A Return to Blu-ray as Streaming Value Evaporates

Physical media may be on life-support, but rumors of its demise are overstated. Its heyday as a significant slice of film industry revenue may be over, but there’s good reason to believe the movie-disc will live on as a healthy niche that struggling film industry can’t afford to ignore into the foreseeable future. There may even be some optimism that physical media has already seen its rock-bottom and can only go one direction from here. 

Those of us who stopped paying cable bills anytime through the 2000s lived through it. We cheered-on streaming video or the “Subscription Video on Demand” (SVoD) market as it threw a hand grenade into the cable TV industrial complex. But we may not have expected physical media would be collateral damage. A 2023 report from the Digital Entertainment Group says, after over a decade of declines, movie-disc media (DVD/BD/UHD) revenue dropped an additional 28% through 2023. I wish I had more firm good news for movie-disc media, but I’m remaining optimistic that as the SVoD market matures and passes from its experimental disruptive technology phase, more of us will return to the value in owning the disc again.

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Peak Streaming TV

When streaming came along, video on Demand (VoD) was not a new concept. Cable and satellite services experimented with VoD services as far back as the 90s. But the real innovation with on-demand TV and movies would arrive in the high-speed Internet-era, and it was called Netflix. Honestly, what’s not to love about an ad-free, all-you-can-watch video buffet that can be consumed on any connected screen? 

Brief Rise of Streaming Timeline:

• Netflix, an obscure mail-in DVD rental service announced web-based video on demand in Jan. 2007, just days after Steve Jobs introduced the iPhone

• 2010 Netflix goes international, starting with Canada before conquering the world 

• 2013 First net-reduction in total US cable/satellite TV subscribers numbered a quarter-million as “cord cutting” enters the American lexicon 

• 2019/20 Disney+ & HBO Max (Warner), major studios enter the SVoD market 

• 2023 Cord-cut US households outnumber cable TV 

• 2023 Physical movie-disc media sees its sixteenth straight year of sales decline

By the 2010s households across America were replacing monthly cable bills that averaged between $80-$200 with a broadband Internet connection and an inexpensive ad-free, unlimited streaming video service called Netflix. When the first major SVoD service was the only game in town it built an audience on licensed TV programming and movies from nearly any network or film studio. Early adopters may remember when a Netflix subscription was only $8/mo and paired with a free, ad-supported Hulu subscription you had a popular one-two punch for movies, legacy and current TV with no cable bill.

Unsustainable Streaming Flood

Did anyone really think the economics of an $8/mo centralized streaming service could last? The cord cutting trend took a lot of potential revenue out of the entertainment industry. Meanwhile, movie theater attendance had been in steep decline since long before the virus struck in 2020. Cable TV may have simultaneously been among America’s most profitable and hated businesses, but it had it all! From outrageous bills to network advertising, cable providers and the networks it carried had such large, often captive markets that it could afford to fund what we call the “golden age of TV” in the late 90s & 2000s.

This may be an unpopular opinion, but early streaming adopters were taking part in an experiment with the Netflix library in its $8/mo-era. We got away with it while we could, but what we were viewing was provided at losses, covered mostly by borrowing and investors to provide us with a preview of a home entertainment future. It was the proverbial free sample of crack to get us hooked. One way or another, the real cost was coming to our homes to roost. 

In 2023, big-tech unlocked the “Disrupt Home Entertainment” achievement trophy when cord cutters outnumbered cable subscribers. The big media companies were already working on getting that revenue back when they began to imitate Netflix. The media conglomerates started tech-companies to launch their own streaming services while Netflix built its own legitimate media production company—what could possibly go wrong?

Anonymous TV Industry Insiders | Vulture, June 2023: 

“Everything became big tech — the Amazon model of ‘We don’t actually have to make money; we just have to show shareholder growth.’ Everyone said, ‘Great. That seems like the thing to do.’ Which essentially was like, ‘Let’s all commit ritual suicide. Let’s take one of the truly successful money-printing inventions in the history of the modern world — which was the carriage system with cable television — and let’s just end it and reinvent ourselves as tech companies, where we pour billions down the drain in pursuit of a return that is completely speculative, still, this many years into it.’”

“I think we may be in the world’s biggest Ponzi scheme.”

Peak Streaming

Now that we’re years into competitive streaming we’ve started to see the cracks. According to one media analyst, as the seemingly unlimited growth of the SVoD market has begun to taper off, only Netflix has proved profitable as a standalone streaming business. For some companies, losing money in streaming may be seen as an investment in a retention or marketing strategy for other profitable services. Amazon and Apple may use streaming to promote their services or ecosystem. Disney may have even pitched streaming to its board as marketing for its theme parks and theatrical releases, but that doesn't seem to be working. For film studios sinking in losses at the movies, starting a streaming service has been like throwing it an anchor.

Behind-the-Scenes Hollywood Legend Talks Streaming 

Rob Long is a Hollywood writer/executive and podcaster that shares his often humorous takes on the entertainment industry as co-host of the Glop Culture podcast. The natural humor he brings to his writing and podcasting is a gift he’s employed since he started in the business writing for the comedy TV show Cheers. Long has had a lot to say about the sorry state of entertainment production in the age of streaming. He seems to imply that production companies building streaming services and tech companies (Netflix, Apple & Amazon) creating studio productions is just bad business. But he says they’ve been able to get away with reckless spending due to a period of low-interest rates and relatively free-flowing investment capital. On the Unspeakable podcast with Meghan Daum Rob Long said: 

”Netflix grew on borrowed money… [while production studios] spent on building these stupid companies [streaming services]. There is no reason on Earth why the world needs, or where the economically rational choice would be to build “Paramount Plus”. It’s so lazy, they spent so much money and didn’t even think… they just named everything “Plus”! There’s even an MGM Plus!… When money was essentially free, they made poor decisions… ”

Long has told stories about one important job of a movie producer, working the phone to acquire investment into movies. The business has always worked this way and Long says that throughout film history, the most successful business-sectors in any given era will reliably invest in Hollywood despite its risks. Fortunately for these producers, big companies and the powerful people behind them are charmed by the glamor and prestige of being part of Hollywood while wanting their brands associated with it.

In earlier eras of entertainment this may have resulted in Mutual of Omaha putting its name on a wildlife documentary series. But the consumer electronics industry took its relationships with Hollywood to the next level in the 1980s by acquiring them, and giving us preview of what was to come. GE acquired RCA which included NBC. Sony bought Columbia pictures to create Sony Pictures. Comcast bought NBC-Universal from GE in 2011. But these days, the most successful business sector is big-tech, which is simultaneously investing in the industry, while gravely disrupting it. The two business-worlds seem to be merging after a catastrophic collision with Netflix that turned the tech-startup culture of investment spending over to Hollywood.

Drunk with Growth Potential

The COVID restrictions of 2020-2021 arrived just as Disney+ and a revamped unified HBO Max (HBO/Warner/Discovery) began. The SVoD market was already ripe for growth, but the COVID-era may have seduced streamers into exaggerated impressions of demand. According to a Deloitte Digital Media Trends study soon after the start of widespread COVID restrictions, the percentage of Americans that subscribed to one or more streaming services jumped by about 11%, while the average American household increased the number of streaming services from 3 to 4 while subscriber churn only declined slightly. That’s a little smaller growth than I would have guessed but according to Neilson, the real growth during the high-pandemic months was in viewing time. From Neilson Insights:

“During the height of countrywide shelter-in-place orders across the U.S. amid the COVID-19 pandemic, weekly time spent watching connected TVs grew along with overall media use, rising by more than 1 billion hours as the weeks passed.”

- Nielsen Insights 

Two streaming market Statista charts revenue Vs. growth by year, show us a market that has found its ceiling.

SVoD Market: Global Revenue by Year (Statista)

SVoD Market: Global Revenue Year-Over-Year Growth (Statista)

2023-2024 - Streaming’s Real Cost Passed to Consumers 

By now we’ve all seen a parade of streaming service price hikes accompanied by lost revenue. Worst of all, we’ve seen movies and shows pulled from the services that produced them. Much of streaming’s new lost media were only produced over the last few years and are now locked away by its intellectual property owner, potentially never to be seen again. That the cost of streaming specific titles is higher than the rewards of its presence on the service speaks to an industry that drank a bit too much of its own Kool-Aid. The money being saved could be hosting cost, per-stream residuals and maybe the service gets a tax write-off. But for some of the freshly pulled Disney+ plus content, it could be a form of reputation management or damage control to keep subscribers from accidentally watching that Willow remake. 

Loss... or "investment" into Direct to Consumer (DTC) streaming by media company 2020-2022:

Timeline of a Broken Streaming Video Business: 

Oct 2022 - Why Streaming Content is Becoming the Newest Form of Lost Media  

Nov 2022 - Warner Bros. Discovery Lost $2.3 Billion 

Jan 2023 - Netflix will pull cheapest ad-free plan after latest price hike

Jan 2023 - Netflix is preparing investors and users for more price hikes in 2024

April 2023 -  16 Fantastic shows that have been inexplicably yanked from their streaming services

June 2023 - Disney Takes $1.5B Write-Down After Removing Shows Off Disney+ and Hulu

Sept 2023 - Streaming Has Reached Its Sad, Predictable Fate

Oct 2023  - Disney Plus Price Hike

Nov 2023 - (HBO) Max’s Standard No-Ads Plan Is Dropping 4K Ultra HD Content, Reducing Concurrent Streams From Three to Two

Nov 2023 - Disney+ Loses $283-million

Dec 2023 - PlayStation owners rage over plot to delete downloads you’ve paid for with NO refund

Feb 2024 - Prime Video Removes Dolby Vision and Dolby Atmos Unless You Pay More

Streaming Will Only Get Worse

Where will streaming video will go next? My guess is that media conglomerates with ties to communications companies will form a team-up. Comcast (NBCUniversal) and AT&T (Warner) may partner with Disney to take the lead on at least one unified streaming service in a sort-of Hulu 2.0 enterprise that will compete with or absorb Netflix. They’ll find clever ways to sneak more advertising throughout user-interfaces and content, even on more expensive premium “ad-free” subscriptions. Soon, we’ll forget about “cord cutting” and a not-so-new term will re-enter the American entertainment lexicon: “Bundles”. Perhaps a new generation of bundles will be tied to your ISP or wireless network fees and they may even involve contracts to lock you in. It will be just like cable TV, but in the cloud. Streaming can't continue operating at losses for much longer, eventually its true cost will be passed on to consumers. I'm hopeful this may present opportunity for physical media.

Gene summarizes the state of streaming video! 

Back to Physical Media

I’m not here to tell you that you can stick it to the man through consumption. But by collecting movies on optical-disc in any form, you will at least support a more reliable and egalitarian method of media consumption. You’ll achieve the only real ownership of your movies in the true constitutional sense that exercises your right to private property. If James Madison permitted himself such frivolities, he would almost certainly keep a collection of his favorite movies on disc. If you care about sound and video quality, the new generations of optical disc is your best bet this side of Kaliedescape.

After over a decade of decline, there’s still a robust, if niche market for physical movie-disc media—but it needs your support! It may be too soon to provide any solid sales data to support it, but I believe the market for DVD, Blu-ray & 4K Ultra discs may be on the rise. There were plenty of anecdotes from the collector market of individuals unable to obtain Oppenheimer on 4K Ultra HD the week after release due to demand and that’s a good sign. If physical media can achieve broader market acceptance again, it will have a much better chance of surviving streaming. Streaming affords the studios absolute control of its intellectual property's distribution. But a formidable revenue stream is a fair incentive to include a physical media release into a new movie's life-cycle. But I can only wonder if a niche collector's market will be enough to entice physical media releases far into the future.   

Conan the Barbarian (1982) 

The movie that got me back into physical media recently was Conan the Barbarian (1982). It has long been one of my favorites. I grew-up reading the old DeCamp edits of the books by Robert E. Howard and the comic adaptations by Roy Thomas. While the Arnold Schwarzenegger movie can be criticized by Howard purists for not giving the character the same backstory as the books, the screen-writing duo of Oliver Stone and John Milius succeeded in capturing the true spirit of the character. I will be grateful if the character never receives a new film adaptation that updates Conan’s Hyborian Age for modern audiences. But I have finally been treated to the definitive Blu-ray version of the classic I've been waiting for.

Arrow's 2024 Release of Conan the Barbarian (1982) Unboxed!

Arrow Video is a boutique video-disc company that curates classic movies and performs high-quality audio/video transfers for DVD, Blu-ray and 4K UHD. I heard the company had released a limited, definitive remaster of Conan the Barbarian (1982) in UHD with a new Dolby Atmos soundtrack and video lovingly transferred from the original film's negatives. I was hooked because it also includes the classic Milius/Schwarzenegger commentary that I've only heard on an old DVD release, no subsequent Blu-ray until now included it or the ambitious restoration that Arrow performed. The commentary is a must hear for any fan of Milius, Schwarzenegger or the 1982 movie, it's comedy gold hearing Milius philosophize over each scene through his distinct "survival of the fittest" outlook while Schwarzenegger only really speaks up about his injuries while filming or about his female co-stars.

I couldn’t find the disc anywhere in stock soon after its Jan 30th 2024 release date. It must have been in high demand if the Sold Out label on every retail web-page was any indication. Stock of the disc eventually returned to one online supplier the next month and I finally got it into my hands. 

When I finally got it home, opening the small box that includes a booklet, silly two-sided poster and hard cardboard slip-cover accompanied by that distinct smell of new media brought back a flood of fond memories of collecting great movies. At no time did I make a conscious decision to abandon physical movie-media, it just sort-of faded out. The fade can be dated across my modest collection at around 2015 when it ground to a halt. But for movie viewing at home, I for one will be subscribing less and the halt on my physical media collecting ends now!