The rise of streaming and the slow death of the disc
Blu-ray is no longer a selling-point. That was the straightforward analysis of Samsung’s AV product manager at the company’s 2012 European product launch earlier this year. “The fact that a Blu-ray player plays discs is now a secondary feature,” he said. It's the most obvious admission yet from the industry that the future of DVD and Blu-ray – and the software disc in general – is now in serious doubt.
As sales of discs plummet, it’s all too easy to see DVD and Blu-ray being replaced by downloading and streaming alternatives, as recently released figures suggest. At the end of 2009, hi-fi stalwart Linn announced it would stop making CD players. It seems only a matter of time before more of the big names in AV officially follow suit. What then for the disc?
Disc sales slow, and retailers suffer
In 2011, Blu-ray and DVD sales fell by 7.2 per cent, while downloads and digital rentals increased by 12 per cent. It’s estimated that the top 10 DVDs in 2007 cumulatively sold 105m copies – in 2011 it was 42m. The shift in consumer spending and habits is already taking place and having a knock-on effect for retailers, manufacturers, the film industry and more.
Music and video (read ‘CDs and DVDs’) retailer Zavvi ceased trading in 2009, while HMV has seen its share price crushed from a peak of 149p/share in 2009 to around 4p/share in 2012. Like-for-like sales for that venerable retailer fell by 13.6 per cent last year, with more than 60 per cent of entertainment sales now taking place online. Universal Studios, meanwhile, reported a 24 per cent fall in revenue in Q1 of 2011.
By contrast, US streaming service Netflix, which launched in the UK earlier this year and is set to appear on more and more devices over the coming months, saw its share price increase by 219 per cent to $175/share in 2010, and hit a peak of $299 by the end of 2011. It’s perhaps no wonder, then, that sales of DVD and Blu-ray players have suffered a decline – even if the Competition Commission recently took an interest in the video-on-demand market.
A whole new product category
At the peak of the DVD’s popularity, in 2007, 7.3 million players and recorders were sold in the UK. By 2014, analysts predict that market will have roughly halved in number, and dropped further in value. So, as a new category of streamers replaces CD players, could it be that a new category of network video players or smart TV boxes will do the same in your home system?
Samsung’s focus for 2012 was the company’s Smart Hub of streamed content, with its Blu-ray players cutting a more compact profile and being sold as ‘Smart TV boxes’. Other brands have already taken this a step further, removing the disc drive altogether.
Smart TV boxes connect you to streaming video services such as Netflix, Lovefilm or Sony’s Video Unlimited, giving you your on-demand TV and movie fix in subscription or rental form – without a disc in sight. Philips’ new HMP2000 is set to retail for just £50, and will come loaded with access to Netflix, YouTube and catch-up TV services, while the likes of Apple, Boxee and Sony already have similar devices.
Competition is fierce
Old-style physical discs face competition on all fronts: Sky is expanding its Anytime+ on-demand content, while Virgin Media announced its first annual profit, as a result of its success in doubling the number of TiVo subscribers, its rival service to Sky+.
There are glimmers of hope for discs. Almost 18 per cent more Blu-ray players were sold in 2011 compared with 2010.
But the good news is tempered: they were an average price 5.8 per cent lower than the previous year, with supermarkets the big winner. While 15.3m Blu-ray discs were sold in 2011, this only represents 13 per cent of an overall declining market.
But, the switch to streaming won’t be plain sailing. Korean broadband companies have already threatened to throttle broadband delivery as a result of smart TV streaming. They have the best broadband provision in the world, yet they’re screaming that they don’t have the infrastucture to cope with the bandwidth demands caused by the prevalence of Smart TVs.
Consider that the UK is only now getting the necessary broadband speeds required for streaming content, and you will see that we might all be looking at a big problem in content provision just over the horizon.
Which is why we argue, in a companion blog, that we argue that we may end up with an internet that can’t satisfy our hunger for content.
Rise of streaming – in numbers
£112 – average price of a Blu-ray player
2 million – LoveFilm subscribers in the UK
1,004,447,198 – Total number of Virgin on demand views in 2011, the highest ever
96% – drop in HMV share price in past 3 years
32.7% – Netflix's share of peak downstream traffic in N.America
Read: Can the web take our hunger for streaming?
Comments
The comment from our BT Engineer was we'll be lucky to see a connection faster than 2Mb/s this side of 2050, and with a 40GB/month download limit. I do not think we'll be relying on streaming anytime soon.
I tried netflix for a short time and was on the whole unimpressed with the picture quality, as quality is tied into connection speed.
Call me old fashioned, but I like to have a physical copy of a movie. Which you can play anytime in HD with 7.1 audio. Without pauses for buffering or long unexpected intermissions because the connection has been lost.
Blu-ray is going to be around for a while yet, with dvd being phased out over the next couple of years. There is still money to be made by the studios, though I can see them reducing their costs by just putting the movie on the disc without the "watch them once" extras.
Streaming could become a them and us scenario. With ISP's allowing those with cable to have it at an additional charge, and those of us having to still use the old fashioned BT line connection being told tough you cant have it.
Because, cable or phone line connection, streaming does suck the life out of connection speed.
So here's to the future of Audio Visual entertainment. To be run on a steam powered telecom system. Unless you are one of the chosen who has cable. But even that is probably throttled by your ISP.
I think it will be a long time till you see the dominance of streaming services over Blu Ray and DVD.
There are many reasons for this, many of which have been mentioned by previous commentors.
But in my humble opinion, i think the main barrier is the inconsistency of internet quality across the UK.
In my own personal experience, i am currently using my university campus internet which is superb and i can stream HD video from the likes of netflix 24/7 without any problems.
But when i return home to a rural area, the internet is truly terrible. So bad that even browsing the internet can be a struggle at times.
I will most likely unsubscribe when i return home. I am sure there are millions across the UK who are in a similiar stuation.
this article is a load of garbage its just hype from samsung.
so at the moment more people are watching films on download or streaming, why because they are cheaper eg blockbuster instore rental £3.50 stream from xbox £1.20, this is mainly due to us being in a recession.
the same reason why download games are more popular ie xbox 360 arcade games cheap to buy.
there are plenty of reasons why sales are down mainly its all about money people only have so much to spend
and cash is now spread out between more things itunes, x360, ps3 cd, dvd, blu ray etc etc, so sales may be down in one area but going up in others. look at all the triple a games that have been released in the last 3 months for example.
so for the short term sales may be down but do people really want to give a download as a present or a physical disc.
according to samsung and some others cd was supposed to die out 3 years ago, so why is hmv, play and amazon still selling them if no one wanted them they would not sell them, do you see psone games on play or amazon no!
you have been able to stream form your pc for years so why all the hype now it will not take of, not for another 5 or so years at least.
this is due to broadband and bt and using 20 year old techonology with new bits added on it just cant cope.
in 2-3 years when the 4k tv are mainstream, do you really think you will be able to download a 4k film with hd sound approx 60gb via broadban, NOT A CHANCE
give me the 4k blu ray disc instead
if you want to watch a h.264 film on sub sky hd quality with outdated dolby sound then streaming is great
but if you want to watch 1080p with dts master hd sound then grab that blur ray disc
what hifi should be ashamed of printing this article they are just pandering to samsung
its strange that samsung release digital streamer then slag of blu ray players, maybe its because there players are rubbish and panasonic and sony have the market cornered
I'm sorry but if I'm handing over my money i want something that exists in return I don't really care about cd/dvd/blu-ray itself as formats, all i care is that they exist in the 'Real World',
I refuse to spend money on a computer file that can be destroyed/deleted so easily,
I use computers for multi track recording on a daily basis and can tell you that standard scsi/sata/ide hard drives are just not reliable as a long term storage medium, maybe this new wave of solid state drives will add that but I am doubtful,
the only thing I will replace my cd's with is another high quality storage physical medium.
lol thanks
I would go with A, though this was an issue for nearly 2 months just after christmas it seems to be more stable now.
Not saying streaming is not the future i am saying if you completely rely on the net for your entertaiment like i did, somewhere down the line your going to feel let down due to some problem which is less of a chance with the old trusty dvd.
Like i said i still use zune and love film streaming to catchup on a films
There are 2 things which are going to make things better which is 4G and affordable large solid state hard drive in the near future, though won't become the norm for another couple of years after that.
@ landzw - all good points, and it made me think of one certain scenario that really puts me off...
Picture the scene, it's Fri/Sat night and your all settled in with food and beer ready for a nights entertainment. You fire up the media service of choice only to find that a) no connection as ISP has issues b) intermittent connection due to whatever issue with BT or ISP or service provider overload c) the media service homepage is gone only to be replaced by a graphic from Lulzsec or Anonymous or d) one of the many bits of the home network infrastructure has gone belly up and requires reboot/putting in the bin.
To rub it the chap next door can be heard enjoying content off a quaint silver disc. Extreme scenario's I know, but entirely possibly when you rely on more bits of kit and external service providers.
Just over a year ago i thought the future was streaming and downloading content ( well for me anyway ) I purchased a big external hdd, ripped 100 of hours of dvd's, brought streamers for a couple of rooms and i thought all was perfect.
Problem 1, having to turn on and off the streamers and main computer every now and again to re-sinc everything.
Problem 2, Now and again after itunes updates you couldn't even connect to the streamers.
Problem 3, Having 100+ films on a hdd trying to find a film you want to watch end up taking mores time, unlike browsing a dvd collection.
Problem 4, Having hi quality movies takes up massive amounts of hdd space especially 1080p movies
Problem 5, Downloading problems and internet provider problems, which then you relise how much your relying on your internet .
Problem 6, You end up needing more tech to go wrong e.g. streamer , hdd, router, computer / nas
Problem 7, WiFi coverage can be a problem depending what size house you have and age of building
Problem 8, Try streaming a Hi Def film say in your living room, your son playing on xbox in his room , your daughter listening to music, things start buffering and stop working
Yes you can wire up rj45 cables and use homeplugs but its all extra costs not to mention the chances of hdd failure.
So now i'm back to the trusty old dvd and cd discs, i have cheap blu ray players in each room which i rent mainly blu ray films of love film, and i still mainly buy dvd's with the odd blu ray depending on film like syfi or fantasy, and i don't have to worry about a thing it all works perfectly and its cheaper than purchasing films online.
Though i do like having the option with dvd's and blu ray to have a digital copy to take on my iPad or iPhone as i need it, don't get me wrong i see benifits streaming i still use zune and love film from time to time
One point that seems to be forgotten is the cost of downloading /streaming content as it's not free. So worth noting when deciding to buy or stream as most ISP's have download usage bands and will happily charge you extra when you go over your band...
Really suprised there's no mention of Ultraviolet in your article. Its had a very slow start in the UK and it was beginning to look like it would die before it really got started, but now Warner and Sony have announced their commitment it's worth watching for awhile longer.
Read this piece in the magazine today, yes Zavvi shops closed down nearly three years ago but the webshop is doing just fine thanks to its spread of products and the company's spread of other web shops. Who cares if Blu Ray isn't its top seller if the firm stays in business? GAME would be an up to the minute example, as their Blu Ray film sales were woefully underpromoted even when their bread and butter trade took a battering. You can see the result from the past two weeks.
As for the Samsung suit's comments, I've only got a Samsung Blu Ray because they were the first to go under £100 last summer in a sale, they are kings of the price point and that's it for me, they've pulled too many other strokes like borderline misrepresentation of ClearMotion Technology as proper 100Hz, fattening up their hard drive division with bargain prices at Christmas 2010 only to sell it off four months later and deliberately weak batteries in their non-smartphone handsets for me to buy anything else of theirs again.
What Blu Ray in general won't ever get is the decade of people upgrading multiple players as they did with DVD, it's only the PS3 that has given the format a proper installed base and now the price crash as low as £40-50 after years of giving them away with TVs. Also I don't know anyone that junked perfectly good DVDs that will be upscaled, to rebuy an entire collection on the new format when they aren't guaranteed a great transfer for old films.
Downloading and streaming is but a dream to so many in this country. If S Korea is having serious reservations about 'smart tvs' use clogging up the net then God help us in the UK.
For those who want the best, HD will always have a market. Although it looks like the streming way of movies and music now is going the lazy way of mp3`s as humanity gets more and more lazy.
Still...exploentital growth cannot live with limited energy. Times will change, you watch.
The problem is the content really isnt it, so much music these days is just disposable nappies, and hollywood churns out garbage by the megaton, why would anyone want to actually own a copy of that?
I've just bought ten brand new cds from online retailer, including Steven Wilson, Obsequiae, The Devil's Blood, Christian Mistress, The Pineapple Thief... they're beautiful, they're mine, I can touch them, it is my collection standing proud next to my collection of books. do they take a lot of space? yes they do but this is what is all about, after all it is a collection. swap it for a streamer or a hard drive? no thanks. also I bought a cd for my girlfriend, as a gift. swap it for a itunes voucher? how romantic...
I have no desire to watch movies on anything but my 50inch Plasma TV and my Bluray player (DVDs also)
I'm not sure the UK internet is up to everyone streaming movies either?
As for music well whats being made these days perhaps is fine on MP3 to the younger generations with iPlayers and tiny ear pieces.
But for real music lovers like myself SACD was the best to date from the silver disc if only it had been marketed better. Stereo SACD is great and not everyone could afford or have room for 5.1 channels of quality hifi speakers.
CD also still sounds great providing the record company manages to make a good job in the studio.
Now we're being told that streaming is the way forward and that record companies will make hi res files to download for even better sound.
To date I have not seen the likes of Pink Floyd, becoming available but instead all I see is music usually jazz or classical from little known artists.
Sure they might sound good when expensive 24 bit DACs are used but I'm still waiting to be convinced. Until I see much more popular music from some the great legends of the 70's, 80's & 90's I'm staying with the CD/SACD format.
For me and my many friends lets keep the silver discs spinning for both Audio and Visual
Yes, but 'slow death' being the key phrase. There won't be an abrupt end to physical media for years yet unless the entertainment co's pull the plug to force the issue. Vinyl lives on, FM radio lives on & Pink Floyd scored the biggest ever selling SACD yet last year. And all these were predicted to be 'dead' by the so-called experts. People like certain things, and physical product is one of them.
Sorry, but too much of this article is confused chaff (and appears to me to be propaganda for an industry agenda - isn't the profit on downloads much bigger?). HMV's decline is no different to many high street shops, and Zavvi too. Both of these have poor 2nd rate online shops compared to Amazon & Play, and they are doing ok for themselves. Physical media sales worldwide will doubtless show a bigger drop than would have normally been seen from declining mass market formats because like almost every luxury product sold in volume around the world in this economic slump they have to go out the window as purse strings tighten. Have you seen the figures for sales of new cars..... New adopters are likely higher earners and so new technologies will hold up.
Also new technology will be seen to prosper even in a slump as people like their new toys (cue Ipad hysteria), but there appears to be a desperate need by the big manfacturers to get another home entertainment hardware purchasing frenzy going. In this case streaming hardware. Of course they want to keep us spending and to save their bacon in the wake of relative failures like Blu-ray and 3D TV to spark the publics imagination into mass new technology adoption like we saw with DVD. Blu-ray was never going to kill-off DVD as many experts insisted it would, and so it has come to pass as Joe Average Public was/is happy with upscaled DVD quality. A new player will only be bought when the current one has died.
On-demand content will eventually kill off mass physical media sales, but I think it will be much slower as a whole than the death of any specific media format that has come and gone before.
.......but surely the best for sound quality is HD Master audio etc which cannot be streamed on these internet sites due to technical reasons, ie bandwidth limitations or am i missing something?
Plus all the money that i have invested in AV components, it makes sense to exploit all the sound goodness from the good "old" blu ray disc which certailnly for me sound is so so important to the whole cinema effect!