | paidContent