The Staying Power of the DVD vs. VOD

Bill Fischer had some interesting things to say about the staying power of the DVD as a media format going forward in a comment on our Netflix earnings call post yesterday afternoon. Bill Fischer is the Vice President of Corporate Development of a company called DVD Stations. DVD Stations has a corporate blog as well as a company site. This was one of the more insightful comments that we’ve received lately.

Specifically, Bill addressed the storage and bandwidth problems with VOD vs. the relativly easy and inexpensive competing DVD.

“Although, we agree the value proposition of VOD and especially HDVOD is undeniably compelling (in the long run it seems that is must win), here are some quick thoughts on why we’re still bullish on packaged media:

A typical Blockbuster distributes 16 terabytes of data a week via DVD. Granted the standard DVD format is based upon an old codec and can be compressed nearly 6-fold with nominal degradation in quality, but the HDDVD formats will be built with better codecs and will carry 3 to 9 times the data. With 8,000 locations, Blockbuster will be moving many petabytes of data weekly. Consumers may trade viewing quality and viewing selection for convenience but bandwidth costs alone (even with P2P)shouldn’t be overlooked, Reed Hastings could probably provide a perspective on the bandwidth costs for them to replicate their service via VOD vs. their sneakernet. Simple server storage for the data contained on 30,000 films would cost millions annually whereas one could store 30,000 DVDs in a small unrefrigerated closet.”

Fischer goes on to add that in addition to great storage, the DVD has strong DRM, easy portability, and near flawless data transfers. Most significantly in my opinion, Fischer adds, “the studios and electronics companies are making multi-billion dollar bets on building the next-generation platform for packaged media, they could be horribly wrong but since the studios also hold the IP, their views and bets shouldn’t be entirely dismissed.”

I suspect that Bill is right and that the DVD format will be with us for a while. Even though I’d much rather see HDTV Everything Video on Demand, I suspect it may still be a while before we see this as reality. I’m also sure that lots of micro content will be downloadable through many different companies, but it won’t be all in HDTV for a while either.

Feel free to read the comments at the Davis Freeberg on Today’s Netflix Analyst Call for Fischer’s complete thoughts.

Thanks Bill for adding such insightful commentary to the conversation.

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