The DVD is hardly dying

DVDs should be over by now. Jason Ropell, vice-president of content for Netflix, says it’s “incontrovertible” that the future of video consumption will be Internet streaming on demand. So why is it that some of the biggest players in home video today are DVD rental kiosks like Redbox, the U.S. rental giant, or Movie Magic and zip.ca, whose machines rent out DVDs to people in supermarkets and drugstores across Canada? Redbox alone has close to 30 million active customers using its DVD service.

The collapse of DVDs was real enough when it came to buying those little discs. The DVD boom of the last decade when, Ropell says, “you’d walk into people’s houses and they’d have a whole bookshelf filled with DVDs with the spines out, like books,” ended long ago. Brahm Eiley, from the media consulting company Convergence Consulting, says sales have been in decline since 2006.

But just because people don’t want to buy DVDs doesn’t mean they don’t want them. When Netflix tried to spin off its U.S. DVD rental business into a separate subscription service, Qwikster, it was hit with so many customer complaints that it had to back down. Even Ropell admits that some customers just don’t want to give up on the physical disc: “There are people who say, ‘I just like seeing the DVD show up in the mail.’ That’s not a logic-driven preference.” Redbox has discovered that if you put DVD rentals in easy-to-reach places and charge a low price for them ($1 per rental in the U.S.), people will keep on renting them and bringing them back. According to a report in the Los Angeles Times Redbox boasts that its kiosks are a five-minute drive or less from 68 per cent of Americans, and it seems that many people still find a five-minute drive more convenient than loading up a movie online.

One reason DVD isn’t dying out yet is that there are still things you can get on DVD that you can’t find in streaming. Because DVDs are physical media, they’re governed by first-sale doctrine, a more than century-old rule allowing almost anything to be rented out. The same rules don’t apply to streaming, and so Netflix’s streaming deals are famously narrower than the DVD selection it originally provided in the U.S. “The streaming service will never have the selection the DVD service has,” says Joris Evers, Netflix’s director of communications, “because of the licensing and the different worlds around it.”

Until those licensing issues are worked out, companies may still need to find some kind of balance between digital and physical rentals. That could be Redbox’s plan. This February, the company partnered with the U.S. telecommunications giant Verizon to create an online streaming service to complement its DVD business. Analyst Ralph Schackart told Home Media magazine that the partnership would likely “combine elements of physical and digital services.”

What we won’t be getting from these partnerships, though, is the depth and breadth of selection we got in the previous decade. Redbox is mostly about the biggest recent studio releases, usually offered with few or no extra features, and so are the services that already exist in Canada. “Good luck finding anything either made before four years ago, unrated, or a little bit daring,” wrote Blake Williams at BlogTO when evaluating Movie Magic. The DVD boom was an era of abundance; Redbox and its competitors have created a movie rental service for an age that is comfortable with scarcity.

Of course, all of this could change with the elephant in the tech room, Apple. The company’s iPad became so dominant in the publishing world that the U.S. Department of Justice recently sued them for “restraining retail price competition in the sale of e-books.” When Apple comes out with its planned television set, movie studios might have to adjust their release windows and deals to suit Apple, and that could make the purchase of movies—just like the purchase of e-books—a more popular option.

For now, though, it seems that whether the future belongs to physical discs, streaming, or some combination of the two, it’s going to be more about renting than owning. Ropell, for one, doesn’t think the transition will be so hard to make: when he lived in Toronto, he thought going to places like Sam the Record Man “was so much a part of the experience of purchasing music. I thought that would be very difficult to break. But I can’t remember the last time I bought music.”