The Nine Lives of Packaged Media

It’s been said a cat has nine lives. Apparently, so does packaged media.

Make no mistake, streaming video represents the present and future of home entertainment. The fact that the Walt Disney Co. is making branded over-the-top video a primary focus is no outlier. It’s a strategic move emulated throughout the media landscape.

“The launch of [direct-to-consumer] product … is the biggest priority of the company in 2019,” CEO Bob Iger told analysts on the Aug. 7 fiscal call.

And with good reason.

When DEG: The Digital Entertainment Group released half-year industry numbers, the trade group buttressed fiscal results with Netflix & Co.’s revenue prowess.

Indeed, SVOD revenue topped $6.1 billion through June 30 – up nearly 30% from $4.7 billion during the previous-year period. Impressive data considering every other industry metric (except digital sales) is in decline.

Upon closer inspection, however, the results showed packaged media sales of DVD and Blu-ray Disc titles topped $1.9 billion – almost 16% less than the $2.3 billion generated during last year’s period.

And yet, that tally is 65% more than what electronic sellthrough ($1.17 billion) generated, which was up about 10% from $1 billion last year.

That’s noteworthy considering packaged media has been written off on Wall Street, in the media and industrywide for more than a decade. The format is rarely mentioned – and when it is, it’s largely to emphasize its decline or as a throwback to a bygone era when buying movies and TV shows mattered.

Apparently, it still does.

Home entertainment has historically been about transactions, with studios pushing digital sales due to their higher margins than physical. Opportunities to purchase digital are everywhere, physical increasingly less so.

Some argue that the inclusion of a digital file with packaged media products underscores digital’s presence/demand. But most consumers don’t purchase a Blu-ray/DVD/Digital combo for a digital file when cheaper digital alternatives exist.

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