Hollywood has long been trying to get the viewers to buy movies online. While that didn’t happen for a long time, the industry has finally found a way to force consumers into buying online movies. And this new tactic is a roaring success.
With the increasingly greater part of digital tech in our lives, Hollywood’s conventional revenue streams have been growing thin. Over the last decade or so, the sales from rentals and physical discs has steadily declined. The digital sales, at the same time, weren’t growing at a rate which could counter-balance the decline in profits. And so, movie pundits knew that something needed to be done.
So Hollywood has finally come up with an effective solution. Studios are increasingly adopting a new method of launching movies. Before the movies are made available on DVD or at the rental services, it is made available in a ‘Digital HD’ copy for two to four weeks. The high definition copy of the movie is made available at notable online marketplaces such as the iTunes Store and Amazon.
Consumers can then buy the movie from these stores but if they want a DVD or a rental option, they have to wait a few weeks. Such marketing has evidently persuaded a huge number of consumers to buy the Digital HD copy right away and so, has proved quite successful. So the trend is catching on as more and more movies are released in a similar fashion. During 2013, digital movie sales bumped up by 47%, reaching a whopping $1.19 billion.
Digital sales are dear to the studios primarily because they come with steep profit margins. And though currently, digital sales constitute only 10% to 15% of the total revenue of the home entertainment arena, studios intend to keep up the tactic and increase this percentage share.
Rental services and DVD sellers are somewhat at a loss over this new strategy. The surge in digital sales only means that their revenues are sure to go down. Movie streaming, however, is expected to remain successful and experience a good growth with Netflix leading the way.
Source: WSJ
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