Making up the future one guess at a time
August 4th, 2008 Filed Under Home Entertainment, Home Video, Movie Business, Other Commentary
Yesterday I was involved in a discussion of Sony’s misleading claims about Blu-ray’s performance last year. Someone mistakenly thought I was arguing against their claim of Blu-ray dominance by the year 2012. Even though my actual point was about how a company official distorted the actual Blu-ray revenue numbers from 2007, that doesn’t mean I agree with the prediction for 2012.
Actually I’ve seen so many analyst predictions that I tend to simply tune them out. Obviously not everyone ignores them though, so let’s address that issue as well. A good analyst can be an invaluable tool for running your business. Not because they can tell you what will happen in the future, but because they can explain what happened in the past.
The fact is no one can predict the future. It seems like an obvious thing to say, but clearly there are people everywhere who think it’s possible. How else do you explain the way so-called expert opinions about what’s going to happen in the coming months and years get treated like the gospel truth.
Rather than looking at the obvious reasons why no one can tell if Blu-ray will ever become the dominant home video format, let’s look at things from a less hypothetical point of view. What we’re going to consider is the expert analysis of the format war between HD DVD and Blu-ray. Specifically we’ll look at a major development all the experts got wrong.
In 2007 the focus was on winning the format war. It was something of an industry assumption that the only thing standing in the way of an HD disc revolution was the confusion caused by having two formats. And what was the rationale for this conclusion? Simply that DVD appeared to be a flop early on.
That’s right. Since DVD looked like a flop for a couple of years and so did Blu-ray that must mean Blu-ray will enjoy the same success as DVD. That’s not just short sighted. It’s laughable. Consumer electronics history is filled with technologies that appeared to be flops in the beginning - and were. Perhaps the closest parallel to Blu-ray was Super VHS.
S-VHS offered superior image and sound to standard VHS videotape. The VCRs cost more, but also offered improved playback of standard VHS tapes. Of course to get the full benefits you’d need a fairly new TV that many people couldn’t afford, and the media was more expensive. And of course the similarity to standard VHS made it confusing to consumers. It remained a niche product until the demise of VHS at the hands of DVD.
Fast forward to the beginning of this year. After a good year of constant promotions, subsidized disc manufacturing, and generally unsustainable expenditures from Sony to promote Blu-ray it finally defeated HD DVD. And yet sales tanked shortly afterward. Movies have slowly continued to gain in popularity, but aside from the PS3 there isn’t a single Blu-ray player that could be deemed a success by any measure.
Like S-VHS it confuses consumers, many of whom are very happy with what they’re getting from the DVD technology they still regard as new and cutting edge. The vastly improved picture can’t be appreciated on the older TVs many people have, and there’s no move among consumer electronics companies to attain market saturation by introducing real budget models. It also features improved audio that requires equipment most people don’t have and won’t be buying.
On top of all that the world economy has taken a huge hit in 2008, something else analysts couldn’t really predict (although to be honest they had to see it coming some time). Despite a likely increase in home video sales as people stay home en masse, it will be difficult to sell new players to people struggling to pay their bills.
Now does that mean that Blu-ray will suffer the same fate as S-VHS? Absolutely not. When I say no one can predict the future I include myself. Blu-ray is clearly better supported and has more marketing power behind it than S-VHS ever did. But the fact remains its at least as valid a comparison as DVD.
The way things have played out this year makes perfect sense in hindsight, but wasn’t predicted accurately by anyone. With that in mind are you willing to believe the same people who didn’t predict where we are now when they pull more future figures out of their nether regions?
Lies, damned lies, statistics, and Sony
August 2nd, 2008 Filed Under Home Entertainment, Home Video, Movie Business, Other Commentary
Despite all the marketing hype coming from companies like Sony and Disney, Blu-ray’s backers have yet to come up with a good case for the format’s success. Between the inevitable problems with its Mighty Morphin DRM, increased competition from game consoles, and the rise of internet-based video distribution the chances of Blu-ray succeeding don’t seem to be improving. Still, Sony continues to be optimistic - at least in public.
Sony Pictures Home Entertainment’s Tim Meade is claiming Blu-ray will account for 25% of “global sales value of BD movie discs as a percentage of all types” at the end of this year, and in 2011 more BDs (Blu-ray Discs) will be sold than DVDs. Sounds impressive doesn’t it? Until you look closer at what he’s actually saying anyway.
I can’t figure out exactly what he means by “global sales value of BD movie discs as a percentage of all types.” He said that last year it was 9%, which means he can’t be referring to annual revenue. In the US, where Blu-ray had its strongest performance in 2007, Blu-ray and HD DVD combined were outsold more than 50:1 by DVD. I haven’t been able to find any global figures, but they would have to be even lower.
Looking closer it seems that he’s not even talking about an entire year for either figure, but rather some other unspecified amount of time. That would make some sense considering both figures would probably include Christmas and post-Christmas sales when you’d expect new (and expensive) technology to do particularly well.
You could also argue it doesn’t matter what period of time he was referring to. Once you start cherry picking your figures you’re as much as admitting the big picture doesn’t back up your conclusions.
Your business model is movies that suck?
July 29th, 2008 Filed Under Copyright, Movie Business, Other Commentary
In today’s LA Times there was an article proclaiming that Warner Brothers’ anti-piracy campaign, which began months before the movie’s release, was the reason it has become one of the most successful movies of all time. Believe it or not that wasn’t even the dumbest thing in the article though.
In fact that honor goes to a quote from Eric Garland, an executive for a media analysis firm. Mr Garland said “If the movie’s a stiff, and word gets out too early that it’s a stiff, it’s devastating to the business model.”
Surely he must be kidding right? I mean nobody could possibly have a business model that revolves around their product making just as much money when it’s bad as when it’s good? Could they?
That’s exactly the problem with the entertainment industry’s claims that copyright infringement loses them money. They’re so used to calling the shots that they find it inconceivable that they don’t. The answer, in the warped mind of a music or movie executive, is to change the laws to put themselves back in charge. The problem with this solution is that laws don’t change reality. They reflect it.
The history of copyright law is clear. New technology comes along that disrupts an existing business model. The people making money off that model complain loudly to anyone willing to listen that our entire way of life is under attack. They attempt to use new legislation and/or the courts to ensure their business model’s survival. And in the end they always fail.
Technology that disrupts one business model invariably creates another. And the new one is worth more money to more people. That’s just the way it is. There is no such thing as an inalienable right to make money. If your customers tell you your product isn’t worth what it used to be you either need new customers or a new product. You don’t get to tell them they’re wrong.
