Why isn’t renting or buying digital videos catching on like streaming services?

While streaming video’s ubiquitous, actually buying or renting digital video’s not so much. A recent survey by research firm GfK showed 46% of respondents had never purchased or rented a digital movie or TV show. This contrasted to 86% of the people surveyed having bought or rented a DVD/Blu-ray in the past. Meanwhile, 78% of the people who’d not bought/rented digital videos did pay for streaming services such as Netflix. While DVDs/Blu-rays often come with digital video codes these days, two-thirds of the GfK respondents hadn’t redeemed theirs.

Why aren’t digital video sales or rentals catching on more, despite recent declines in physical disc sales? Below are some of my suggested reasons.

Digital movies and TV shows are too expensive, especially compared to Redbox and Netflix

The biggest reason in my opinion is that digital movies and TV shows are way too expensive. This is especially compared to other video options.

I checked over the digital video options for 2015’s top 10 grossing films, and drew up a chart below comparing their availability and pricing across several areas.

MovieAmazon HD buyAmazon HD rentalAmazon BRRedbox
Star Wars: The Force Awakens$20N/A$25$2
Jurassic World$20N/A$18$2
Avengers: Age of Ultron$20N/A$23$2
Inside Out$20N/A$25$2
Furious 7$10N/A$13$2
Minions$10$4$15$2
The Hunger Games: Mockingjay, Part 2$20N/A$20$2
The Martian$13N/A$15N/A
Cinderella$20N/A$20$2
Spectre$15N/A$15$2

For starters, physical Blu-rays usually cost the same as buying digital files. For those that don’t mind still owning physical media, there’s not much incentive in terms of pricing to go digital. Depending on the film, store, or time of year (the holidays), Blu-Rays will often be on sale; meanwhile, sales on digital videos are often rare-to-infrequent. No contest which option is more appealing to consumers, especially when $5 DVD bins still exist at Target and Wal-Mart.

And that’s just for buying the videos. For renting, it looks even worse. In order to encourage purchases, studios might not bother offering their films for rent digitally, so it won’t even be an option. Note nine out of the ten films above aren’t available to rent digitally. It seems bizarre that last year’s highest-grossing film, “Jurassic World” (worldwide gross: $1.67 billion) is unavailable to rent digitally. Some of the above films, including “World,” are available via pay TV services like HBO.

Redbox kiosk
Flickr photo by Mike Mozart (CC BY)

The pricing also ignores that Redbox still exists. While the company that owns Redbox is having some problems, Redbox kiosks are still readily available in many places, and offer nearly all of the above films as Blu-rays for $2 a night. Compare that to the $4-$5 digital services charge for HD film rentals.

Of course, all of the above prices are for HD versions. For some reason, Hollywood still thinks HD should be charged a premium over standard definition videos.

Overall, Hollywood seems to have taken the idea of (over-inflated) “standard retail pricing” to heart for digital video sales and rentals. Therefore, it’s no surprise that the general public would instead rather spend the cost of two digital HD video rentals ($8-$10) on a month of unlimited Netflix access, or 4-5 Redbox rentals.

DRM and confusing “walled gardens”

See my previous post comparing digital video stores. While I recommended Amazon or Google Play (or Vudu for Ultraviolet enthusiasts), I noted digital rights management and “walled garden” ecosystems made recommending a digital video store difficult. Yes, Ultraviolet exists, but not every video is available through that service.

Streaming media’s advantages

As I noted above, streaming media’s quite cheap in comparison to buying or even renting digital videos. Netflix runs $10 a month, while Amazon Prime Video costs $99 per year. While it can take awhile for films to show up on such services, it seems many people don’t mind the wait, plus there’s plenty of material available to watch in the meantime.

Demanding customers

Home theater enthusiasts, more technically inclined individuals (who can probably rip their own DVDs) or fans of a particular show/film might have their own demands over picture quality, extras, etc. The current state of digital video sales/rentals doesn’t seem to provide exact parity with its physical disc counterparts.

Digital video codes come with physical discs for free

Physical disc buyers often get a free digital video code with their purchases. While this has its own flaws, a digital copy coming for free with Blu-ray purchases might make the idea of buying digital video files on their own less appealing.

Conclusion

In general, Hollywood’s heavy emphasis on DRM, the “walled garden” nature of digital video stores, and artificially high pricing might explain digital videos’ current lack of appeal to the average customer. If Hollywood really wants to see sales or rentals of digital videos rise, they’ll likely have to do one or more of the following:

  • Remove or lessen DRM for better cross-platform compatibility. Not likely, I know.
  • Get everyone—including Disney and Apple—on board with a single cross-platform video service or protocol such as Ultraviolet. Also, offer all videos (including blockbusters, TV shows, and obscure films) through said service.
  • Lower the prices of their films and TV shows to something actually reasonable/competitive.

Otherwise, there’s not much incentive for someone to switch from renting videos for $2 from Redbox, or stop waiting for the film to turn up on Netflix/HBO.

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