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July 12, 2005

DVD Glut

I can't help but wonder if the recent news at Dreamworks and Pixar is in some way related to the Internet, Tivo, and other disruptive technologies.  Could it be that people are watching Shrek 2 on Tivo and saving that on Tivo for future viewing?  Could it be that other activities, such as Internet usage, is infringing on DVD time?

There is another big issue.  Why, in 2005, are we creating "inventory" of a digital good that can then be returned and cause an earnings miss?  Why not VOD, or at least "print on demand" at Best Buy and Tower Records.  Or at the very least, only recognize revenue on sell through.  This seems like a 1980 problem raising its head 25 years late.

Perhaps Amazon can solve the problem...

Posted by Bill Gurley on July 12, 2005 at 10:10 AM | Permalink

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Posted by: modsesque | Mar 19, 2009 3:10:08 PM

I never quite understood why broadcasting a movie or song over the air and recording it (a la Tivo) seemed OK but when someone makes a copy of an existing plastic disc of the same content these companies are up in arms about it. Tivo is no different than burning a DVD (unless you get into the argument that someone paid to have cable service in their house, but I would argue that doesn't make up for the lost $20 sale).

Posted by: Wil Schroter | Sep 16, 2005 12:46:41 PM

"Print on Demand", especially if implemented by Amazon, would be interesting...but only if the unit prices were markedly lower than the prices for the DVDs at retail.

It's one of the issues that has plagued Audible since its inception...i.e., that the digital version of the book costs pretty much the same as the physical version, despite the dramatically lower costs, and higher margin for the publisher.

Posted by: Michael Parekh | Jul 15, 2005 11:36:57 AM

I have a TiVo with a DVD recorder and digital cable. I can record movies and burn them to a DVD-R (if I want to keep them) or a DVD-RW (if I don't) for about 30 cents a flick.

OK, I'm an early adopter (as I'm sure is anyone reading this blog) but consumers won't be driving this for much longer. And I disagree that they're even driving it now - Hollywood (and their distribution channel) is because they're about 5 years behind the music industry in figuring this all out.

Posted by: Chris Selland | Jul 13, 2005 3:05:35 PM

National retailers (Circuit City, Good Guys, Tower) are not driving this, consumers are. Broadband infrastructure is limited to metropolitan areas. Consumers dont mind shelling out a mere twenty bucks to own a dvd so they can watch it in the household, car, and vacation home. The product is not cost prohibitive and is mobile.

Posted by: | Jul 12, 2005 9:39:30 PM

"Why, in 2005, are we creating "inventory" of a digital good that can then be returned and cause an earnings miss?"

I could not agree more. The idea of putting 1's and 0's onto a piece of plastic, pacaging them into a box, and then shipping them throughout the world always seemed ridiculous to me. With the broadband infrastructure we've had in place for the past 8 years or so, there is simply no excuse for this.

Posted by: Tom O'Neill | Jul 12, 2005 1:55:03 PM

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DISCLOSURE: The information contained Above the Crowd has been obtained from sources believed to be reliable but is not necessarily complete, and its accuracy cannot be guaranteed. Any opinions expressed herein are subject to change without notice. The author is a general partner of Benchmark Capital, a venture capital firm in Menlo Park, Calif. Benchmark Capital and its affiliated companies and/or individuals may have economic interests in the companies discussed herein. © J. William Gurley 2005-2006. All rights reserved.