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Has streaming killed the dvd star?

Joanna Massie

26 January 2012

In a bid to compete  in the gleaming age of the modern-day internet, Blockbusters has released a series of ‘exclusives’ – new movies which, for two weeks only, will be for Blockbusters’ users’ eyes only – but only if you live close enough to a Blockbusters to rent the disc, since they conspicuously haven’t adopted a streaming service.

This is clearly a move to tackle the growing market for streaming services in the UK. The launch of Netflix in the UK earlier this month is the latest in what seems like a barrage of attacks on the physical disc , all of which invite the argument  that the DVD is quickly becoming obsolete in favour of quick-fire, on-demand TV and film.

However, Netflix, which in July 2011 took a 61% share of all digital film watching in the US, won’t power through uncontested. There is stiff competition from BskyB, Youtube and LoveFilm – indeed, the CEO acknowledged that it could take up to two years to make profit in Britain.  It’s not altogether  smooth sailing for Netflix in the US either: in October 2011, shares hit a dramatic low following a price hike and the company is only slowly recovering, still nowhere near its pre-crash value.

However, the opening of Netflix in the UK does suggest that streaming is now the cool kid in the playground. Recent research suggests that almost two thirds of the British public are willing to pay for a film subscription service (although the number that actually do is far lower). DVD providers also have to contend with illegal streaming. Numbers are hazy because people are unsurprisingly unwilling to admit to it, but ‘pirate content’ is estimated by Envisional to take up 23% of all global bandwidth.  Illegal streaming is not going unnoticed however. MegaUpload (and its well-known child MegaVideo) was closed down last week pending a court investigation, and the recent SOPA and PIPA bills have sparked a series of awareness campaigns about online piracy - albeit not quite in the way those in favour of the bills might have liked. With SOPA and PIPA having been stalled by a high profile campaign from some major websites, one might hope the discussion will finally move away from restrictive and suffocating regulation and towards a reassessment of the way media is created, shared and paid for.

This is not a new area of discourse for us; our researcher Andrew Sissons proposed a new model of payment for the internet in his report entitled the Big Digital Dilemma, and we opened up the discussion during our related Big Digital Debate.  The big question is about how we can get people to pay for content; and, with a move towards both legal and illegal on-demand services, how we can keep money flowing to support high-quality creative industries.

With a seismic shift happening in the way we pay for and consume films, the DVD shop and rental place are looking increasingly vulnerable.  Is Blockbusters right to continue powering through, clearly separating itself from the streaming market, or should it reassess its business model in light of the apparent future age of film watching?