The Tangled week was a fitting end to a horrific quarter for optical disc media. There are a lot of issues here:
1. So how many people used coupons on the Tangled Blu-ray? Considering the unit sales that have been reported, it doesn't make any sense that the revenue total was only 48 million dollars, unless a huge number of coupons were used, bringing the average price of the Tangled release well under $20.
2. The 25% number that week for Blu-ray. Years ago I wrote that Blu-ray would approach 25-35% of DVD and peak. What I did not allow for was that DVD would drop as quickly as it has, a drop that appears to be accelerating. So Blu-ray should be rising in percentage, as people drop DVD buying in huge numbers. But when you look at the number of Blu-ray players sold in just the last year, combined with the DVD drop, you arrive at an expected rise for Blu-ray that should be a lot higher than the low 20s percentage gain for the first quarter.
3. Is Blu-ray close to peaking? It's not like anyone who doesn't already own a Blu-ray player is suddenly going to start buying a lot of movies when they get the player. These are the type of people who might buy a couple movies during the year, with nearly all of their movie watching coming from rentals. Just look at the prominent catalog releases. The Star Wars movies are going to be released later this year, along with a second release of the LOTR movies. The Indiana Jones movies are almost a certainty for 2012. By the end of 2012, there won't be very many top tier catalog releases that will be unavailable on Blu-ray. Studios are going to start pushing downloading sometime. And I don't expect the studios to kill off DVD the same way they killed off VHS, unless they're prepared to drop Blu-ray prices even more. At the current rate, it really appears that the best case might be for Blu-ray to peak in 2013, with a very good possibility of that peak coming as early as 2012.
4. The alarming drop for optical disc again brings to mind that expanded 30 day window for rental that we keep reading is working. If it really is working, then that means that optical disc sales numbers would be even worse than they are now.
5. What role do the actual movies play in all of this? Well, I predicted last fall that the weak lineup of movies in the summer of 2010 would lead to a similarly weak 4th quarter. It turned out that, at least for Blu-ray, the numbers were alright. But as soon as the Christmas buying season was over, sales took a turn for the worse. Maybe the video releases in the first quarter were better in 2010. But remember this-the biggest movie in the holiday 2009 season was Avatar. And it wasn't released on video until the second quarter of 2010. So those comparison weeks haven't even arrived yet. BUT THERE IS HOPE. The always Blu-ray friendly comic book adaptions are plentiful this year. We might see a big sales boost in the fourth quarter from these releases.
6. What about the economy? Well, I believe it's too late for a boost in the economy to make a difference. People's buying habits have already changed. They are used to lower prices. They are used to renting instead of buying. Is downloading the answer? I don't know. But I do know that optical disc is not about to make a comeback. The studios need to concern themselves with keeping the optical disc drops to a minimum while finding another source of revenue.
7. The catalog releases during 2011 have really picked up. I don't know if it will keep up, but we can hope. However, the problem is that we are also seeing a rise in subpar, low quality Blu-ray releases. Releases without lossless sound, or even sound that is any better than DVD. Releases not in their original theatrical aspect ratio. Releases from decade old masters that look little if any better than the typical 1080i cable channel showing. Some of these releases even look worse than DVD! Buyer beware, especially if the price is too good to be true.