Increasing Returns: The Dwindling of DVD to VOD
One powerful force that can drive the
emergence of technologies is the concept of
“increasing returns.” The concept of “Increasing returns” is coined
from a branch of mathematics called Chaos and Complexity Theory (Laureate
Education, 2014e). David Thornburg (Laureate Education, 2014e) describes the “increasing
return” model as two innovations hitting the market at the same time in which
one of the technologies will get locked in and drives the other to extinction.
The current competition between DVD’s and
video on-demand (VOD) are current examples of the force of “increasing returns.”
It is more apparent now than before that the DVD-to-VOD window has reduced.The release dates of the DVD’s and the
availability of VOD has had a tremendous widow collapse within recent years.
Before it was typical to see at least a 30 day gap between the release of VOD
from DVD’s. It is now common to see many films released on VOD the same day as
DVD’s.
One reason I believe this window has
started to close is due to the ease of accessibility to film through cable
networks, such as Xfinity, and internet based providers such as Netflix.
Consumers have shown less interest in purchasing physical media with the option
now available online as well as cable networks.
Richard Greenfield, a BTIG analyst, explains
that Hollywood studios have begun to show more interest in protecting rental
economics from services such as Netflix and Redbox than protecting DVD sales
().The dwindling interest in the purchase of DVD’s has supported the increasing
economics of VOD rentals.
In regards to McLuhan’s tetradic model, DVD’s
are befitting to dwell within the second quadrant as they are becoming obsolete
by VOD. VOD enhances consumer’s accessibility
in the comfort of their own homes as well as increasing access through various
mobile devices. Although DVD sales have
not completely plummeted, it makes sense that VOD will continue to be a prominent
choice to consumers.
References:
Laureate Education (Producer). (2014e). David Thornburg: Increasing returns [Video file]. Baltimore, MD: Author.
Laureate Education (Producer). (2014g). David Thornburg: Red queens [Video file]. Baltimore, MD: Author.
Lawler, R. (2010, August 20). Studios giving up on DVD, pushing VOD instead.
Retrieved from https://gigaom.com/2010/08/20/studios-giving-up-on-dvd-pushing-vod-instead/
