DVDs: They will survive
Doomsayers say DVDs are dinosaurs, but they're dead wrong. These discs will not only make it through the digital age - they'll thrive in it.
By Chris Taylor, Business 2.0 Magazine senior editor

(Business 2.0 Magazine) -- Reports of the death of the DVD have been greatly exaggerated.

Sure, the shiny digital discs look increasingly irrelevant if you read the headlines. Industry giants like Amazon.com (Charts) and Apple (Charts) are going head to head in the nascent market for movie downloads. Amazon just unveiled the Unbox, and Apple's rolling out a service that lets people watch a flick as soon as it begins to download. Apple is also trumpeting a forthcoming device, tentatively called iTV, that promises to stream movies wirelessly from computers to TVs.

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Think DVDs are headed the way of the dinosaur? Think again.

So if we're getting movies on our iPods, our computers and our TVs (via our computers), why would anyone ever buy a "Pirates of the Caribbean" DVD again?

Turns out, there are plenty of reasons why.

The current push by Apple et al. into digital movie downloads makes a lot of assumptions. It supposes that we all own iPods and PCs, and are more than happy to plunk down a few hundred bucks for yet another set-top box - this time called iTV.

These services may do very well, but they lack one thing: the ability to store, or "burn," a movie on a disc.

Avoiding the 8-track curse

The ability to burn is one reason why DVDs are still the best bet.

They also pack more information than the typical downloaded movie. Their quality is far superior than streaming movies wirelessly - which, by the way, are going to look horrible on a regular Wi-Fi connection (802.11b, for you geeks).

You can lend DVDs to friends and family. They're easy to mail. And you get instant access to all of their features and every scene in a movie, instead of having to wait for the download to end.

What's more, DVDs cost pennies to manufacture. Movie buffs take great pride in their DVD collections. And there are, by last count, 1.1 billion DVD players in homes around the world.

Bottom line: contrary to popular perception, they're not going the way of the 8-track and the audio cassette.

A battle that's much ado about nothing

I know what you're thinking. Movie studios and electronics manufacturers are ruining a good thing as their battle over the next generation format drags on and threatens to alienate consumers. Rest assured, there will be a truce in the tug-of-war over Blu-Ray and HD DVD. Sales of DVDs players will spike and the movie experience will outshine downloads even more.

There's something else to consider. Some 120 million devices in the United States are capable of burning DVDs - more than enough for every household.

That's why a little-noticed deal this week between software developers Sonic Solutions and Macrovision Corporation makes a lot of sense. Sonic (Charts) makes software that helps consumers burn discs, while Macrovision (Charts) sells copyright protection services to the entertainment industry.

So for the first time, consumers will be able to download and burn movies onto DVDs legally - that is, with the copyright protection technology that the movie studios demand.

Riding the 'long tail'

Jim Taylor, a former DVD evangelist at Microsoft and now the general manager of Sonic, says most consumers don't yet understand how restrictive movie download services are.

"For most people, it hasn't quite sunk in yet that download-to-own is not download-to-burn," explains Taylor (no relation to this author). "Yet the number one demand from consumers [who download movies] is the ability to burn to DVD."

Taylor is confident that the Sonic-Macrovision technology will hike studio revenue by hundreds of millions of dollars a year between now and 2008 - and by billions of dollars a year thereafter.

Why?

Because suddenly it becomes possible for stores - both online and off - to burn DVDs on demand.

He envisions a kiosk at Target or Wal-Mart offering hundreds of thousands of movies, instead of, say, the thousand that currently fight for space on store shelves. He predicts that Amazon will be a big winner because it will be able to burn discs as customers order them, thereby reducing inventory costs and boosting margins.

You may have heard of the "long tail," Wired magazine editor Chris Anderson's term for the massive revenue streams that flow when retailers supply enough products to match individual tastes rather than sell a limited number of one-size-fits-all hits.

The Sonic-Macrovision software, Taylor says, "is a new venue for the long tail."

DVDS on demand

Indeed, it opens up a vast world of choice for consumers.

Want to make sure Grandma sees that Discovery channel special you watched last week? No problem - go to the Discovery website, download the show, burn it onto a DVD with Discovery's blessing, and stick the DVD in the mail.

Need to surprise your date with an obscure romantic flick from her childhood? Burn it at the Blockbuster kiosk.

Sonic is happy to confine itself to the back-end, integrating the software - called, unsurprisingly, "DVD on Demand" - into the next versions of its best-selling burning software like Toast and Easy CD Creator.

If there's a problem with the software, it's that no one is yet manning the front end. There isn't a Steve Jobs to herd the entire movie and TV industry into a single download-to-DVD service.

On the other hand, that means a great opportunity for plucky entrepreneurs. Because it would seem those shiny, eminently portable digital discs have a long and healthy life ahead.

Apple moves in on movies

Two thumbs down for Unbox

Report: Target warns studios over downloads

3-D without glasses Top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.