Blockbuster Declares Bankruptcy: Perhaps It's Time To Stop Doubting My 'Physical Media's Dying' Stance's Validity
Over my 5.5+ years’ worth of churning out Brian’s Brain blog content, I’ve learned that there’s little to no correlation between a given post’s popularity with my readers (as measured in ‘hits’) and the amount of comment feedback I receive on it. However, I’ve also learned that there’s one post topic guaranteed to cultivate reader responses…the tug-of-war between physical-housed and online-streamed media. I still have a number of readers who regularly write me, snidely dismissing the transition to Internet-based music services such as iTunes, Napster and Zune…no matter that abundant data confirms the fade-away of CDs, the fizzle of the once-presumed DVD-Audio and SACD successors, and the ascendance of the track-at-a-time download successor.
Evolve the discussion to video, where the outcome is currently not quite as clear, and the simmering debate boils over. Take, for example, the most recent example of my longstanding ‘discs are dying’ stance, my recent Blu-ray-themed cover story. Read through it, if you haven’t already done so, and you’ll see that my pessimism regarding the format’s chances for equivalent success to its DVD predecessor hinges on three primary summary factors:
- Self-created stumbles (the format war versus HD DVD, evolving standardization, etc)
- Worldwide economic malaise affecting, to a lesser or greater degree, all consumer electronics product segments, and
- The growing momentum behind Internet-based streaming and download alternative delivery approaches
Now take a look at the ‘Talkback’ reader comments on that particular piece (scroll to the bottom of the page). Some of the Internet-delivery-is-bad feedback is (reasonably) valid; specifically, from folks who live in rural climes where broadband service isn’t available at all, or is outrageously expensive and/or slow. But, with all due respect to them and their concerns, they represent an increasingly slender sliver of the U.S. population.
And speaking of slender slivers of the U.S. population, I chuckle whenever I hear from folks who are enamored of Blu-ray’s claimed quality advantage over streaming media, or who who cling to the idea of possessing shiny discs that take up room on residence shelves and collect dust. On the treasure-vs-clutter issue, and while I realize that I’m nitpicking a bit here, folks first off don’t realize that they don’t actually own the media they’ve purchased (as they’ll soon find out if they decide to ‘rip’ a copy for archival purposes, to stick on a computer hard drive, or to share with friends or family members). Instead, what they’ve bought is a narrowly-focused license to access the content.
I’ll grant that, as I’ve said before, the physical-vs-virtual media argument for video fundamentally differs from its music counterpart in one key area; while a consumer might only care about one track’s worth of content from an album, few folks would be interested in only one scene’s worth of material from a movie. However, how many movies do you ever want to view more than once (save perhaps those of you with kids and a few Disney flicks that your offspring want to watch over and over and over again…)? For the films that don’t beg for a repeat viewing, a lower-priced online rental (that you don’t even need to drive to a store to rent, even assuming it’s in inventory at the time) will suffice. Online purchase-and-download options are available for the precious few titles that engender repeat showings, of course, and some services even let you burn a copy onto a blank disk.
Regarding quality, I feel quite confident in saying that the same trend which played out with digital music will equally apply to video. Dispute consumers’ wisdom all you wish, but I don’t think you can dispute the fact that the vast majority of consumers are perfectly content with 128 Kbps MP3s or even lower bitrate variants using more modern codecs such as AAC and WMA. As such, there’s no motivation for consumers to upgrade to supposedly higher quality sonic alternatives in the future. Convenience, cost, storage capacity and other factors trump any quality discrepancy between the MP3 and an audio CD (not to mention the audiophile-favored LP, or a DVD-Audio or SACD disc).
Similarly, the bulk of the U.S. population is perfectly content with DVD-equivalent streaming video quality, especially when it’s accompanied by settop box- or display-based interpolated upscaling to a pseudo-high definition resolution. And no, they don’t care very much about the ‘extras’ missing from a downloadable version of a movie versus its disc-based counterpart, either. Look at the news of just the past few days if you require proof of the validity of my pragmatic perspective:
- Brick-and-mortar predominant, and physical-media predominant, Blockbuster finally bowed to the inevitable and declared bankruptcy yesterday. Most retail outlets will be shuttered, and the company plans to plow the resultant cost savings into financing its fledgling online distribution service.
- Meanwhile, Netflix remains on a roll. The company just expanded its online streaming service to Canada, where interestingly it’s priced $1 less per month than its U.S. counterpart…but it’s streaming-only at that price, with no mail delivery of discs included. Netflix plans to offer a streaming-only service option in the U.S. in the coming months, and I for one will be sorely tempted to migrate to it.
- Granted, the bulk of Netflix’s business is currently focused on shipping discs to customers. But, as I’ve written before, the company is remarkably prescient (to the near-term detriment of its shareholders’ returns) in investing for the inevitable migration to streaming. Netflix has even consciously signed agreements with content rights holders that delay its access to disc-based rental versions of various titles (as compared to when they’re available for sale in retail outlets) in exchange for being able to sooner-or-later stream the material. A short-term setback for Netflix, perhaps, but a long-term win.
- Netflix’s online streaming service is so dominant at the moment that Apple bowed to the inevitable and decided to build support for it into the second-generation Apple TV, even though Netflix Online seemingly conflicts with the company’s own iTunes Store movie and television show rental and purchase offerings.
- Speaking of settop boxes, now’s as good a time as any to pass along something I learned a while back from an excellent Wired Magazine writeup and have been meaning to tell you about ever since. Regular readers already know that I mention Roku’s Video Players on occasion; Roku just yesterday released the latest members of the product family, in fact. Roku’s product line was initially known as the Netflix Player, until the supported content suite expanded beyond Netflix to Amazon Video and other services. Well, as it turns out, the Netflix Player was originally a project within Netflix, which CEO Reed Hastings abruptly decided to spin out into an independent company shortly before the scheduled launch date…because he didn’t want to directly compete against the other platforms (the Xbox 360, PlayStation 3, Nintendo Wii, and various set-top boxes and disk players) which he hoped would sooner-or-later pursue a license for Netflix Online access.
- And speaking of the Xbox 360, Microsoft once again, the other day, reiterated its non-intention to add Blu-ray support to the console at any point in the discernible future.
And now, once again, I await the inevitable backlash from physical media fans Have a good weekend, everyone.