Format War Won - by the Internet?

While the audiophiles and first-adopters argue about HD DVD and Blu-ray, the rest of the world moves on, unknowing and uncaring. We've predicted not once but many times that the new formats were doomed from the start. A recent article on Forbes is predicting not only the demise of CDs, but of ALL physical formats! Well, knock us over with a feather. We never would have guessed.

According to the article:

In [2012-2013], total home-video revenue is expected to climb 10.1% and 6.6%, respectively. But then growth is projected to continue to slow before sales finally contract a projected 2.3% in 2015 to $31.5 billion.

So if we follow the logic, HD disc sales (both combined) will increase in the coming years increasing steadily until 2013, where sales will start to slow. The slowing will be caused in part by an increase in the amount of on-demand services utilized by consumers. While ownership of a physical disc is important to many consumers, as time goes on, that paradigm is predicted to change.

I assume projections are at least partially due to projections by the cable, tel-co and satellite industries regarding attaining a level of proficiency at reaching consumers in their homes with high definition content. I know right now there are tens of millions of consumers who would love nothing more than fiber connections to their homes, but who must wait for the infrastructure to catch up on the local level. High-income homes and communities in historical or well-established neighborhoods seem to be a major trailer in this area due to "final run" installation difficulties.

Currently, video rentals have declined sharply since the decrease in VHS rental service. DVD rentals have not taken up the slack. CD sales have also seen a sharp decline and are predicted to dip even lower in coming years. What does this mean for you and me? That remains to be seen. On-demand services have historically been pay-per-view rather than pay-to-own. So far, no one has come up with a really reliable way for someone to "own" a non-physical piece of media. Selling consumers "downloadable" music or movies that you can't easily transport will be a bitter pill for most. No one wants to "own" a movie that you can only play in your living room. They want to be able to play it in the bedroom, on a portable player, or at a friend's house. Only time will tell how these decidedly DRM issues are resolved.