Red Envelope Madness!

Tuesday, June 13, 2006

Why DVDs will be around for few more years

Netflix CEO Reed Hastings has been saying for years that "DVDs will dominate for another decade," because the selection of movies available for Internet downloading and Video-on-Demand will remain small, as long as the studios license the content the way they're doing now. The studios have no financial incentive to allow more titles to be downloaded, because they make way more money from selling DVDs:

Studios make money when Netflix and other companies license their movies. But that amount pales compared to how much the studios make when consumers buy discs. Studios earn $17.26 for each DVD sold, but only $2.37 for a movie on demand and $2.25 per DVD rented, according to Tom Adams of Adams Media Research.
Read more via the International Herald Tribune.

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