Friday, April 24, 2009

Movies -- Comfort Entertainment in Recessionary Times (But DVD Sales Are Left in the Dust)

What to do during the current economic melt-down when discretionary funds also have melted down?  Turn to the movies, of course.  This is something that Americans have done since the beginning of time (well, ever since motion pictures have been around anyway).  And, we are flocking to theaters and watching at home in increasing numbers as our cost-effective entertainment of choice.

The only problem is that Americans are increasingly renting movies -- we aren't buying.  And, we aren't renting from Blockbuster either (remember, Blockbuster is edging ever closer to BK).  Instead, we are staying at home and having the movies come to us -- and Netflix is a beneficiary of this trend.  Netflix just announced that it has surged past the 10 million subscriber mark, while Hollywood's DVD sales -- a perennial cash cow -- plummeted nearly 12% last year.  And, Netflix of course is also driving forward online delivery, which increasingly is becoming the delivery method of choice (and will surpass physical distribution in the next few years).  How long will this take?  2 years? 5 years?  Certainly, no longer than that.