To quote Reuters:
Target’s letter from President Gregg Steinhafel noted that movie studio downloads were less expensive than DVDs, according to the newspaper. The letter also said that if the pricing did not become more equitable, Target would reconsider its investment in the DVD business, the paper said.
Well, who would’ve thought.
All joking aside, I liken this realization to the way DVD sales hurt VHS sales. The only difference is that when the motion picture industry moved to DVDs, the market remained in the hands of the big retail chains. It’s natural for retail chains to feel threatened.
Well, times have changed, and difficult to argue that digital distribution of media isn’t rapidly becoming the standard. Faster networks make downloading and streaming high quality video easier than ever, providing consumers with media literally at the click of a button.
As Sun Microsystem’s CTO Eric Schmidt put it way back in 1993, “when the network becomes as fast as the processor, the computer hollows out and spreads across the network.” Maybe our stack of DVDs will be hollowing out as well.
For now, however, it seems that Target and Wal-mart are being a bit over sensitive. The digital distribution share of the motion picture market is still remarkably small compared to DVD sales, and by stepping out of the DVD market this early these businesses stand to miss out on billions in revenue.