Twenty-five years ago this month, the spark was lit for what has grown into a $32 billion-per-year business. The March 1997 U.S. debut of DVD was not only the most successful consumer electronics product launch in history. It was also the start of the digital revolution in home entertainment.
Without DVD, there would be no Blu-ray Disc or 4K Ultra HD Blu-ray, still the format of choice of movie purists and collectors. Without DVD, there would be no digital distribution or streaming. That’s right — there would be no Netflix, no Disney+, no HBO Max, no Hulu, no Peacock, and no Paramount+.
DVD’s compact size and high capacity also made it feasible to put entire TV series in one neat little package, which led to “binge-watching,” rooted in the TV-on-DVD explosion of the early 2000s and now part of popular jargon, and a regular habit, thanks to Netflix.
As a Microsoft tribute ad to Warren Lieberfarb, the Warner Home Video president hailed as the father of DVD, noted, the shiny little digital disc “helped usher in a new era of technology that changed the world.”
Media Play News is celebrating 25 years of digital entertainment with a two-part special report. This month, we will chronicle the development, launch and rise of DVD and its two successor disc formats, Blu-ray Disc and 4K Ultra HD Blu-ray. Next month, we will trace the history of digital distribution, including electronic sellthrough, digital rental and streaming.
The origin of the DVD can be traced back to 1986 when Warner Home Video, under the direction of president Warren Lieberfarb, first advocated for the development of a format to put movies on a five-inch optical disc, similar to the CD that had taken the music industry by storm just a few years earlier.
As the years progressed, Lieberfarb’s drive to develop a video disc for the distribution of movies intensified. After more than a decade of steady and significant growth, the home video industry — centered on the rental VHS videocassette — had begun to flatten. The novelty of renting movies was fast wearing off, and the cable business was aggressively courting consumers with more and more appealing pay-per-view options.
The path to DVD, however, was far from a straight one. It had many twists and turns.
“CD was launched in 1982, and when this became a mass-market success, it really drove the home video industry through a number of trials and errors,” said veteran industry consultant Marc Finer. “This included everything from evaluating the somewhat outdated Video CD format — which was limited to 80 minutes of video and/or still images — to rebranding the analog Laserdisc as CD Video, which was scrapped because it was felt this would simply cause consumer confusion. The ultimate solution was to develop an entirely new format that combined the portability and convenience of the audio CD with the latest state-of-the art video technology.”
Lieberfarb envisioned this new type of video disc riding the coattails of the CD explosion and turning consumers from renters into buyers — and generating significantly higher profits for the studios. He charged his organization with achieving this vision in an attractive, convenient, collectible form that — unlike the high-cost, cumbersome existing Laserdisc system — could be easily and inexpensively replicated.
“The goal was to have a form of packaged media that would be economically superior to the margins and royalties of pay-per-view, and to offer the consumers higher quality and convenience than the VHS rental market,” Lieberfarb said.
The DVD project — code-named TAZ after Warner’s whirling Tasmanian Devil cartoon character — plunged Warner Home Video into a new world of advanced technology. Lieberfarb and his team, working closely with Toshiba Corp., soon became familiar with such new concepts as a bonded disc, digital assets management, authoring and other related production issues.
Beyond developing these new technological skills, the Warner team had to negotiate the specifications of the DVD system with the very different corporate cultures of the CE and IT industries, as well as the unique business cultures of its Asian and European partners. Within the Warner Home Video organization, a “Manhattan Project” spirit developed, as more members of management were brought in to apply their special expertise to TAZ — encouraged by the new format’s potential.
Then, in 1992, Sony and Philips announced their own intent to develop a high-capacity video disc utilizing CD replication technology.
Development work at Warner accelerated. The Warner-Toshiba consortium in June 1994 officially announced the development of a five-inch Super Density (SD) disc, which could hold an entire movie. Three months later, in September, Sony and Philips announced their own specifications for a high-capacity video disc, called the Multimedia Compact Disc (MMCD).
Fears of a format war rippled through the industry as 1994 turned into 1995. But with the disruptive battle between VHS and Betamax still fresh on everyone’s minds the rival disc consortiums — Warner and Toshiba on one side, Sony and Philips on the other — began working on a compromise.
The final agreement was announced in December 1995, with both sides agreeing to support something called the DVD, which initially stood for “Digital Versatile Disc,” a moniker that over time evolved to Digital Video Disc.
“We all knew that we needed to work out a solution to bring a unified and fully supported new technology to market,” said Mike Fidler, who just before the March 1997 launch of DVD moved from Pioneer Electronics to Sony Electronics, where he was SVP of marketing. “We understood that consumers, as well as retailers and stakeholders, needed a single solution that could deliver all the incredible benefits of a CD-like optical disc, including high performance, high convenience and low cost, to drive a new sellthrough video business. All companies worked together to deliver this vision.”
‘A True Pop Culture Phenomenon’
After that, things happened fast. In November 1996, the first DVD players went on sale in Japan with a small assortment of titles, mostly music videos. The first feature films on DVD appeared in Japan on December 20 — The Assassin, Blade Runner, Eraser and The Fugitive from Warner.
Consumer electronics companies showecased their new DVD players at the January 1997 CES in Las Vegas. There was no content yet available to play on the new machines, but they attracted quite a bit of attention–and commanded a fair amount of floor space.
For the U.S. software launch, a handful of Imax documentaries arrived on March 19, 1997, with the initial batch of DVDs from Warner and MGM arriving in a seven-city test March 24. Titles in that first box of about 20 movies included Twister, Bonnie & Clyde and The Mask, all packaged in the cardboard “snapcase” that Lieberfarb is said to have preferred.
In May 1997 the first music video titles were released on DVD, including Eric Clapton: Unplugged.
In June 1997, the DVD Video Group was established, with the goal of being the “singular source” of information about the format, Billboard observed at the time. Organized by the late Philips executive Emiel Petrone, the group helped facilitate a unified marketing message across all of the industry’s leading companies.
In July 1997 what was then MCA/Universal Home Video said it would support the nascent format. That month, the Video Software Dealers Association (VSDA) held its annual convention in Las Vegas, and devoted the opening business session to a panel of studio home video presidents discussing DVD and its potential.
In August 1997 Warner went national with DVD, putting discs in nearly every major home entertainment retail chain, including Best Buy, Musicland and Tower Records. And in September Walt Disney Studios announced its support for DVD as well.
Bob Chapek, CEO of The Walt Disney Co., remembers those days well. “At that point I was SVP of marketing for home video, running marketing, essentially,” he said. “What I was actually doing was making sure those discs would actually play, because if you remember there were some playability issues, as there are with all new formats, compatibility issues between players and discs, and making sure that anything we put in the marketplace was going to actually deliver on what the consumer expected. And then, shortly thereafter, we started innovating, trying to take full advantage of all the capabilities that the new digital format had. More than just no need to rewind, right? Or you can start a movie anywhere you wanted to — there wasn’t that linearity, and we tried to take advantage of that in so many ways.”
Twentieth Century Fox, led by feisty ex-Disney home video chief Bill Mechanic, was a conspicuous holdout — in part, observers said, because of Lieberfarb’s command of the spotlight. Citing piracy concerns, Mechanic pushed for digital VHS, the videocassette’s last gasp, which never really got off the ground. When a reporter subsequently asked when Fox would join the other studios in supporting DVD, Mechanic’s flippant response was, “Ask Warren Lieberfarb.”
Then, just as DVD was beginning to gain some momentum, along came Divx, a pay-per-play variant championed by the CEO of Circuit City, one of the country’s major consumer electronics retailers. Fox, not surprisingly, embraced Divx, as did Paramount, Universal, Disney and DreamWorks.
But Divx died a surprisingly swift death, done in by a failure of consumer electronics manufacturers — who were focusing on making more, better and cheaper DVD players — to support it. The playing field was obstacle-free, and DVD’s popularity began to accelerate.
In February 1998 Air Force One became the first DVD to ship more than 100,000 units. In April, Paramount announced its intent to release movies on DVD, followed in August by a reluctant 20th Century Fox and, in September, by DreamWorks.
The percentage of people who switched from renting to buying movies kept rising, surpassing even Lieberfarb’s initial projections. In November 1998 the 1 millionth DVD player was shipped to retail; in December it was reported that DVD players were in 1.4 million U.S. homes, and that these households had snapped up a whopping 23 million discs that year alone. Computer makers announced shipments of 6 million PCs with DVD drives.
In August 1999 Titanic became the first DVD to ship 1 million units. In October, Disney announced that the first of its vaunted animated classics to be released on disc would be Pinocchio. And by December 1999 4 million U.S. households had at least one DVD player; software shipments, meanwhile, had quadrupled to 98 million discs.
“It was a heady and exciting time,” said Fritz Friedman, who at the time headed worldwide publicity for Columbia TriStar Home Video (now Sony Pictures Home Entertainment).
“DVD brought home entertainment into the digital age. Digitized content provided such superior image and sound quality that once the consumer experienced DVD, it was hard to go back to tape. Commercially, thanks to the bigger margins on DVD and robust sales, the home entertainment industry entered what I would say was the beginning of a ‘golden age’ in our business. And this success subsequently gave our home entertainment execs seats at the studios’ theatrical production meetings because the huge revenues generated by DVD contributed greatly to a film’s bottom line. Thus, home entertainment revenue potential became a vital consideration in determining theatrical release slates.”
To enhance the value proposition of buying movies rather than renting them, studios began adding bonus content, from deleted scenes and bloopers to detailed documentaries about the making of the film, and director and cast commentaries.
“For New Line, introducing the new DVD format was pure nirvana, energizing and challenging us to think completely out of the box,” said Stephen Einhorn, at the time president of New Line Home Video.
Chapek adds, “I work with Pete Docter still to this day, and I remember innovating on Monsters Inc., with the two paths on the menus, one for kids, one for adults, and it was a completely different experience.”
The swift rise of DVD also allowed two young tech entrepreneurs, Reed Hastings and Marc Randolph, to revive the floundering rental market by doing away with the most hated aspect of the video rental experience: returning copies to the video store, often with hefty late fees.
After first making sure a DVD was below the 13-ounce limit for first-class mail, they launched a company called Netflix that allowed customers to rent movies by mail and then return them in a postage-paid envelope. Hastings, who provided $2.5 million in seed money, had reportedly come up with the idea after he was forced to shell out $40 in late fees for an overdue copy of Apollo 13. By 1999 the company had settled on a subscription model; Hastings enlisted two veteran video “rentailers,” Ted Sarandos and Mitch Lowe, as his wingmen and sent them on the road to talk up the Netflix concept, armed with a white plastic mailbox as a prop.
The business grew rapidly; within a year there were 100,000 subscribers, including Colin Powell. In early 2000 Hastings and Randolph offered to sell Netflix to Blockbuster for $50 million. Blockbuster turned them down.
By 2003 Netflix had 1 million subscribers, and two years later the service was reportedly renting 1 million movies a day. Blockbuster, meanwhile, was on a losing streak, culminating in the chain’s 2010 bankruptcy.
In the meantime, DVD’s fortunes kept rising. In October 2000 Sony’s highly anticipated new PlayStation 2 video game console came to market with DVD playback. By December of that year DVD players were in 13 million homes, and it was reported that consumers during the year had bought 182 million discs.
In June 2001 holdout George Lucas announced that Star Wars: Episode I — The Phantom Menace would appear on DVD in October, the first “Star Wars” film to be available on the format.
In October 2001 MCA/Universal announced first-week sales of 25 million units of The Mummy Returns. A few days later, Disney said the DVD debut of Snow White and the Seven Dwarfs was the first DVD title to sell a million copies in a single day. That kicked off a running sales-record battle, with the trade press inundated with press release after press release touting a new victory of one sort or another.
By December 2001 the industry was preparing for a very giddy, gleeful Christmas. The latest stats showed DVD players were now in 25 million U.S. households, with total discs sales for the year at 364 million.
In April 2002 DVD player shipments hit 30 million. Two months later, Netflix — the upstart rental organization that offered DVD rentals by mail — opened 10 distribution centers, paving the way for next-day delivery. Also in June, the Motion Picture Association of America reported that DVD accounted for 40% of the studios’ total worldwide revenue.
In August 2002 The New York Times dubbed DVD “the most successful home entertainment device in history … a true pop-culture phenomenon.” A month later, Disney’s Monsters, Inc. became the first major animated film to sell more copies on DVD (7 million) than VHS (4 million) its first week in stores.
In October 2002 DEG: The Digital Entertainment Group (originally, the DVD Video Group) reported that 153 million DVDs had been shipped to retailers in the third quarter, twice as many as in the third quarter of the previous year. Since launch, the DEG reported, more than 1.1 billion DVDs had been shipped to retailers — 425 million, or nearly 40%, in the first nine months of 2002.
As holiday sales began to heat up, DVD was again front and center — both at the sales counter and as a press-release topic from the studios. In November, what was then Columbia TriStar Home Entertainment (now Sony Pictures Home Entertainment) said Spider-Man set a new sales record, shipping 26 million units in North America, 20 million of them DVD.
In September 2003 the studios began to assemble a variety of multi-disc boxed sets aimed at the gift market and diehard DVD fans looking to enhance their collections. In October, analyst Tom Adams of Adams Media Research revised buy rates upward to 15.5 DVD units per household per year, citing “phenomenal” sellthrough growth in the first half of the year. By December 2003 50 million U.S. households had at least one DVD player. The following month the DEG reported that consumers had spent $11.6 billion that year on buying DVDs and another $4.5 billion on renting discs.
This success could not have been achieved without retail support. As soon as DVD began to take off, the big mass merchants rallied behind it, using DVD to drive store traffic even if it meant selling discs at loss-leader prices.
Rental dealers, even the mighty Blockbuster chain, were slow to migrate to DVD, and by the time they did the business was firmly in the hands of the big chains. There was no way they could compete on price.
Netflix wasn’t the only company to delve into DVD rental. McDonald’s began renting DVDs in vending machines and in 2005 sold half the company, known as Redbox for its bright-red kiosks, to Coinstar, whose primary business was coin and bill-changing machines. Kiosks were placed outside high-traffic discount stores, supermarkets and drug stores. Redbox flourished — despite litigation from studios that felt the cheap dollar rentals cannibalized DVD sales. In 2016 Redbox was sold to Apollo Global Management and became a standalone company.
Consumer spending on DVD purchases hit $15.5 billion in 2004, up 33% from the prior year. But in the fourth quarter of that year softer-than-expected sales on certain new mega-hit theatricals suggested to some that the gravy train might be running out of steam.
Bob Chapek, then president of the Walt Disney Co.’s home video distribution arm, Buena Vista Home Entertainment, told Home Media Magazine at the time, “It’s an indicator that things might be slowing down.
I expect that next year we’re going to see a significant fall in the buy rate per household. Maybe the 30th percentile will buy as much as the 20th, but with the 70th percentile you start to hit the laggards.”
Even so, in February 2005 DreamWorks’ Shark Tale sets a new record for a February sellthrough release, selling 6 million units its first week in stores. In April the DEG announced DVD shipments of more than 400 million units in the first quarter of the year, up 21% from the first quarter of 2004.
VideoScan data showed sales to consumers rose 20.5% in the same period.
Then came a dismal 2005 holiday season, with title after title missing its sales target. The press releases touting new sales records abruptly stopped. And when the year-end numbers were tallied, they showed DVD sales with a mere 5% gain over 2004 — a far cry from the double-digit increases to which the industry had grown accustomed.
Observers attributed the slowdown in DVD sales to a maturing market, as well as the emergence of high-definition TVs. But worry not, studio executives told fretful retailers: A next-generation, high-definition disc format is just months away from launch.
The only problem was, there were two of them.
Work on a high-definition disc format began even as DVD was in the early stages of its meteoric rise in popularity. The best minds of the consumer electronics industry knew that as clear and crisp as DVDs looked on regular TVs, they were not meant for the new breed of high-definition TVs poised to take over the market, and it was imperative to develop a next-generation optical disc that could present viewers with true 1080p HD.
After years of lab development, Sony Corp. in 2000 unveiled a pair of projects — one in partnership with Pioneer — that employed blue-laser technology, with the promise of far greater capacity than DVD. The first prototypes were displayed in 2000, and two years later the Blu-ray Disc rewritable format was officially unveiled. The nine founding members of the format — Hitachi, LG Electronics, Matsushita Electric Industrial (which later became Panasonic), Pioneer, Royal Philips Electronics, Samsung, Sharp, Sony and Thomson Multimedia (which later became Technicolor) — began releasing specifications, and the first consumer Blu-ray Disc home recording device, the Sony BDZ-S77, was released in Japan in April 2003 with a price tag of $3,800. It was touted as a means of recording high-definition broadcasts; no studio content had yet been released on the new disc.
But the DVD Forum, led by Toshiba, had other ideas. Also in 2003, the consortium behind the original DVD launch adopted specs for a high-definition successor that they called HD DVD. It employed red-laser technology, the same as DVD, but on a higher-density disc.
The battle lines were drawn around a fundamental philosophical difference. The HD DVD camp wanted to ramp things up as quickly as possible, with a format that was evolutionary in nature: It used the same red-laser technology as standard DVD, but on a dual-layer disc with three times the capacity of a standard DVD — ample room for a high-definition picture, better sound and more extras. It was also an open format that could be brought to market quickly to start meeting the needs of consumers looking for high-def content on disc.
Blu-ray Disc, on the other hand, was a revolutionary new product that employed blue-laser technology and offered even greater capacity — six times that of a standard DVD. It wasn’t seen as an interim step, but as a “format of the future” more than capable of accommodating expanded interactivity and associated broadband services — a promise that certainly has come to pass.
Warren Lieberfarb, the father of DVD, was among Blu-ray’s harshest critics, calling it “vaporware” and questioning whether it would ever be brought to market.
On the content side, Ben Feingold, who at the time was president of what is now Sony Pictures Home Entertainment, pushed for studios to rally behind Blu-ray Disc several years before they ultimately did. In a presentation to the Sony board, he recalls, “I said, ‘We need to accelerate the next-generation format,’ and their response was, ‘We’re doing so well with DVD, why would we go to a new format?’ I told them I was noticing a very sharp drop in early adopter purchases, and I was kind of alarmed at the decay.
I told the board we have to obsolesce to keep ourselves in the game, like the tech companies are always doing, with a better product. Sony agreed, but everyone else said we don’t want to do that.”
Blu-ray Disc ultimately was launched in the United States in June 2006, at the same time that HD DVD appeared on the scene. What followed was a format war every bit as bruising and destructive as critics had feared. Studios lined up on either side of the aisle, with Universal, Paramount and Warner Bros. supporting HD DVD, and Sony, Disney and Fox rallying behind Blu-ray Disc.
Consumers, caught in the middle, were understandably confused — and reacted by not buying either format. Fueling their hesitancy was the emergence of digital distribution options. Consumers had become accustomed to buying their music over the internet — so why not movies?
Netflix thought the same; in 2007, just one year after the launch of Blu-ray and HD DVD, the company augmented its disc-by-mail rental business by offering its subscribers the chance to “stream” movies and TV shows over the internet.
The format war, Feingold said, “was very damaging — it delayed everything by about 18 months.”
Why wasn’t there a compromise, as there had been with DVD?
“There were two issues,” Feingold said. “There were competing hardware companies that didn’t want to agree on a standard — led by Toshiba on one side and Sony on the other — because they were fighting over patents, royalties and pride. And the second issue was that studios were being induced through compensation to align with one side or the other. I made a bunch of deals with a number of companies to support the Blu-ray format.”
Ironically, 2006 turned out to be a banner year for physical media. Consumers spent more on disc sales and rentals than they ever had before — or since. Total disc sales generated $16.6 billion in consumer spending, while disc rentals brought in another $7.5 billion.
Shortly after the two rival high-def formats came on the market, Warner Bros. and Paramount said they would support both formats. At the January 2007 CES in Las Vegas, the Warner Home Video team, in a nod toward appeasement, debuted a two-sided disc with HD DVD on one side and Blu-ray on the other. Even the packaging was half blue, half red, the colors adopted by the competing formats.
A big boost to Blu-ray came in late 2006 when Sony put a Blu-ray Disc drive in its new PlayStation 3.
In March 2007 Sony Pictures Home Entertainment’s Casino Royale was the first Blu-ray Disc to ship more than 100,000 units. That was also the same month that Blu-ray sales topped 1 million.
By this time, Blu-ray was already outselling HD DVD, and in June 2007 Blockbuster announced it would carry only Blu-ray. Disney gave Blu-ray Disc a significant push with extravagant media events for new Blu-ray releases such as the first two “Pirates of the Caribbean” movies in May 2007 and, that summer, an educational mall tour.
The War Is Over
In January 2008 Warner announced it would support only Blu-ray after May of that year. Walmart and Netflix soon announced the companies would carry only Blu-ray. And on February 19, 2008, the high-definition format war officially ended, with Toshiba announcing it would no longer market HD DVD. Both Universal and Paramount, which several months before had gone all in on HD DVD, quickly announced their support for Blu-ray Disc.
By the end of 2008 there were more than 10.7 million Blu-ray players in the market, outpacing the adoption of DVD (5.4 million players by the end of its third year), according to the Blu-ray Disc Association. In October 2008 Walt Disney Studios Home Entertainment introduced the industry’s first Blu-ray combo pack, Sleeping Beauty, which sought to ease the transition from DVD to Blu-ray Disc by offering consumers the chance to get both formats in one package. Wall-E followed in November and High School Musical 3 came in February 2009. They were so well-received that the combo pack soon became an industry standard.
The January 2009 CES saw huge electronics industry support for the format, with Panasonic announcing the world’s first portable Blu-ray player, and Sharp unveiling HDTVs with built-in Blu-ray drives. By mid-2009 there were more than 2,500 Blu-ray releases in the market, and by the end of the year home entertainment leaders noted that despite the global economic meltdown Blu-ray Disc sales were up a whopping 70% from the prior year. Also in late 2009, former Blu-ray rival Toshiba announced it would begin selling Blu-ray players and laptops with Blu-ray drives.
The creative community also rallied behind Blu-ray. Director James Cameron said, “I wish all my movies could be seen by everyone at home in Blu-ray. It’s the image quality, it’s the color, it’s the quality control — it’s everything.”
A novel tangent briefly captivated the consumer electronics press, if not the consumer: 3D Blu-ray. CES 2010 was something of a coming out party for the throwback to the 1950s theatrical craze, with a flurry of 3D Blu-ray hardware announcements and commitments by DreamWorks Animation, Walt Disney Studios Home Entertainment, and Sony Pictures Home Entertainment to release 1080p 3D discs to owners of 3DTVs utilizing active-shutter glasses.
The glasses, however, hastened the format’s downfall. They were expensive, easily broken or misplaced, had to be recharged, and proprietary to each manufacturer. HDTVs with passive 3D, using glasses with polarized lenses of the same type employed by theatrical 3D, didn’t catch on either. And with limited content suitable for 3D presentation, the format experienced a rather quick decline.
Regular Blu-ray Disc, meanwhile, continued to gain ground, although not at the level of DVD. Consumers were reluctant to ditch their DVD collections and repurchase their libraries. Even if the DVD picture quality wasn’t quite as good, many considered it good enough. There was also a new kid on the block — disc-based video games — that siphoned away the young male consumers who had played a key role in DVD’s initial success.
“When we launched DVD there was no game platform other than cartridge,” Feingold said. “VHS sellthrough was pretty much limited to family-oriented product, with practically no ‘R’-rated product. DVD changed that, and guys started buying movies. Then the game platforms came, and guys started playing video games instead of buying movies.”
In March 2010 Redbox announced it would begin offering Blu-ray rentals at its kiosks in the summer. A month later, Avatar became the best-selling Blu-ray Disc ever, with initial sales of more than 1.5 million copies.
Blu-ray Disc sales up shot up another 68% in 2010, contributing $1.8 billion in revenue, with 11.25 million Blu-ray devices sold for the year, bringing the total U.S. installed base to more than 27 million households.
The Blu-ray Disc tide continued to swell, even as Netflix was growing its streaming service and studios began offering movies for sale over the internet, as downloads, through iTunes and other services.
But then history repeated itself: A new, even better TV came on the market, and, again, physical media didn’t have a seat at the table.
The first 4K TVs, billed as “ultra high-definition,” or UHD, were previewed at the January 2012 CES. They boasted more than 8 million pixels, compared to about 2 million pixels in a 1080p HDTV.
But as the Los Angeles Times opined at the time, “with so many consumers more than happy with 1080p (and 720p, a less-intensive level of high-definition), why bother?”
What’s more, the paper noted, “there’s nothing to watch in that format.”
It wasn’t until CES 2016 that a premium version of the disc format — 4K Ultra HD, with HDR, offering greater contrast and deeper, more life-like colors — was introduced, this time with full support from both consumer electronics manufacturers and the studios.
A Third Generation of Disc
The first 4K Ultra HD Blu-rays went on sale in March 2016 and broke all sales expectations, even though there were just two players on the market, from Panasonic and Samsung. By then, more than 84 million U.S. households had at least one regular Blu-ray Disc player, and consumers had bought some 750 million Blu-ray Discs.
In October 2016 Eddie Cunningham, then-president of Universal Pictures Home Entertainment, said 4K Ultra HD Blu-ray “represents a transformative time in home entertainment,” delivering “an unprecedented viewing experience which we expect in turn will cement the format as the best way to watch movies at home.”
In January 2022 the Consumer Technology Association (CTA) reported that 4K Ultra HD TV penetration grew from 36% of U.S. households in 2020 to 52% in 2021, while DEG: The Digital Entertainment Group in February 2022 reported that sales of 4K Ultra HD Blu-ray Discs rose 6% in the fourth quarter of 2021 — the latest in a series of steady sales gains.
A Proud Legacy
With 4K movies and TV shows readily available from Netflix and other streaming services, 4K Ultra HD Blu-ray has yet to expand beyond a niche market. And with streaming now accounting for nearly 80% of all consumer home entertainment spending, it is doubtful that it ever will.
Physical media remains a viable business, but its popularity has been on a downward slide for the past decade and a half. Consumer spending is a fraction of what it was in those heady days of 2006 when consumers spent more than $24 billion on buying and renting discs — at the time, mostly DVDs.
The following year, disc sales and rentals posted their first-ever decline, and as digital distribution and, in particular, streaming, took hold, the annual drop in consumer spending on physical media hit double digits.
Most recently, according to DEG estimates, total disc sales generated just $1.97 billion, while rentals brought in $822.7 million.
The total, $2.8 billion, is less than 12% of the 2006 tally.
And yet the disc’s legacy remains. As head of Studio Distribution Services (SDS), a joint venture between Universal Pictures Home Entertainment and Warner Bros. Home Entertainment to distribute DVDs, Blu-ray Discs and 4K Ultra HDs in North America, Cunningham is one of the few Hollywood executives who are still focused on the disc.
He’s quick to underscore DVD’s importance in the digital entertainment food chain — and maintains the disc business, small as it has become, still has years of life ahead.
“In many ways, the DVD was the beginning of the digital revolution for our industry,” he said. “While packaged media no longer occupies a lofty position near the pinnacle of the media business, it is still a significant category. Many consumers and collectors are still remarkably committed to physical purchasing, and the retail industry remains steadfast in their support for it.
“The Blu-ray Disc and 4K Ultra HD formats are still the best way to enjoy the highest-quality, uninterrupted, picture and sound in the home. And as long as retail stays engaged, we will have a good business for many years to come.”